By Stan Collender, NationalJournal.com
© National Journal Group Inc.
Tuesday, Dec. 18, 2007

As far as the federal budget is concerned, 2007 should be buried in the backyard and never seen or heard from again.

	The previous budget stalemate meant that the budget outlook got better. The 2007 stalemate made it much worse.

The procedural highlight was Congress adopting a budget resolution relatively early in the year, which few thought possible. There was reason for optimism at that point. After all, with a Senate majority that was four seats smaller than the one Republicans had in 2006, this Congress had just accomplished something the previous one couldn't.

But in retrospect, that achievement was almost certainly bound to be an aberration. A budget resolution is a unique kind of legislation; it can't be filibustered in the Senate and doesn't have to be signed by the president, so it is not subject to a veto. As a result, only a simple majority was needed to put the budget resolution in place.

It was never that easy again for congressional Democrats. Every other budget-related bill needed more than 60 votes in the Senate to overcome a seemingly inevitable filibuster. With congressional Republicans determined not to allow anything to happen that could be considered an accomplishment, gathering the necessary votes became impossible.

Even if they had been able to get 60 votes to overcome a filibuster, there was almost no way the Democratic leadership in the Senate was going to get the two-thirds majority needed to overcome the president's virtually guaranteed veto of anything the Democratic majority wanted to do. The first barrier was tough; the second was impossible.

The most interesting aspect of all this is how different the outcome is from the budget stalemate of the late 1990s, when Bill Clinton and the Republican-controlled Congress fought to a draw.

That stalemate was considered a good thing for the budget. Neither big tax cuts nor large spending increases were possible in that environment. Along with a rapidly growing economy and soaring stock market, it was one of the main reasons the federal budget had a surplus from 1998 through 2001.

No one concerned about the federal budget is celebrating this time. In 2007, the unwillingness of the White House to negotiate with Congress on the budget and the inability of Congress to deal with the administration meant PAYGO rules were not applied to revenue reductions, major spending additions for Iraq and Afghanistan were classified as "emergencies" even though military and other activities began long ago, and program changes that would have reduced federal spending were not adopted. Perhaps worst of all, the stalemate left a number of domestic safety programs so underfunded that it will take years and billions more than would have otherwise been necessary for them to work properly.

So while the previous budget stalemate meant that the outlook improved, the 2007 stalemate made the outlook much worse both immediately and well into the future.

All of this happened as the visibility of the budget as an issue faded further from the public's view, even though the situation was getting worse. The Bush White House continued its policy of talking as little as possible about fiscal policy, the deficit and the national debt, and congressional Democrats had no consistent spokesperson on the budget. As a result, the issue was so in the background in 2007 that there was virtually no mention of the $50 billion to $60 billion increase in the deficit that will occur if there is no PAYGO offset to the one-year alternative minimum tax fix.

The president insisted the AMT fix should not be offset, but never mentioned that the deficit, federal borrowing and annual interest payments would all be higher if his position prevailed. Congress failed to point out the fiscal irresponsibility of the president's position, possibly because lawmakers realized that, without the votes to override a veto, they would likely have to approve the AMT fix without an offset as well.

As all of this was happening, the national debt exceeded $9 trillion for the first time and the annual deficit projections were getting worse. It is now almost inevitable that the 2008-2009 deficits will be higher both in dollar terms and as a percentage of GDP than previously estimated. The Bush administration's projection that the budget will be in surplus by 2012 is now widely considered a joke by budget observers.

It's hard to see how 2008 will be much better. The White House will have even less incentive to govern and compromise with Congress on anything having to do with the budget. Congressional Republicans will be looking to make it even harder for the Democratic majority to claim any wins on taxes and spending, and congressional Democrats will be focusing on election-year issues in hopes of building a larger majority for 2009.

That's why, as I pass along my traditional holiday greetings in the last "Budget Battles" column of the year, I'm not just expressing my best wishes to you and your family; this time it's far more a prayer.

-- Stan Collender is a NationalJournal.com contributing editor and managing director at Qorvis Communications in Washington, D.C. A frequent speaker on the budget and the economy to audiences across the country, he is also author of "The Guide to the Federal Budget" and writes the new blog, Capital Gains and Games. His e-mail address is secollender@nationaljournal.com.

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