Next year's budget sinking in deep red ink

The chance that the majority Democrats will pass a budget this year is “fading,” Senate Budget Committee Chairman Kent Conrad (D-N.D.) said Tuesday.

He is pessimistic because House Democrats don’t know whether they want to pass a resolution that would officially acknowledge the certainty of big deficits. House Majority Leader Steny Hoyer (D-Md.) and other Democrats have indicated that would be a tough vote in an election year.

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Conrad said the Senate was getting “mixed signals” from the House and time is running out, not least because the Senate has a packed legislative agenda.

“I have told my staff we’ve got to look at all options because it appears that the chance of doing a budget resolution in both chambers is fading,” Conrad said.

Eschewing a budget resolution could complicate efforts to extend the Bush-era tax cuts for individuals making less than $200,000 and couples making less than $250,000 annually.

President Barack Obama and Democratic congressional leaders want to extend the tax cuts for the middle class but not for the wealthy. Republicans are pushing to extend all of the tax cuts.

Conrad wrote a budget draft that included reconciliation instructions allowing “jobs legislation” to advance in the Senate with a simple majority instead of 60 votes.

That would make it possible for Democrats to approve an extension of only the middle-class tax cuts with no GOP support.

Conrad included the reconciliation rules at the request of Senate Finance Committee Chairman Max Baucus (D-Mont.), whose committee would craft any extension of the Bush-era tax cuts that expire at year’s end.

Conrad’s budget draft was reported out of the Senate Budget Committee last month but has yet to hit the Senate floor.

One option Conrad said his staff is now looking at is a deeming resolution.

Like an actual budget measure, the deeming resolution would set the discretionary spending levels for the next fiscal year. But unlike a budget resolution, the deeming resolution would allow Democrats to avoid laying out their fiscal policies for 2011 and beyond.

The deeming measure wouldn’t allow for the fast-track reconciliation rules, which can only be enacted through a budget resolution.

Centrist House Democrats have been wary of voting for a budget resolution because it’s likely to project large deficits. Republicans have hammered Democrats over the budget deficit, which they blame on Democratic spending.

The Congressional Budget Office has estimated that Obama’s policies would lead to deficits averaging nearly $1 trillion over the next decade.

Conrad said he has considered attaching a deeming resolution to an Afghanistan war spending bill the Obama administration wants Congress to move before the Memorial Day recess. Because of the heavy workload in the Senate — including the financial reform bill, the nomination of a Supreme Court justice, an energy and climate change bill, Federal Aviation Administration reauthorization, extensions of tax provisions and unemployment benefits and Medicare doctor payments — bills are likely to be packaged together, Conrad said.

“It seems to sort of jump out at you that you have to put things together here [when] you think about all the things you need to have done,” Conrad said.

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House Democratic leaders said late last week that there are several ways to set spending levels, suggesting they could move ahead with a deeming resolution rather than a full budget plan.

Republicans have noted that the House has never failed to consider a budget resolution since the current budget rules were put in place in 1974.

“Rather than cut government spending, [Democrats] chose instead to cut and run — and to simply avoid the hard choices American families and small businesses must make every day,” said Rep. Paul Ryan (Wis.), ranking Republican on the House Budget Committee.

“This unprecedented failure to govern is especially alarming as spending, deficits and debt continue to spiral out of control.”

The House and Senate together have failed to pass a final budget resolution on numerous occasions, including in 1998, 2002, 2004 and 2006. Republicans held both chambers in those Congresses with the exception of 2002, when Democrats controlled the Senate.

Conrad said that Congress may return to that form this year.

“As you know, in an election year, the only time it’s been done in the last 10 years, I got it done in 2008,” he said. “And this year, maybe the best we’ll be able to do is a deeming resolution which will set budget parameters. But I’ve not given up yet. There’s still some prospect, although clearly it’s fading, so the best we might be able to do is a deeming resolution which does set the budget parameters and enforceable spending limits.”

— This story was posted at 2:26 p.m. and updated at 8:18 p.m.