Preparing for the FY2009 Federal Budget Battle

Brace yourself, folks, it’s started already!

Budget Director Jim Nussle at OMB fired a shot across Congress’ bow Monday in what officials are billing as a first of its kind pre-emptive letter to the Budget and Appropriations committees. The letter threatens vetoes over Democratic spending and tax policies before their budgets have even been unveiled! Nussle's letter threatens vetoes of any fiscal 2009 appropriations bills that exceed the President’s overall spending target and do not meet his mandate to cut earmarks. Do I even need to mention tax increases?

Of course, that presumes that any of the bills will reach his desk while he’s still in office!

Conventional wisdom among those who watch these things carefully is that Congress will delay any ’09 spending bills until there is a new President. Of course, a new Republican president could be an even tougher sell than Mr. Bush. But, I see a different scenario developing.

I think the Democratic leadership will pull out all the stops to send budget bills to the White House that they know will draw a veto. Election years seem to encourage that sort of thing and Nussle’s letter has made it easy. If they send “dead on arrival” budget bills and he doesn’t veto them, he’s caving to the Democratic Congress. If he does, he’s a lame duck obstructionist. For the Democrats, it would be much like stepping into a pitch to load the bases. It’ll sting for a while, but it might be worth it to set up the Grand Slam. If the next batter can pull it off…

Whether no bills get to the President’s desk or they arrive with a veto waiting for them, it’s very likely that the Federal Agencies will muddle through the first quarter of next Fiscal Year on a continuing resolution. And, maybe a good part of the second quarter.

I work for a company that has more than 2,500 Government contractors as clients. I get to see the effect of continuing resolutions up close and personal. Programs are put on hold, decisions are put on hold and lives are put on hold. It’s no way to run a Government.

From this side of the river, the view of the process that creates situations like this is a dim one – and it’s getting dimmer.

We can live through another appropriation season without budgets. We’ve done it before, repeatedly, but it’s sure not what the economy needs right now.

Has anyone over there given that any thought?