Balooning Budget

Last night, conferees from the House and Senate agreed on a budget resolution for fiscal year 2009.

If there's one good (using the term loosely) thing that's come from the Democrats controlling Congress, it's that President Bush has finally dropped the proverbial hammer on discretionary spending growth. Prior to their takeover, President Bush had let discretionary spending grow at an 8.0% annualized rate--the highest rate in the last forty years. The Democratic control of Congress has allowed Bush to set a harder line with his veto threats and not go against his own party.

The Budget Conference agreement for FY09 set discretionary spending totals $20+ billion over the President's spending request. Bush requested frozen spending levels that actually amounted to a cut when inflation was factored in.

As Ranking Member Republican Paul Ryan has pointed out, the Democrats budget does nothing to deal with the long-term growth of entitlement programs, factors in new spending, and relies on false assumptions (i.e. tax increases which Democratic candidates are already committed to finance their platform proposals).

Last year, President Bush vetoed some of the first appropriation bills that came across his desk because they spent too much, forced Congress to cut some out, and then signed them into law once they were more inline with his spending requests.

This was a political victory for the White House and demonstrated that President Bush could be fiscally conservative.

However, being an election year, Democrats in Congress will have less of an incentive to work with Bush on budgetary matters. It is likely that the Democrats will pass a continuing resolution (funding the government at previously appropriated levels), avoid a showdown with the White House, and deal with a new President on the annual appropriations. By simply waiting a couple months, Democrats could potentially work with a President--Obama--who is more inline with their priorities and spending increases.

If the Democrats choose this course of action, it could set up an election year advantage for Republicans.

By highlighting the Democrats' budget, Republicans can use the priorities contained within the budget for political fodder: the increased spending, failure to tackle the important long-term issues, and reliance upon tax increases to reach a balanced budget. This forces the point that these liberals are of the tax-and-spend variety who disregard the interest of the taxpayer. Sure, the Democrats plan would balance the budget, but they would do it by using tax increases which would hamper economic growth.

However, this will be an effective issue only if the Republicans regain their core on fiscal responsibility. In the 90s, the first priority on "The Contract With America" was fiscal responsibility and making the government more efficient. Simply painting the Democrats as irresponsible isn't going to work in this election because Republicans have been just as irresponsible in the last eight years. However, making a commitment to be the party of fiscal responsibility once again could be effective.

Pledging to reduce spending, eliminate earmarks, balance the budget, and keeping taxes low on the middle class will energize the base as well as provide a substantive difference that the GOP can work with. It will also reenfranchise those fiscal conservatives who have been without a home.

The Democrats are out of touch and this issue with help to exploit that.