While a Federal Gas Tax suspension for the summer and an end to AMT may have gotten more attention, Senator John McCain announced that he would halt the growth of discretionary spending for one year while the government performs a "prompt and thorough review" of the budgets of all Federal Agencies except the Department of Defense and the Department of Veterans Affairs.

These budget politics could play havoc with discretionary spending. If Congress is unable to pass agency budgets for FY09, we would likely go the route of either an omnibus bill as in FY08 or continuing resolutions. We should note that the FY08 Omnibus increased Federal spending by 8.1%, while continuing resolutions keep spending at the prior year's level.

This proposal, along with President Bush's announcement that he will be submitting only a current services baseline for FY10, increases the pressure on the current Congress to pass FY09 budget legislation this year if they want to have an impact on budgetary priorities in the near future. If McCain is elected, he could put his plan into effect by vetoing appropriations bills, which would have the same effect of the pause unless overridden. In any case, absent action from Congress, the hastily passed FY08 Omnibus Budget could be the beacon for spending for several years to come.