Wednesday, December 06, 2006

WSJ: GOP Slashes Federal Spending

I note below that because of the Republican intransigience on spending issues, federal spending in 2007 may well turn out to be lower than it was in 2006. Tim Chapman and the Club For Growth have been all over this story.

But while it's a good thing if federal spending does end up being reduced, it seems to be cause for alarm in many quarters. And the WSJ joins Congressional Democrats in characterizing it as 'blowing up the tracks' during retreat:

The collapse of the appropriations process will be felt soon in the Justice and Commerce departments, food-safety agencies and veterans' health care. "It's not just a mess. It's a mountainous mess," complained Wisconsin Rep. David Obey, the next House Appropriations Committee chairman...

With Congress turning off the lights this week, there seems no chance of saving the appropriations process. Instead, most of the government will remain on a stopgap bill through Feb. 15, and in kicking this can down the road, the Republican leadership has no idea where it will stop rolling.

"It's a demonstration of the irresponsibility of Republicans that they would leave this country with this mess," said the next House speaker, Rep. Nancy Pelosi (D., Calif.). "But we won, we will deal with it."

Democrats could simply extend the stopgap resolution again in February and set themselves up as a budget appeals court of sorts, to which the administration will have to come for relief. "I think we can work through it, but it is not our preference," said White House budget chief Rob Portman. But the administration admits it could yet pay a price if the spending issues become entangled with President Bush's spring supplemental-spending request for military operations in Iraq.

The stopgap resolution, which the House expects to take up today, allows no growth above 2006 spending, and as a rule, any spending cuts from 2006 levels voted by the House this past summer prevail. On balance, annual funding is about $6 billion less than the president's budget request -- without always reflecting his priorities.

So there's the disaster: $6 billion. That sounds like a lot of money, until you realize that the total projected expenditure of the federal government in fiscal year 2007 is $2.7 trillion. The staggering shortfall that the government must deal with is about 0.2% of federal spending - and that doesn't count the money that will be added in later if this 'doomsday scenario' comes to pass, in the form of 'emergency spending.'

Yes, this is a difficult appropriations process to manage, particularly in an environment where elected officials have come to expect annual increases of nearly 8 percent in spending. But a 0.2% reduction does not constitute a disaster or a crisis; it's only portrayed that way.

Update: Check out Jon Henke's sensible comments on this over at QandO.

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