Democrats Unlikely to Pass Spending Plan in Face of Deficits

Published May 15, 2010. By Brian Faler. In Bloomberg Businessweek.

May 15 (Bloomberg) -- Democrats in Congress will likely skip this year the annual task of crafting a budget for the U.S. government amid lawmakers’ unwillingness to approve a measure sure to include huge deficits.

With the midterm elections looming and primary results showing voters in a sour mood, Congress will probably forgo passing a tax-and-spending plan for the fifth time in the last 12 years.

“It’s still on the outer range of possible” that a budget will be produced, “but increasingly less plausible,” said Representative Earl Blumenauer, an Oregon Democrat on the House Budget Committee. “With each passing day it gets a little less likely.”

House Speaker Nancy Pelosi, a California Democrat, and House Majority Leader Steny Hoyer, a Maryland Democrat, signaled on May 13 that they are prepared to write separate spending measures rather than lay out a five-year fiscal blueprint.

Republicans said Democrats are shirking a basic congressional responsibility. Representative Paul Ryan, the top Republican on the House Budget Committee, said the Democrats are refusing to make the “hard choices American families and small businesses must make every day.” He called that “alarming as spending, deficits and debt continue to spiral out of control.”

10-Year Deficits

The government is projected run $10 trillion in deficits over the next 10 years, with interest payments on the debt forecast to quadruple to more than $900 billion annually. Moody’s Investors Service has said it might eventually cut the government’s bond rating if the fiscal outlook doesn’t improve.

“Failure to adopt a budget resolution when fiscal resolution is needed most would send the worst possible signal,” said Bob Bixby, head of the Washington-based Concord Coalition. “It would say to investors in Treasury securities, foreign and domestic, that the federal government is still in denial about its fiscal problems and has no plan to address the situation anytime soon.”

The past failures by Congress to pass a budget occurred under either Republican or divided control of Congress, and coincided with election years.

“You have the problem, always, of people not wanting to cast difficult votes in an election year,” said Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat.

Political Ads

“It isn’t the vote people fear, it’s the television ad” by a lawmaker’s election opponent on budget issues, said Steve Bell, former Republican staff director of the Senate Budget Committee. “Given the discontent of the electorate,” Democrats “know how powerful and damaging such ads can be,” he said.

The Senate Budget Committee adopted a plan last month that anticipated cutting the deficit to $545 billion by 2015 from the current $1.5 trillion.

House Budget Chairman John Spratt said he hasn’t given up telling colleagues that adopting a plan would show constituents that Democrats are trying to put the government’s books in order. Still, he said the prospects of Congress reaching a budget agreement are “iffy.”

Spratt, who is among lawmakers facing a serious re-election challenge, said “there are those who have tough seats who, probably some of them would like not to have a budget.”

He also said lawmakers could limit spending this year without a budget, by means such as adopting a cap on the government’s discretionary spending. “There are other ways to skin this cat,” he said.

Democrats have been unable to agree, though, on what the Obama administration called a modest proposal to freeze discretionary spending unrelated to national security issues.