Congress continues to wrestle with a number of high-profile budget and financial bills that will have broad impact on citizens throughout the United States and around the world, including legislation on war funding, economic stimulus, housing, and the last budget of the Bush presidency. Despite significant congressional rhetoric and media coverage of these efforts, Congress has made little real progress on reaching compromise or instituting policies. As contrasting election-year pressures will intensify heading into the summer — pushing Congress to enact more proposals but also making it harder to do — it's likely there will be additional rhetoric emerging from Washington, but little real progress. Below is a summary of the latest action (or lack thereof) on these efforts.

War Supplemental Package Remains Unfinished
Congress has been deliberating on a war supplemental package for most of 2008 and may finally put forward a bill late in the week of April 28. While specific elements of the bill are still the subject of rumor, the consistent message emanating from House Democratic leadership has been that the bill will likely be composed of the remainder of President Bush's FY 2008 request, which is now $108 billion; his full $70 billion request for an FY 2009 "bridge" fund that would partially cover FY 2009 war expenses; and some additional domestic spending measures.

By giving Bush enough war spending authority to obviate additional requests for the remainder of his term, Congress hopes to secure adequate leverage to attach several domestic spending initiatives that would likely by vetoed should they pass in a standalone bill. Such domestic spending may include funding for an unemployment insurance extension, a Food Stamp benefit increase, a child nutrition program enhancement, infrastructure repairs, and wildfire fighting efforts. However, Democratic lawmakers have stopped short of designating such items as "economic stimulus."

Second Stimulus Waiting on War Supplemental
Although House Majority Leader Steny Hoyer (D-MD) notes that "there may very well be matters in the [war supplemental] that have a stimulative effect," House Democratic leadership is "thinking more in terms of you have a supplemental, but you also have a separate stimulus." Following the release of March's sour jobs data, House Speaker Nancy Pelosi (D-CA) reiterated the need for an additional round of economic stimulus legislation, with the White House quickly responding that the effects of the first economic stimulus package have yet to kick in (the Treasury Department began sending tax rebates to direct deposit accounts on April 28 and will soon begin mailing rebate checks to those without direct deposit).

Although items that many outside organizations and experts consider stimulative may appear in the war supplemental bill as items of additional discretionary spending, Democrats appear to still believe an additional proposal will be necessary outside of that legislation. The contents of a second stimulus bill would likely include whatever items do not make it into the final version of the war supplemental. In particular, extended unemployment insurance benefits, Food Stamp spending increases, and infrastructure repair projects are sure to be included in at least one of the bills, if not both.

Housing: House and Senate Moving in Opposite Directions
On April 23 and 24, the House Financial Services Committee began marking up the Housing Stabilization and Homeownership Retention Act (H.R. 5830), a plan by Committee Chair Barney Frank (D-MA) to provide $300 billion in federal loan guarantees in an effort to stem the growing national tide of foreclosures. Frank says he plans to conclude the mark-up by May 1, with the hope of moving the bill to the House floor by Memorial Day. The House Ways and Means Committee adopted a companion piece to the Frank bill on April 9 that consists of $11 billion in tax cuts, all targeted at the housing sector and fully offset.

Meanwhile, the House Judiciary Committee is slated to consider changes to the 2005 bankruptcy law on April 30. The bankruptcy law made it more difficult for consumers and homeowners to file for Chapter 7 bankruptcy and is viewed by many groups — including the Center for Responsible Lending, the Consumer Federation of America, and the National Consumer Law Center — as contributing to the steep increases in foreclosures, now occurring at a rate of 20,000 a week, according to The New York Times.

The House action is the next step after the Senate adopted the Foreclosure Prevention Act earlier in April, a package mainly made up of tax cuts, as well as modest counseling and financial assistance for homeowners. The bill is aimed more at easing the housing credit crunch by restoring liquidity to the sector than at addressing foreclosures like the House proposal does. This bill provides $11 billion in tax cuts and credits, though they are less targeted to the housing sector and homeowners at risk of foreclosure than in the House proposal. In addition, the Senate did not include offsets in its bill, choosing to deficit-finance the tax cuts. While the Senate version is sharply different from Frank's efforts, Sen. Christopher Dodd (D-CT), chair of the Banking, Housing and Urban Affairs Committee, says he will resurrect an earlier proposal that is similar to Frank's and re-introduce it shortly in the Senate. This vastly increases the chances for a conference on housing crisis legislation.

Related resources: "Senate Housing Legislation Highly Disappointing: Three-Fifths Of Cost Of Senate Bill Goes For Tax Cuts That Will Do Little Or Nothing To Address The Foreclosure Crisis"

Budget Resolution: Despite Glimmer of Hope, Final Resolution Still a Long Shot
It has been six weeks since the House and Senate adopted $3 trillion budget resolutions for Fiscal Year 2009 by close votes of 212-207 and 51-44, respectively. In the time since then, House and Senate conferees have been unable to bridge the gaps between the chambers' versions. If a resolution is not jointly adopted by the two houses, or "deemed" adopted by the houses separately, appropriators will not have any discretionary spending caps or allocations to guide them in crafting annual spending bills.

The conferees' main impediments to compromise on a resolution are the $3.5 billion difference in discretionary spending and whether to offset the cost of a one-year patch to the Alternative Minimum Tax (AMT). The House version mandates offsets while the Senate version does not.

A glimmer of hope appeared during the week of April 21, when the Blue Dog caucus of Democratic fiscal hawks announced they might be willing to relent on their insistence that the $70 billion AMT patch be paid for. On April 24, a leading Blue Dog, Rep. Allen Boyd (D-FL), indicated (subscription) the coalition was willing to look at other strategies to pay for the patch than forcing it to be spelled out in the budget resolution. If this concession is formally agreed to by the caucus over the next couple of weeks, there may be reason to expect passage of an FY 09 budget resolution. If not, the appropriations process will likely proceed as soon as Congress wraps up the war supplemental bill. If this happens, it will be the second time in the last three years Congress has operated without a budget blueprint.

Related Resources: FY 09 Budget Resource Documents