Annual Budget a Critical Test for New Congress Douglas Holtz-Eakin, former director of the Congressional Budget Office, explains this year's budget and the reasons Congress still hasn't passed it.

Annual Budget a Critical Test for New Congress

Annual Budget a Critical Test for New Congress

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Douglas Holtz-Eakin, former director of the Congressional Budget Office, explains this year's budget and the reasons Congress still hasn't passed it.


Now, what you're about to hear is a very risky interview. Risky because I know that the second you hear the words budget or continuing resolution, you're likely to reach over and snap off that radio. But I hope you'll give us a chance, because the fact that congress adjourned this weekend with the budget still undone really does affect your life.

Joining us to explain how is Douglas Holtz-Eakin, director of the Center for Geoeconomic Studies at the Council on Foreign Relations and former director of the Congressional Budget Office.

Hi there. Thanks for joining us.

Mr. DOUGLAS HOLTZ-EAKIN (Council on Foreign Relations): My pleasure.

SEABROOK: So let's start by explaining what's happening here. The president lays out the budget every year, but it's the Congress that actually doles out the money. It does that with 10 or 12 large spending bills called appropriations bills. In the past few years, those bills have been extraordinarily difficult for Congress to pass. This year they've only passed two. Why?

Mr. HOLTZ-EAKIN: Congress cannot live by its own rules. That's the first thing to know. They are supposed to, by April 15th of each year, actually have a plan for those 12 bills where they say, okay, how much do we want to spend and how much tax revenue will we have available and how does it all add up?

This year they were unable even to come up with a plan. So in the absence of an overall plan, it's difficult to get any of the individual 12 done, and you can go through bill by bill and find some sort of fight that's tying it up. The upshot is, listeners don't have to worry about budget. We don't have one.

SEABROOK: So what are we doing here, the United States? We're just flying by the seat of our pants?

Mr. HOLTZ-EAKIN: This weekend they had to pass what's called a continuing resolution. It's a stop-gap funding measure. And what it says is, each agency is allowed to continue writing checks at the same pace as last year. No agency knows what they'll get for the whole year. So they are literally unable to plan. No agency knows for sure that at the end of the year Congress won't do what it usually does, which is sort of make things add up by doing an across-the-board cut. So they won't even spend at the same rate as last year. They'll scale back a little bit just to play safe.

SEABROOK: Okay. So I think about this, and I think, all right, so somebody in some obscure agency can't buy a copy machine. How does this kind of thing affect people outside of Washington, people in, say, Iowa?

Mr. HOLTZ-EAKIN: Well, let's take a veteran in Iowa. Everyone agrees that the Veterans Administration can't live on last year's money. It needs at least two billion more. Well, that means they're for sure going to have to let the waiting lines grow for vets who are looking for particular help. That's a real cost to not getting the budget done.

SEABROOK: Say, healthcare. They can't get to the doctor.

Mr. HOLTZ-EAKIN: They're going to be in line. They'll take care of the most severely injured vets first, but for those people who are further down in the need list, they'll wait.

SEABROOK: So we get a sense of how hard it is every year to pass these bills. Are there special considerations this year with everything being kind of in flux between parties, the Democrats taking over in January?

Mr. HOLTZ-EAKIN: I don't have a lot of sympathy for that argument. We have elections every two years and Congress knows that. You really ought to follow the original plan. The 1974 Budget Act passed by the Congress says have a plan in place by April 15th, pass the appropriations bills during the summer, have everything buttoned up by September 30th so that the fiscal year can be in October 1st, then go run for election in November. But they didn't do their job.

SEABROOK: And it's now December 10th.


SEABROOK: In the last decade, these bills have been loaded up more and more with what are called earmarks; they're special grants for individual projects, often called pork barrel projects, depending on who you are talking about. How does that affect this budget process?

Mr. HOLTZ-EAKIN: Earmarks are easiest to identify when the bills are fought about for a long time, studied. Earmarks are impossible to find if you cram all 10 appropriations bills that didn't get done together into one large document, and you do it fast at the beginning of the Congress to get it out of the way. The odds of earmarks being in there goes way up.

SEABROOK: Is that your sense of what's going to happen in the new congress?

Mr. HOLTZ-EAKIN: It's a critical test for the Democratic leadership. They have said we're going to do business differently; we're not going to engage in all the shenanigans that really brought difficulties to the Republicans. But the first order of business will be one of these large omnibus bills that's usually stuffed with special projects. How will they clean it out?

SEABROOK: Good question. We'll be watching. Douglas Holtz-Eakin is the director of the Center for Geoeconomic Studies at Council on Foreign Relations and former director of the Congressional Budget Office.

Thank you very much.

Mr. HOLTZ-EAKIN: My pleasure.

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