External factors will limit next president’s control over spending

Rhetorically, the two presidential candidates offer sharp contrasts on federal spending. Obama has promised to pump more money into domestic programs, which Democrats contend have been badly shortchanged during the Bush years. McCain, on the other hand, has vowed to freeze domestic spending and veto bills that contain earmarks for lawmakers' projects. But as president, either would run into harsh realities when he presents his fiscal 2010 budget proposal to Congress next year.

Under McCain, the Democratic majority on Capitol Hill would fiercely resist a domestic spending freeze. Over the past two years, congressional Democrats demanded more domestic spending; Bush and his Republican allies demanded more funding for the military and security, along with targeted tax relief. The net result was that both parties got some of what they wanted, and the deficit increased.

As for McCain's anti-earmark crusade, lawmakers on both sides of the aisle would do whatever they could to subvert it. Many members believe that earmarking is protected by the Constitution, which gives the power of the purse to Congress. They may agree to reduce earmarks and make them more transparent, but not to entirely eliminate them.

In an Obama administration, the high costs of the continued U.S. presence in Iraq and Afghanistan and of government intervention in the financial markets, plus the burgeoning federal budget deficit and debt, would constrain any attempt to significantly boost domestic spending. And Senate Republicans, along with fiscal conservative Blue Dog Democrats in the House, would seek to limit liberals' desires for big spending increases.

Whoever is president, external factors drive most federal budget decisions. Since 1985, nondefense domestic discretionary spending has been relatively stable, hovering between 3.2 and 3.9 percent of gross domestic product. Defense spending, however, has moved in response to world events, dropping from a high of 6.2 percent of Gross Domestic Product in 1986 to a low of 3 percent by 1999, as the military drew down from the Cold War, only to ramp up to 4 percent of GDP a year after the 9/11 terrorist attacks. Unexpected events -- such as 9/11 and the threatened collapse of the financial markets this fall -- have a much greater impact on federal spending levels than do the personal proclivities of the Oval Office occupant.

Furthermore, an increasing portion of federal spending is tied up in mandatory entitlement programs, such as Social Security and Medicare, that grow no matter what Congress and the president budget annually. "Mandatory autopilot spending already consumes half the budget," Rep. Jim Jordan, R-Ohio, a House Budget Committee member, noted at a Sept. 25 hearing.

When the rising percentage of federal revenues that go to pay interest on the national debt is factored in, the next president would be totally hamstrung by rigid obligations by his second term, according to budget expert Eugene Steuerle. "Any candidate faces a budget that has very, very little flexibility," said Steuerle, vice president of the New York City-based Peter G. Peterson Foundation, which advocates reducing the federal debt. "We've really crimped ourselves."