Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Washington's budget follies

By Jeanne Sahadi, senior writer

NEW YORK (CNNMoney) -- Is this any way to run a government?

Congress may soon pass a fifth short-term funding bill in as many months just to keep Washington operating for another two to four weeks.

On top of that, government agencies may also be asked to start cutting up to $4 billion in programs and earmarks during that period.

Of course, lawmakers on the left and the right may come to agreement on a so-called "long-term" spending bill that would cover the rest of fiscal year 2011, which ends Sept. 30.

Or just as likely they could instead hit complete gridlock, pass nothing and shut the whole government down. Turn out the lights. Lock the doors. Hang up the "Gone fishin" sign.

Those are the basic options in the next week because on March 4, the current short-term spending plan expires.

Passing a very short-term continuing resolution is intended to buy more time for House Republicans and Senate Democrats to work out a deal on funding levels for the rest of the year. While that may be preferable to a government shut down in some respects, it's not exactly an ouchless Band-Aid.

"It's just a nightmare. You don't know your full-year budget so you don't know how to allocate your funding," said Douglas Holtz-Eakin, a former director of the Congressional Budget Office and leading Republican economist. "Regardless of party, it's just bad governance. A pox on both their houses."

Of course, continuing resolutions are nothing new. Congress has enacted at least one every year for all but three of the past 30 years. And the general verdict from government agencies is that continuing resolutions can make it unnecessarily difficult to get their jobs done.

Studying the effects at six agencies, the Government Accountability Office found in 2009 that short-term spending resolutions create pointless inefficiencies -- for instance, delays in hiring and the need for repetitive work such as issuing multiple grants and contracts.

As in years past, agency directors "will be putting their fingers in the wind" to figure things out, Holtz-Eakin said.

The uncertainty and hassle could be compounded by having to make new short-term cuts.

House Republicans on Friday proposed a two-week continuing resolution that would cut spending by about $4 billion, and the cuts incorporated several of the reductions proposed by President Obama in his 2012 budget proposal.

That's a switch from the swath of cuts they included in a bill that the House passed last weekend. That bill, which Obama threatened to veto, would reduce federal spending by $61 billion over seven months.

Senate Democrats had wanted to maintain funding at current levels for at least a month, but this week said they would propose cuts of their own for a seven-month period. Late Friday, they didn't dismiss the latest House bill outright.

"We are encouraged to hear that Republicans are abandoning their demands for extreme measures like cuts to border security, cancer research, and food safety inspectors and instead moving close to Democrat's position that we should cut government spending in a smart, responsible way," said Jon Summers, a spokesman for Senate Majority Leader Harry Reid.

That may mean the chances for agreement on a two-week spending bill just went up.

But both parties' tendency to push the prospects for compromise on a temporary measure is emblematic of a broken budget process, according to many fiscal experts.

Like Holtz-Eakin, Rudolph Penner, another former CBO director, has nothing nice to say about this year's fits-and-starts funding practices.

"The whole process has become quite absurd," Penner said. "We wouldn't be talking about it if the Congress had passed appropriations before the start of the fiscal year like they are supposed to."

- CNN's Deirdre Walsh and Ted Barrett contributed to this report To top of page

Index Last Change % Change
Dow 17,050.75 138.46 0.82%
Nasdaq 4,810.79 19.64 0.41%
S&P 500 2,013.43 17.60 0.88%
Treasuries 2.11 0.05 2.23%
Data as of 6:55am ET
Company Price Change % Change
Bank of America Corp... 15.75 0.01 0.06%
EMC Corp 27.18 1.22 4.70%
Apple Inc 109.50 -1.28 -1.16%
Freeport-McMoRan Inc... 13.46 0.45 3.46%
General Electric Co 28.03 0.26 0.94%
Data as of Oct 8


Judge denies request by Paul Smith's College to change its name in order to secure huge donation from philanthropist Joan Weill? More

IMF's Christine Lagarde avoided blaming China for lackluster global economic growth on Thursday, framing the country's deep slowdown as the "healthy" result of needed reforms. More

The National Domestic Workers Alliance introduced a new initiative, Good Work Code, to set standards and protections for on-demand workers. More

Karim Abouelnaga turned down a job on Wall Street to address a problem that set him back as a low-income student: the summer slide. More

One of the largest pension funds in the country says it needs to cut benefits for 273,000 current and future retirees as soon as July. Otherwise, it won't be able to pay any benefits after 2025. More