Budget For 2012 Will Be Much More Difficult Than the Budget for 2011

As the clocked ticked towards midnight last night and the country held its breath, the Republicans and Democrats reached a compromise agreement at the final possible moment on funding the federal government for the remainder of fiscal year 2011. Had they failed, vast elements of the federal government would have closed their doors, hundreds of thousands of federal employees would not have been able to collect their paychecks, and the lives of millions of people would have been disrupted.

Some might say that this agreement is evidence that the two political parties have not entirely lost their willingness to compromise on critical issues, and that what we saw last night should therefore give us a glimmer of hope. Perhaps so. But a pessimist might take the opposite view. After all, if it is this difficult for them to come to an agreement on whether to cut $40 billion rather than $36 billion (either of which would amount to only about 3% of the budget deficit for fiscal year 2011), how much more difficult is it going to be for them to tackle the budget for fiscal year 2012?

If this is the amount of political rancor caused by the possibility of cutting funds for National Public Radio, how much political rancor is going to be caused by the possibility of cutting funds for Medicare, Medicaid, Social Security, and the military? There was no suggestion by either side of substantial changes to current tax policy during the shutdown standoff; how much more bitter would the debates have been had changes to tax policy been put on the table?

The big budget battles are yet to come, and the episode we have just gotten through has been merely a preview of the main attraction. Everybody better hold on to their hats.