GovernmentExecutive.com

This is the time of year when it is appropriate to reflect back on what occurred over the past 12 months and take a quick look ahead at what's likely to happen in the year ahead.

Kudos and applause go to Comptroller General David Walker and Congressional Budget Office Director Douglas Holtz-Eakin.

Walker displayed extraordinary courage and dedication when he put himself and the organization he heads--the General Accounting Office--in political peril by coming out forcefully and publicly about the deteriorating fiscal future. Using language that was tough by almost any standards and certainly atypical in the pull-your-punches world of Washington, Walker said what needed to be said about both the current and longer-term budget outlook when few others in senior positions were even willing to mention the topic.

Holtz-Eakin, meanwhile, deserves a great deal for credit for reinvigorating the Congressional Budget Office. Although it may not be obvious to many on the outside, Holtz-Eakin has restored much of the enthusiasm, pride and spirit of CBO's staff. He also has begun to restore some of the credibility that CBO lost in recent years. That will be critical to the organization's effectiveness in the future.

Unfortunately, most other parts of the federal budget apparatus fell further from grace in 2003. The House and Senate Budget Committees were largely silent as the budget outlook and the quality of the debate slipped further. They played no major role in the decisions that were made. The credibility of the Office of Management and Budget also deteriorated as its statements and projections became increasingly hard to believe.

Some of the most avid budget watchers of the past few decades--Wall Street and the business community--paid little attention to what was going on in 2003. Depending on one's perspective, they either were barely involved in the debate or should be considered co-conspirators in the outcome.

Wall Street was clearly conflicted: The bond market needs new federal debt to sell at the same time that declining federal borrowing increases the value of the debt it has already sold. The equity markets want the government to do those things that will cause rapid economic growth for the companies whose stock it sells, but doesn't want corporate or upper-income tax increases to pay for those policies.

And the business community, which in the past lobbied so forcefully and often effectively against deficits, this year seemed to be totally uninterested. The fact that the half-trillion dollar deficits projected in the future could require increased corporate taxes when the deficit re-emerges as an issue seemed not to be a concern.

So what should we expect from next year's budget debate? The answer is more of the same. Perhaps even much more.

The biggest change will be that the fiscal 2005 budget will be debated during an election year, so there will be less time available for the debate because of the frequent and lengthy recesses. This includes breaks for the two political parties' presidential nominating conventions, and the need for the House and Senate to leave Washington early enough in the fall to allow members to campaign full-time before the Nov. 2 election.

Unfortunately, that means that...again...few of the appropriations are likely to be in place when the fiscal year begins on Oct. 1.

In spite of the fact that it will probably range between $500 billion and $600 billion, it is hard to see how the deficit will become a big issue next year, or do much to temper congressional and administration desires for more spending and lower taxes. The narrow majorities in both houses, which forced the leadership and the White House to agree to additional spending and back off on proposed cuts so that legislative battles could be won, will still exist next year. In fact, these narrow majorities will give members even more leverage in the months leading up to the election, as Republicans work to demonstrate their ability to get things done.

But the spending increases and tax reductions are likely to be even greater next year as members whose re-elections are in trouble are given projects, increases and breaks that demonstrate to their constituents the good things they are doing for the people back home.

Indeed, it is hard to imagine how the politics of an election year will do anything but make the federal budget outlook worse.

"The budget" is likely to be talked about more prominently next year as some begin to publicly decry the fiscal excesses of the past few years. In recent weeks the drumbeat about spending increases approved by the Bush administration has gotten significantly louder, and direct challenges to the White House from conservative Republicans have increased significantly. It is hard to see these same individuals and groups not supporting President Bush's re-election, however, so the disapproval is likely to stop short of a full revolt.

And that means that the budget issue most likely to emerge next year is spending, not the deficit. At the same time that increases are provided to guarantee legislative wins and help the re-election efforts of members in trouble, a consensus could also develop that spending needs to be looked at seriously once the election is over.

Not only will this further obfuscate an already-confusing fiscal 2005 budget debate for the average voter, it will make the 2006 debate even more difficult.

But that story will wait until next December.

This is the last "Budget Battles" for 2003. Thank you to all who took the time to respond with your thoughts--positive and negative--about this year's columns. Due to the goodwill of the folks at NationalJournal.com and GovExec.com, "Budget Battles" will continue in 2004--not bad for a column that was supposed to run for only six months during the 1997 budget negotiations. I like to think that "Budget Battles" has continued because of solid writing and brilliant commentary rather than because the federal budget is every bit as confusing and controversial now as it was six years ago. But we all have our fantasies.

My best wishes to you all for a happy, prosperous and safe holiday and New Year.

Question Of The Week

Last Week's Question. The question was, "What are the exact dates of the one-month window President Bush has to submit his fiscal 2005 budget to Congress?" The answer comes from the budget process requirement that the budget be sent to Capitol Hill between the first Monday in January and the first Monday in February. The exact dates for 2004 are Jan. 5 and Feb. 2.

In keeping with the holiday spirit (and because we have a few extra mouse pads), this week there are five winners, who were selected at random from all those who submitted the correct response. Congratulations to Tony Cheesebrough, who works for the Office of Management and Budget; Jody Hernandez, who works for the Senate Budget Committee, Linda Shaw, who works for NavAir in Florida; Nicholas White, who works for the Army in Darmstadt, Germany; and Jeff Chamberlin, who works for the Congressional Research Service.

Where Will You Be On Jan. 28?

National Journal and Government Executive will team up next year just as the fiscal 2005 budget debate is about to begin to present the latest in their annual series of half-day executive briefings on what you should expect. This briefing--The Fiscal Year 2005 Federal Budget Game Show--will be conducted by "Budget Battles" columnist Stan Collender in his usual informative and highly entertaining style, and will be held in Washington the week before the Bush fiscal 2005 budget is released.

Will the budget debate look like an episode of "The Gong Show"? Will the tax and spending decisions put the economy in "Jeopardy"? Will the Republican leadership look like they're playing "Let's Make A Deal" as they search for votes on key issues? And will Congress and the White House be able to "Beat The Clock" and get all of the appropriations enacted by the start of the fiscal year?

Tune in...or rather...attend the briefing on Jan. 28 and find out for yourself. You might even go home with some nice parting gifts.

Substantial discounts are available for registrations received by Jan. 15, 2004, and for groups of more than four. For the full agenda and registration information go to nationaljournal.com/budgetconference/.