Congress down to wire with no budget

chart_fed_budget_2.top.gif By Jeanne Sahadi, senior writer


NEW YORK (CNNMoney.com) -- Come Friday, the government will start a new fiscal year. But it will do so without a budget.

Instead, Congress is expected to vote this week on what it calls a continuing resolution, which is a band-aid solution that would make money available to keep the government operating until lawmakers return from their midterm election sprint across the hustings.

It won't be the first time that Uncle Sam has rung in a new fiscal year budget-free. In fact, tardy federal budgets have been par for the course for most of the past 35 years.

"It's pretty inexcusable even though we excuse it every year. There's no reason on earth why [lawmakers] shouldn't be able to make up their minds before the start of the fiscal year," said Rudolph Penner, a former Congressional Budget Office director who is now public policy scholar at at the Urban Institute.

Without a formal budget, Congress typically ends up passing continuing resolutions for a month or two at a time. That essentially prevents Washington from shutting down while lawmakers finalize how money will be allocated in the fiscal new year.

The resolution -- a "CR" in congressional lingo -- authorizes the heads of agencies like the FBI and FDIC to obligate money they need to carry out their agencies' work, whether through signing contracts, making purchases or hiring people.

It's hardly optimal, however. "It has implications for good government. Civil servants can't do their work very efficiently. It's hard to do rational planning," Penner said. (The same is true for businesses and individuals when Congress puts off making key tax decisions.)

Given the poisonous partisanship that has dominated this mid-term election year, it's easy to wonder if they can even pass a continuing resolution, the contents of which they are currently negotiating. If they don't, a government shutdown would be a real possibility.

But Penner believes a shutdown is unlikely because it would be deeply unpopular and both parties could suffer politically.

By the same token, Penner can envision a scenario where Congress doesn't finalize a formal budget until sometime after January. If the Republicans win the majority in the House, they may be unwilling to pass anything until they take over, he said.

Why this year is different

While it's not unusual for Congress to ring in the new year without a budget in place, there's a somewhat new twist in the old procrastination dance this year.

That's because neither the House nor the Senate have even passed a formal budget resolution, which typically is done in the spring before the appropriations committees decide how to allocate federal funds.

The budget resolution sets caps for spending, establishes revenue targets and generally serves as a five- to 10-year blueprint of congressional priorities for the appropriations and tax committees to follow.

Nonetheless, lawmakers did some work on a budget this year. To date, the House has passed two of the 12 appropriations bills for 2011. The Senate hasn't passed any, but 11 of the 12 spending bills have been approved by the Appropriations Committee.

But it's a long way from the finish line for legislators. And there is still no consensus within or between the House and Senate on what the specific cap should be on discretionary spending for next year.

All told, the CBO estimates that the 2011 budget will total $3.7 trillion based on policies that were in place this summer. A little less than a third of that would go to discretionary spending and the rest would go to entitlement programs such as Medicare and interest on the country's debt.

And that debt is the elephant in the room in all budget discussions.

"No one wants to spell out what they would do given that the choices are humongous deficits or tough policy choices, all in an incredibly tense election year," said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. "The budget never really had a chance. And another sad truth -- most of the public will never even notice."

- Ted Barrett, CNN senior congressional producer, contributed to this article. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,399.67 19.26 0.12%
Nasdaq 4,316.07 57.63 1.35%
S&P 500 1,904.01 17.25 0.91%
Treasuries 2.18 -0.02 -0.82%
Data as of 6:15pm ET
Company Price Change % Change
Apple Inc 99.76 2.09 2.14%
Bank of America Corp... 16.26 0.05 0.31%
Pfizer Inc 27.93 0.10 0.36%
Facebook Inc 76.95 1.00 1.32%
Microsoft Corp 44.08 0.45 1.03%
Data as of 4:04pm ET

Sections

Better-than-expected iPhone sales and record Mac sales lifted Apple in its fiscal fourth quarter. More

Big projects often divide cities. But Minneapolis' light rail line is creating jobs and driving development in underserved areas. More

In three years, all Chicago high school students will have to take a coding course in order to graduate. More

Host a furniture market. Here's how small town High Point, N.C. rakes in this much money -- twice a year. More

Detroit has 80,000 dilapidated properties and 100,000 empty lots. It's trying to get more people like Antjuan Wyatt to buy them. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.