TODAY, The office of the House Democratic Leadership released an Honest Leadership/Open Government Rules Package," identifying ethics, lobbying, and key process reform priorities, as well as rationales for their selection.

In a press conference yesterday, incoming House Speak Nancy Pelosi re-affirmed her commitment to key budget process reforms long-supported by OMB Watch. Among the "First 100 Hours" rules package will be the following reforms:

• EARMARKS: mandatory disclosure of all earmarks and the requirement that members certify that spouses do not directly benefit from the added project
• DEFICIT DISCIPLINE: budget Reconciliations will not be considered if they reduce the budget surplus or increase the deficit
• PAYGO: re-instatement of pay-as-you-go budget rules, requiring that new tax cuts or entitlement spending be offset with corresponding spending cuts

We applaud Pelosi's commitment to this bold and admirable agenda and will hold her to her own high standards, which she enunciated at the press conference:

[N]o new deficit spending ... that will be part of the rules of the House, and we'll also introduce it as a statute, so, hopefully, it will be part of the full budget process.

Here's an interesting article on the mixed blessings of an earmark-free funding year.

Congressional Democrats will strip all pet-project "earmarks" from the 2007 federal budget early next year to help pay for the war in Iraq, says U.S. Sen. Patty Murray, D-Wash.

But that move will have a downside for Clark County, she said Wednesday. Murray's address to the Vancouver Rotary Club delivered a stiff dose of fiscal reality.

The county won't get the $2 million Murray hoped to deliver for the next phase of improvements to the $120 million Salmon Creek-Interstate 5 interchange, an appropriation that would have made the federal government a partner in the project for the first time.

What's more, Murray is framing this as a way to pay for the Iraq war, by which she means the $5.5 billion that the House added to the Defense appropriations bill in September.

Democratic leaders in the 110th Congress will have to find $5.5 billion in cuts to avoid running up the deficit in the current budget cycle, she said. Democrats have settled on a strategy of eliminating funding for special earmarks and adopting a continuing resolution to keep the government going for the next nine months at current spending levels, while focusing on crafting their own budget for 2008.

And finally, Murray says she supports reforming the earmarking process.

Reform of the congressional earmarks process is needed, Murray said. As things stand now, committee chairmen can insert money into the federal budget for their favorite projects at the last minute with no oversight or public notice.

Earmarks "need to be transparent," she said. "They must be done in the full committees with public input."

A story in today's New York Times entitled "Democrats Plan to Take Control of Iraq Spending" raises a number of interesting questions about budgeting war costs.

How can you put such an unpredictable item as war costs into an annual budget? Should war funding requests go to appropriations or a substantive policy review committee such as armed services? What degree of congressional oversight is appropriate for an emergency supplemental spending request?

Reporter Carl Hulse raises one issue, however, that is a complete red-ink-herring:

... adding the war costs to the annual budget could carry risks for Democrats who want to write a spending plan that meets their priorities but eliminates the deficit in five years or so. Adding the war spending at the same time Democrats want to enforce “pay as you go” budget rules would require some of that spending to be made up by reductions elsewhere.

No definition of PAYGO we've ever heard of would apply to even non-emergency discretionary war funding requests.

In an ironic and perplexing development today, the Bush Administration expressed dismay with yesterday's decision by incoming Congressional leaders to extend the FY2007 continuing resolution (CR) through the end of the current fiscal year.

"The announcement from the incoming congressional majority is disappointing," said OMB Director Rob Portman, adding that “should there be a long-term continuing resolution, the administration would want to assure we maintain fiscal discipline and avoid gimmicks and unwarranted emergency spending.”

Almost every spending level in the CR was set by the Bush Administration, when it sent its FY2007 budget proposal to Congress in February. Incoming Congressional leaders said yesterday that they will adhere to the discretionary spending cap of $873 billion for FY2007, set by the Administration.

The CR contains no emergency spending provisions. In fact, the White House is expected to sumbit an Iraq war supplemental in the range of $160 billion early next year, the largest such request ever submitted to Congress.

Incoming Senate Budget Committee chair Kent Conrad (D-ND) announced today that he has selected Brookings Institution economics scholar Peter Orszag to serve as the new director of the Congressional Budget Office, replacing Donald Marron.

