The Federal Budget Is a Myth

Lenwood Brooks is policy director of Public Notice, an independent, nonpartisan, nonprofit dedicated to providing facts and insight on the economy and how policy affects our financial well being.

Imagine sitting down at your kitchen table to work on your family's budget. You pull out the calculator and spreadsheet, slip into green eyeshade mode, and start estimating your revenues and expenses for the coming year.

Several hours later, you have a solid guideline for your annual revenues and expenses—which you immediately push aside, never to be looked at again.

Sounds like a huge waste of time, doesn't it? If you're not going to use the budget to guide your future behavior, why go to all that trouble? But believe it or not, that's what Congress and the president do almost every year with the federal budget. If you want to better understand why our nation is facing a mountain of debt and endless deficits, look no further than our broken federal budgeting process.

[See a collection of political cartoons on the budget and deficit.]

Here's how it works: This morning, President Obama will present his administration's annual budget document. This will set off a predictable round of news reportage and commentary, along with a series of accusations and counter-accusations from the political parties. Unfortunately, the process is little more than an exercise in kabuki theater, since the budget is largely a formality.

Many people believe the president's budget document serves as an "opening bid," a starting point for the House and Senate budget committees as they develop their documents. In reality, the congressional committees generally disregard the administration's document.

The dirty little secret that everyone in Washington knows but doesn't tell is that the budget doesn't really matter all that much in terms of controlling spending. The budget resolution doesn't have the force of law—it's simply a concurrent resolution passed by the House and Senate. And once it's passed, it's never signed by the president, as any public law would be.

[Read the U.S. News debate: Does the United States Need a Balanced Budget Amendment?]

There is one number in the budget that's worth watching: the "top-line" number for discretionary spending. House and Senate appropriators watch this number closely, because it places a limit on how much they can spend. In fact, this year, we already know what that number will likely be, because the Senate set out their number in the Budget Control Act passed last summer to end the debt ceiling standoff: $1.047 trillion.

Since this number is already set by law, it makes it very unlikely a budget will actually move this year. If the appropriators already have their top-line number, why would they bother? Answer: They won't. In fact, Senate Majority Leader Harry Reid, a Democrat of Nevada, has already admitted as much, recently suggesting that the Senate doesn't need to pass a budget, as a result of the pre-ordained spending limit set by the debt ceiling deal.

[Check out the U.S. News Economic Intelligence blog.]

This is in keeping with the pattern of recent years. For the last three years, the Senate hasn't even bothered passing a budget. (Kudos to President Obama and House of Representatives, who have met their responsibilities to present a budget blueprint in recent years.)

So the budget isn't real. Big deal, right? Actually, it is a big deal, because the real losers here are the American taxpayers. It's easy to see how this farcical process has led to our current dire budget situation, where towering debt and endless deficit spending have put our nation on an unsustainable fiscal course.

Think about it: The national debt is more than $15 trillion and counting, and the nation has seen monthly budget deficits for the last 39 consecutive months. The projected deficit for this fiscal year is an additional $1.08 trillion.

Recent polling results tell the story. A January survey by the Gallup polling organization showed that 81 percent of Americans disapprove of the job Congress is doing. Another Gallup poll last month showed that only 29 percent of Americans are satisfied with the size and power of the federal government. I can't help but think there's a strong connection between this loss of public confidence and the government's inability, or unwillingness, to focus on the most elementary tasks of planning and goal-setting—like preparing and sticking to a budget.