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All is fair game for the spending axe

Suffice it to say, the lame duck session will be a royal pain. This is not to assume House Speaker Nancy Pelosi (D, CA) will try and get her final pound of flesh as the very short-term leader of the majority, but because we’re less than a week away from the lame duck starting bell and we’re still not sure what’s on the agenda.

We know we have to do something about all the FY2011spending bills which once again were not individually passed. This means either a monster spending package or once again, Congress simply kicks the spending can down the road so the new Republican majority can deal with it.

Taxes are also on the list of issues with which Congress must be deal. First, you’ve got the expiring Bush tax cuts, and without action in the next few weeks everyone’s taxes go up in 2011. Then there’s the all-but-forgotten package of federal tax credits that expired at the end of 2009, but which both sides of the aisle have pledged to reinstate. There’s the estate tax debacle that must be mended else 2005 inheritance tax rates kick in next year. Toss in a handful of other pesky tax issues, like a permanent fix to the alternative minimum tax (AMT) and, well you get the picture.

What’s going to be interesting is how the Republicans, given their election pledge to bring us back to FY2008 spending levels as the first step down the road to a smaller federal government will handle these massive economic challenges during their last two weeks in the minority.

Are all bets on this new-found fiscal responsibility off until the new Congress? Likely not, and I’m guessing if I got House Speaker-presumptive John Boehner (R, OH) in a room alone, he’d likely tell me we first have to get all four wheels back on the wagon before we start tinkering with the engine to get better mileage. This translates to let’s clear the decks of these various issues and start with a clean slate.

I’m also getting a strong vibe some of the elder GOP members of the House and Senate haven’t gotten the memo on fiscal responsibility. When you’ve got old war horses like Senate Minority Leader Mitch McConnell (R, KY) and Sen. Jim Inhofe (R, OK) trying to explain why banning earmarks is a bad idea, it’s pretty clear these two didn’t just come off ugly reelection trails and/or have been under a rock for the last several months. While they may understand earmarks aren’t of and by themselves budget-busters, the public sees them as the physical and moral manifestation of spendthrift government.

There are also going to be GOP House members who are surprised when being in the majority doesn’t automatically mean it’s only the Democrat’s oxen being gored. I sense Boehner will not play favorites when it comes to implementing his pledge to cut spending and shrink government. I think it’s fair to say no matter what the program, no matter it’s universal appeal or importance, all will be in for at least serious scrutiny as a candidate for the budget axe or repeal altogether.

The Farm Bill debate, always the best example of the old axiom about never watch sausage or legislation being made, will be even uglier if Boehner declares farm programs fair game in the budget whacking battle. As loudly as sitting House Ag Committee Chair Collin Peterson (D, MN) has trumpeted the doom/gloom of 2011 budgeting and the ever-shrinking baseline from which a Farm Bill will be built, expect Boehner to make Peteron’s warnings sound like a whisper. And adding insult to budget injury, let us not forget Boehner has never been a fan of farm programs, even during his days as a member of the House ag panel.

Farm programs will not be the only potential programs to be cut or eliminated. Market Access Program (MAP)/export promotion money is at risk; research dollars once again pop to the top of the list when spending tightens, and then there’s the alternative energy and bio-based product development money, all of these important programs will be very heavily scrutinized.

And you can count on an appropriations process that will flatten if not cut across the board nearly all federal spending. This is not just a Republican notion, as the President has proposed flat spending for the last two years, and this year ordered departments to find an extra 5% to cut.

So, my best advice is this: Don’t even think about playing the old game of pointing at someone else’s program as an alternative to cutting yours. If you’ve got a federal program you want to keep, at the very least you better come up with a host of convincing reasons why it should not be part of the budget blood bath, as in does it create and maintain employment, does it foster economic development. Better still, take a cold, hard look at the program and see if you can’t reinvent it in a manner that saves money but continues to provide the same or more benefit.

You’ve been warned.