At the beginning of this year there were some indications that the era of "deficits don't matter" rhetoric was being replaced by a renewed concern about deficits, at least rhetorically. Unfortunately, the actions since then have shown no indication that policymakers have the stomach to match that rhetoric with actions.

The budget resolution conference agreement leads to higher deficits than current law in each of the next five years, with the costs of additional tax cuts and increased spending for defense and homeland security assumed in the resolution exceeding the savings called for in non-defense discretionary spending and mandatory spending programs. Meanwhile, the House didn't even wait for the budget resolution to pass to start passing tax cuts and Congress is moving forward with expensive highway and water infrastructure bills that are loaded with special projects.

Senate action on the budget resolution was particularly discouraging for advocates of fiscal responsibility. Amendments (supported by the Committee for a Responsible Federal Budget) to reinstate Paygo rules for all mandatory spending or revenue legislation that would increase the deficit and strike the reconciliation protections for tax cuts which would increase the deficit were defeated. Meanwhile, the Senate approved amendments nearly doubling the size of the tax cuts in the resolution and cutting in half the amount of mandatory savings called for in the resolution. The Senate also approved several smaller amendments providing for increases in discretionary spending on health care, education and veterans programs.

The fact that the House and Senate were able to agree on a budget resolution conference report is an important accomplishment, since Congress failed to adopt a budget resolution in two of the last three years. A failure to adopt a budget resolution again this year would have further undermined the credibility of the budget process.

For the full document, please see the attached PDF version.