Conrad said that he selected Orszag after consulting with incoming House Budget Committee chair John Spratt (D-SC), current Senate Budget Committee chair Judd Gregg (R-NH), and the incoming House Budget Committee ranking member Paul Ryan (R-WI).

Though praised by Gregg and a noted budget hawk, Orszag is not regarded as a conservative economist. Prior to joining Brookings, he served as a lecturer at U. Cal., Berkeley and as the top economic advisor to the Director of the National Economic Council and the senior economist on the Council of Economic Advisers in the Clinton Administration.

He is a vocal opponent of Social Security privatization, testifying in May 2005 that:

The Administration’s proposal to introduce individual accounts within Social Security would substantially increase debt, while failing to reduce the projected Social Security deficit and likely increasing it.

The Iraq Study Group, a bipartisan panel convened to ascertain the Iraq war and recommend courses of action, released its report yesterday. Recommendation 72 of the ISG is that:

Costs for the war in Iraq should be included in the President’s annual budget request, starting in FY 2008: the war is in its fourth year, and the normal budget process should not be circumvented. Funding requests for the war in Iraq should be presented clearly to Congress and the American people. Congress must carry out its constitutional responsibility to review budget requests for the war in Iraq carefully and to conduct oversight.

Almost four years into the conflicts in Iraq and Afghanistan, the president is still making emergency requests for funding. Including the $70 billion "bridge fund" in the FY2007 Defense approps bill, we have spent over $500 billion on the two wars - the vast majority of which is outside the normal budget process. Not only does "emergency" funding circumvent legislated budget caps, but, as the ISG report notes, it results in only a "perfunctory review" of the requested funds.

(via ThinkProgress)

This morning, we witnessed a remarkable moment in American history: a sitting President's policy castigated and condemned in person by members of a highly-respected bipartisan group -- including a former Supreme Court Justice, former Secretaries of State, and former Presidential Chiefs of Staff -- over military policy relating to one of the five or six major wars ever undertaken by this country.

And to think, that group, the Iraq Study Group, was created by a tiny earmark inserted into a war supplemental bill by a rank-and-file Republican member of the House.

As the New York Times put it:

One never knows what some lawmaker will insert into a spending bill without public scrutiny: a remote bridge, or maybe a bike path. Then there is the Iraq Study Group, better known as the Baker-Hamilton commission.

...

Representative Frank R. Wolf, Republican of Virginia, created the commission single-handedly last year when he inserted a $1 million earmark into a supplemental spending bill for the war.

But why did Wolf introduce this as an obscure earmark? “The fact is that there were members of Congress who would have opposed it... Should I have allowed that to stop me from doing what was in the best interest of the country?”

The House Democratic caucus may have gotten our memo.

Following a caucus meeting today, to-be-House Majority Leader Steny Hoyer announced that when President Bush sends up his "emergency" supplementary war funding request (expected arrival: next February; pricetag: as much as $160 billion):

There will be vigorous involvement by our committees [and] very substantial oversight and involvement by the Congress... We believe there has not been accountability, there has not been oversight, there has not been a question of policy in the last six years. To that extent, the Congress has been complicit and complacent. We’re going to change that.

The two guys from Harlem and Wall Street will meet in the Library of Congress next month when incoming House Ways and Means chair Charles Rangel (D-NY) and Treasury Secretary Henry Paulson attend a daylong "bipartisan 'retreat' to find common ground on tax and trade policy."

Accoring to Bloomberg News, Rangel suggested that the Ways and Means Committee might hold similar retreats with Paulson during the 110th Congress "to see whether we could work in some of the good ideas with legislation that could be supported by the administration," on issues such as Social Security, Medicare and Medicaid.

They will need to find a pretty big room in the Library to accommodate a table with so many big-ticket items on it.

But, as he has before, Rangel ruled one item off the table, a rollback of the 2003 Bush dividends and capital gains, saying:

Repealing tax cuts that are locked into place, that people have depended on these tax cuts, invested in these tax cuts, not only is it bad tax policy to repeal it retroactively, but it's dumb politics to do it, especially when it's going to get vetoed. Forget about it.