Congress got far less fanfare than it deserved last week when it adopted the fiscal 2010 budget resolution. Not only was the budget resolution put in place surprisingly early in the year but, as opposed to its recent predecessors, it was adopted by very large margins in both chambers. Regardless of whether you like or dislike the policies that the budget resolution assumed, it was a triumph for Congress and the Obama administration, and the event deserved far more attention than it received.
But something else was also left unsaid last week. As hard as it is to believe given that the administration is only a little more than 100 days old, the adoption of the budget resolution may well have been the end of an era as far as the Obama White Houses fiscal policy is concerned. If the administrations projections are correct and what the president has been promising is to be believed, then increasing red ink may now be a thing of the past; reducing the deficit will soon be the new thing in Washington, D.C.
Think of it as the fiscal equivalent of a new age in Washington. On New Years Day 2010, deficit reduction could appear on the lists of whats in that year. Depending on your age, you could be calling deficit reduction hip, cool, da bomb, awesome or sick. And instead of being something promised in the future, it could be happening right then.
At least thats what weve been told to expect. The presidents fiscal 2010 budget indicated that, as soon as the economy is recovering, the stimulative fiscal policy that the administration has been pursuing to deal with the downturn will stop and deficit reduction will become the new primary objective.
Many, perhaps even most, forecasters are now projecting that the economy will start to grow around the beginning of the third quarter of this year that is, about three months from now. Because unemployment and certain other indicators will reflect this change only slowly, elected officials will need more than just a few months to be convinced that the growth is real and for budget politics to change to the point where deficit reduction is acceptable.
But if it is real, the economic recovery will be an accepted fact by the end of December. That will allow, or perhaps force, the White House to submit a fiscal 2011 budget to Congress early next year that embodies the deficit reduction effort that the president is promising. That budget is supposed to be submitted to Congress by Feb. 8, 2010. In other words, the new age of deficit reduction could begin only nine months or less from now.