Is there an exit strategy?

While congressional Republicans spent much of last week wondering whether the Clinton administration had an exit strategy for the military action in Europe, the same question could have been asked about Congress' efforts on the budget.

Why would the White House want to negotiate with Congress?

The House and Senate were debating and passing their separate versions of the fiscal 2000 budget resolution at about the same time that the U.S. forces took action in Yugoslavia, and the big question in both cases was the same. Where do they go from here, and if it does not go well, how do they get out of the fight with something that at least makes it look like a success?

Without minimizing the situation in Kosovo, the budget question will probably be far tougher to answer because it is not clear what Congress is trying to achieve.

Perhaps Congress just wants to prove that, unlike last year, it can make the budget trains run on time. But that will be far more difficult to achieve than currently appears to be the case.

Once the budget resolution conference report is adopted, the only budget legislation Congress will be judged on completing will be the fiscal 2000 appropriations. But the budget resolutions include the mathematically inconsistent and politically unachievable goals of maintaining the caps on discretionary spending while also increasing funding for education, defense and number of other areas. The reductions in all other appropriations that would be required to offset these increases and stay within the caps will almost certainly prompt a veto from the President.

Then what? How will congressional Republicans be able to declare victory if they are facing the choice between a government shutdown or providing more spending? On the one hand, the railroad stops running. On the other hand, the promise to limit spending goes by the wayside.

Perhaps Congress just wants to make the President be the first to insist that the caps be broken. But does anyone really think that the White House is going to discuss caps and budget process when it can be talking about spending more on education, health care and the environment? How difficult will it be for the President to talk about his budget, which he will say maintains the caps while providing more than Congress for ____________ (you fill in the blank)? And as the time before fiscal 2000 starts being measured in hours rather than days, does Congress think it can successfully talk about how the Congressional Budget Office says the President's budget is over the caps? Didn't the CBO vs. OMB issue that Republicans tried to use several years ago fail miserably?

Maybe the congressional exit strategy on the budget is to draw the White House into negotiations on the budget so that both sides get something at the end. But that tactic fails to take into account the new realities of a federal surplus.

Negotiations might have been likely when there was a deficit that had to be reduced and everyone had to agree on a plan or nothing was accomplished. But when a surplus is forecast rather than a deficit, doing nothing means that there is still a surplus. In fact, in this case doing nothing means that there will be (1) a bigger surplus in fiscal 2000 than there was in 1999; (2) a bigger surplus than if there is a deal that uses some of the surplus for a tax cut or spending increase; and (3) a bigger reduction in federal debt and so more downward pressure on interest rates.

The bigger question is why would the White House want to negotiate with Congress? Other than its USA accounts, the administration's big budget goals are increased funds for a variety of high-priority areas and some type of plan that reduces the federal debt in a way that appears to be protecting Social Security. It can achieve the first goal by waiting for Congress to pass each appropriation and then negotiating bill by bill (which has the added advantage of forcing Congress to consider a variety of hard-for-the-public-to-understand gimmicks to get around the caps). As for the second goal, the White House needs do nothing-the House and Senate essentially promised to do the same thing in their budget resolutions.

Perhaps the congressional exit strategy is to pass a tax cut and then get the President to veto it so that they have an issue during the 2000 election. But how does that work in light of all of the problems Republicans have had in recent years getting general political acceptance for the tax cut proposals they have tried to push? Will House and Senate Republicans be able to agree on the type of tax cut they want to support? And how will Congress deal with Federal Reserve Board Chairman Alan Greenspan's stated preference for debt reduction rather than a spending increase or a tax cut?

Finally, does anyone really think the White House will have any problem vetoing a tax cut if that veto can be characterized as keeping the options open for Social Security and Medicare reform-neither of which seems likely to move in Congress this year?

The best indication of what is to come will happen in the next few weeks. If there is little movement between Congress and the White House shortly after the budget resolution conference report is approved, it could be the budget process equivalent of what some are saying will be the result of the NATO bombings-no clear-cut results.

The Budget Countdown

As of today there are only seven potential legislative days left before the April 15 statutory deadline for passage of the fiscal 2000 congressional budget resolution. If Mondays and Fridays, when the House and Senate typically are not in session, are excluded, there are only five days.

Question Of The Week

Last Week's and This Week's Question. A technical glitch made it impossible for some people to send in their responses to last week's question, so we're going to do the "Budget Battles" equivalent of a "do over" (any stoop ball players out there?) and ask it again this week. Who was the last Representative or Senator to serve as director of the Office of Management and Budget? Send your response to scollender@njdc.com. If there is more than one correct response, the winner will be selected by random drawing.