The Absence of a Budget, of Spending Bills, of Tax-Law Changes...

Stan Collender writes:

BUDGET BATTLES : The Big Budget Story Of 2006: That a House and Senate controlled by the same party couldn't agree on a budget resolution for the first time in history, or that only two of the FY07 appropriations were adopted by the start of the fiscal year. Without question, the biggest federal budget story of the year is that Republicans abandoned the policies they have been promoting since 1994. The Republican-controlled Congress and White House apparently realized that everything they wanted to do on the budget was so unpopular that continuing to pursue those policies would create big political problems. There's simply no other way to interpret what happened.

The political party that said it wanted to cut federal spending refused to bring up any of the FY07 appropriations that would have included those reductions. The only two appropriations that were approved -- defense and homeland security -- included increases in spending. The others were held until after the election, when spending can be cut or not cut without any immediate political consequences.

Rather than taking credit for proposing and passing reductions in spending, or trying to get Democrats on record against those cuts so they could use it against them during the campaign, the White House and Republican leadership decided to delay any debates or votes until after the election. This is not what a party confident that spending cuts would be popular would do. But appropriations were only part of the story. When the House and Senate leadership decided against trying to do a budget resolution this year, they also effectively decided to forego making any changes to entitlements.... [N]ot doing a budget resolution effectively was a leadership admission that its own members were unwilling to vote for entitlement reductions, that they would not be politically popular, and that Republicans are not as devoted to them as they said they were.

Here again, the fact that before the election the leadership did not want to have its own members vote for entitlement reductions or force Democrats to go on record opposing the cuts is a strong sign that Republicans do not have enough confidence in their own budget policies to run on and be judged by them.

But the best indication that Republicans have abandoned the budget policies they have so steadfastly championed in recent years came on what many considered to be their signature issue: taxes. It's simply hard to believe that the leadership did not push a vote on some type of tax cut before the election. Even the most obvious and highly supported tax cuts, including many that would have been easily approved, were simply shunted aside until after the election.... [T]his was a sea change from the recent past when Republicans used every possible opportunity to cut taxes and brag about it.

This leaves next year's budget debate in terrible shape months before it even begins. Unless there's a dramatic change, the Republicans' abandonment of their budget positions means that neither they nor the Democrats will have an idea about what they want to do. Combined with the likely narrower margins in Congress next year (regardless of which party is in the majority), this almost guarantees that work on the budget will be slow, halting and painful. It also means that incremental progress may be too much to expect. That could be the biggest budget story next year.

I'm somewhat more optimistic. The fact that the Republican congress has no clue what to do on the budget creates the possibility that somebody like Treasury Secretary Paulson could lead them in a constructive direction. At least they won't automatically go in the destructive directions they have gone since Januar 2001.