The Bush White House and the Democratic Congress have been on a collision course over fiscal policy ever since the president released his fiscal 2008 budget in February calling for annual reductions in nominal non-security discretionary spending.
From an estimated level of $458 billion for fiscal 2007, which ends Sept. 30, the White House's five-year budget blueprint planned to reduce nominal non-security discretionary outlays to $456 billion in 2008, $439 billion in 2010 and $435 billion in 2012. But Democrats do not consider their victories in last year's elections to be mandates from their base to relentlessly cut non-security discretionary spending.
In May, as the Democratic conferees from the House and Senate were negotiating the ceilings for discretionary spending for each of the 12 yearly appropriation bills, the White House issued a letter threatening to veto any spending measure that exceeded the outlays proposed in the president's budget. The congressional budget resolution that emerged from the conference committee established non-security discretionary spending levels that cumulatively exceeded the president's requests by $23 billion.
While the congressional budget resolution was not subject to presidential approval or veto, each forthcoming spending bill will be. President Bush, who never vetoed a spending measure during his first six years, is determined to regain the confidence of the Republican base, which became disgusted by the spending habits of Republican-dominated Washington from 2001 through last year. Congressional Republicans, including the 147 GOP House members (one more than the number needed to sustain a veto) who signed a letter to the president promising to join him in enforcing fiscal discipline, are also determined to regain their reputation for fiscal probity on spending matters.
There's good reason for the pervasive disgust over spending throughout the Republican base. Inflation-adjusted total federal spending will have increased by 27 percent (more than 4 percent annually) over the six fiscal years ending with 2007. Over the same period, the economy has increased by less than 2.7 percent per year. Thus, spending has been growing nearly 50 percent faster than the economy. Meanwhile, inflation-adjusted revenues will have increased by an average of only 1.3 percent per year, which is half the rate of economic growth during the last six fiscal years. Soaring budget deficits were the result.
With federal spending projected to exceed $2.9 trillion in 2008, skeptics argue that the rapidly approaching veto-filled fight over $23 billion in non-security spending amounts to waging a war over less than eight-tenths of 1 percent of total spending. It's true that $23 billion represents the cost of fighting the war in Iraq for about two months; and $23 billion amounts to less than 5 percent of the $470 billion in interest expenses that will be paid on the federal debt next year. But if Republicans believe in reducing the size of government, the fight over $23 billion will at least be a beginning.