Did anyone notice that the budget resolution conference report approved by Congress on April 14 plans a $59 billion increase in spending over the current cap on fiscal 2001 discretionary spending? The existing statutory cap on fiscal 2001 budget authority is $541 billion while the budget resolution assumes that $600 billion will be appropriated next year. The difference between the statutory limit and the budget resolution for outlays is smaller-"only" $46 billion.
This did not happen in the dead of night; the budget resolution conference report was adopted by a roll call vote in both the House and the Senate. Yet there was remarkably little discussion during the debate about the tremendous increase in spending the budget resolution approved. In fact, there was far more rhetoric about how Congress was providing less than the president proposed in his budget and so should get credit for being the more fiscally responsible-even though it, too, was recommending a large increase over current limits.
This April Surprise Is Not So Surprising
A week after the fiscal 2001 budget resolution was approved, stories appeared in The Washington Post and elsewhere about the fact that the fiscal 2001 on-budget surplus was likely to be higher than expected, perhaps by as much as $40 billion.
The stories were at least partially the result of the March spending and revenue figures released by the Treasury Department. That report showed that, after adjusting for a variety of anomalies, the federal government's bottom line through the first six months of fiscal 2000 was about $30 billion better than through the same period a year earlier.
But while some commentators continue to point to the almost annual updating of CBO's and OMB's estimates as an indication that the government's analysts are either politically motivated or use outdated methods, the truth is quite different. Assuming that the $40 billion improvement in the bottom line is the result of both spending and revenue revisions, it represents a change of only slightly more than 1 percent from the current forecast. Even if the improvement was due exclusively to higher-than-expected revenues, the change would still be just 2 percent.
Given the high amount of uncertainty involved in the calculations, no budget forecast-federal, state, local, corporate or personal-comes within 1 percent or 2 percent except by luck. To put this in perspective, a family with a total income of $75,000 would have to be able to project its bottom line for the year to within $1,500 to have the same margin of error. Given the cost of unexpected home repairs, the vagaries in gasoline prices, gyrations in the stock market and the incredible things employers are willing to do to hire workers these days, coming that close to what you forecast at the beginning of the year would be more accidental than planned.
Then Again, $40 Billion Could Be Enough
It may be little more than a rounding error, but the $40 billion increase in the projected fiscal 2001 surplus might be just what Congress needs to avoid a knock-down fight with the White House over appropriations this fall.
If the total assumed for discretionary spending is $600 billion, then the $21 billion increase for military spending ($290 billion in 2000 compared with $311 billion in 2001) means that there would be $289 billion for domestic programs. This is about $20 billion below the amount needed to stay even with inflation and almost $30 billion below what the president proposed in his budget. Therefore, even if the fiscal 2001 surplus is re-estimated upward by only three-quarters of what some are now saying will occur, Congress may be able to fund most or all of what the president requested and so avoid what is otherwise expected to be a bruising series of veto fights after Labor Day.
And Yes, I Live In The Suburbs...
The District of Columbia is insisting that the federal government reimburse it for costs incurred last week in connection with the demonstrations at the World Bank. District officials say that these are national rather than local responsibilities and so the $4 million to $5 million spent on police overtime and the like should come from federal coffers.
The fact that the World Bank is not a U.S. government agency does not seem to matter to the District. Neither does the fact that D.C. already earns hundreds of millions of dollars each year from federal workers who pay income taxes on what they earn (if they live in the District) and sales tax every time they buy lunch at a local restaurant or shop in a local store (regardless of where they call home). It also does not seem to register that a sizeable chunk of D.C.'s revenue is the result of tourists visiting Washington-all of whom pay sales taxes, occupancy taxes and gasoline taxes while they are here. The fact that Washington earns big bucks because of the steady stream of conventions that come every year because it is the nation's capital appears to be irrelevant. And how much does the District of Columbia earn when the city is full because of the Fourth of July festivities on the Mall, the Cherry Blossom Parade or the the inauguration every four years?
Question Of The Week
Last Week's Question. What should an award for federal budgeting, similar to an Oscar or an Emmy, be called? The most popular answer was some variation of "Porky." But the winner of this week's "I Won A Budget Battle" T-shirt goes to Jenelle Flocke, who works for the American Forces Information Service in the Defense Department, for suggesting that it be called the "Hitchcock." This is appropriate because, in Jenelle's words, "It's a mystery (how federal agencies come up with those figures), keeps me in suspense (What new program/initiative is coming down the pike that we'll have to embrace?), someone usually gets 'eliminated' (agency downsizing), and the entire process is one big production that receives a lot of 'billing.'"
This Week's Question. The first item in today's column talks about the $59 billion increase over the current cap on discretionary spending for fiscal 2001 that Congress assumed in the budget resolution. But making an assumption in a budget resolution is not the same thing as changing the cap. The question: Other than Congress and the White House waiving or ignoring the rules, what has to happen for spending to exceed the current limit? Send your response to scollender@nationaljournal.com by 5 p.m. EDT on Saturday, April 29, and you could win your own "I Won A Budget Battle" T-shirt to wear while enjoying your first gin and tonic of the season, that is, if you are over 21. (If you are the winner but are under 21, you'll have to have something nonalcoholic.) Proof of age will be required before the T-shirt is sent to anyone. If there is more than one correct response, the winner will be selected by random drawing.