Is this any way to run a country? With half the year gone, Congress still hasn't been able to come up with a budget for fiscal 2005.

With Capitol Hill closed down for the Fourth of July recess, and other extended adjournments looming for the Democratic and Republican national conventions and home district politicking leading up to the Nov. 2 elections, not a lot of D.C. time is expected from House or Senate members over the next several months.

In fact, Washington odds are good that Congress will have to come back for a post-elections lame duck session to try and tie up some loose ends before a new legislature takes over next January.

Meanwhile, key Senate budget committee members have pretty much thrown up their hands in despair of reaching agreement on a spending proposal for 2005. After months of wrangling, committee chairman Don Nickles, R-Okla., said he was “running out of alternatives” to win over several moderate Republicans who've been holding out for spending limits in an effort to control a snowballing federal deficit.

At the halfway point of the 2004 fiscal year, the federal government's deficit spending promises to set an all-time record of more than half a trillion dollars. Even the dour Federal Reserve chairman, Alan Greenspan, voiced a need for restraint, terming the long-term budget outlook disturbing.

Yet, a House rules committee last week attempted to pass a measure that would allow a conference committee to increase the overall federal debt to $8 trillion without a separate vote — an effort Democrat conservatives called “a blank check for increased borrowing authority without taking action to stem the tide of red ink.” It would, they said, allow the government “to continue on its path of deficit spending… and a ballooning national debt.”

A major sticking point in the budget debate has been the administration's insistence on making costly tax cuts permanent. Even Arizona Sen. John McCain, a staunch Republican, insists that the government can't have it both ways, more spending and tax cuts. “It's a simple proposition,” he says. If Congress wants to increase spending and cut income taxes, there have to be “offsets” to make up the difference — either cuts in spending for some government programs and/or increases in other taxes. Neither is likely in amounts sufficient to provide the whopping increases in spending that are being sought.

The failure of the Republican-controlled Senate to come up with a budget is not without irony (and embarrassment); two years ago, party members roundly derided Democrats when they couldn't agree on a budget (“a stark failure of monumental proportions,” one senator declared).

With no budget agreement, the Senate may be forced to dump some or all of its 14 appropriations measures into a single omnibus bill in order to avoid a continuing resolution that could result in even more current-year spending.

“A fiscal time bomb” is how one analyst has described the proposed combination of spending and tax cuts.

Our children and grandchildren will be dealing with the fallout from that bomb.


e-mail: hbrandon@primediabusiness.com