Budget Deficit Shrinking

The White House today released numbers from its Office of Management and Budget that show that the Federal budget deficit has declined by $250 billion over the past three years. The Administration's figures show that the budget shortfall for fiscal year 2007, projected to be $244 billion last year, is now just $163 billion.

The numbers set the stage for an upcoming appropriations bills battle with the Democratic controlled Congress.

Congress has yet to pass a single one of the twelve annual appropriations bills that fund day-to-day operations of the Federal government. President Bush has threatened to veto nine of the spending bills if they reach his desk in their current form.

The difference between Congress and the Administration on funding levels for fiscal year 2008 is around $22 billion. That is, Democrats in Congress have authorized $22 billion more in spending than President Bush requested. Democrats contend that $22 billion, less than one percent of the total federal budget, is too small a difference to haggle over and that the president's insistence on sticking to his numbers is shortsighted at best. Democrats believe that the priorities they have set in the appropriations bills are urgent and justify the increased spending. The White House counters that the deficit is shrinking in part becuase of its insistence on holding the line on discrestionary spending, that is, spending that is not mandated by law.

Expect all of this to come to a head early next month. Democrats first have to decide whether to force the president's hand by packaging all twelve bills into one "omnibus" bill containing all proposed Federal spending. Their other option is to send President Bush the bills one at a time, as Senate Appropriations Committee Chairman Sen. Robert Byrd wants. If they choose the omnibus route, and the president vetoes the bill, it will lead to a government shutdown. Democrats, for now, seem convinced that the White House will take the blame for a shutdown, should one occur. The White House is equally convinced that Congress, with its historic low approval ratings, will shoulder the blame. It's a $22 billion game of chicken and neither side wants to swerve first. The smart money is on a shutdown.