What I’m hearing is that no one really knows what the next step is for Congressional Democrats to close the door on the FY08 spending bills. The “split-the-difference” omnibus is on the trash heap. Appropriations Committee Chairman Obey is floating a plan to meet President’s funding level by removing earmarks and cutting funding for various programs – without any Iraq or emergency funding. My sources say the Cardinals (Appropriations subcommittee chairs don’t even know what the plan is). This afternoon, Sen. McConnell floated a proposal to meet the President’s funding level plus $70B of Iraq funding. The Democrats may counter with a small bump but nobody seems to have much appetite for taking up Rep. Obey’s plan on cutting the earmarks. At the very least they are going to have to extend the continuing resolution (which expires Friday). It is hard to see them pulling off a vote this week, but the earliest I would imagine would be Friday.

By our rough estimate there are 9,500 earmarks worth $9.5 billion remaining in these 11 bills. Some would be easy to strip, some are more programmatic (where the earmark just slices up an existing funding pie), but clearly earmarks need to be on the Congressional chopping block. Preserving the earmarks while cutting the rest of the budget would tell taxpayers where Congress truly puts their priorities, on parochial pet projects.

It’s very unclear where this is exactly going to end up.

But it is clear how we got here. It is not about endgame maneuvering between Congressional Democrats, House Republicans and the White House. No, the seeds were sown back in July when the Senate passed only one of their spending bills. Senate Majority Leader Reid should have known that is was a recipe for budget disaster, because the last head chef, former Senate Majority Leader Frist followed the same recipe last year – passing only one bill in July, in fact the same bill, DHS. This was a strategic blunder, spending time on anything but funding the government.

In the end the Senate only passed 7 of the 12 spending bills and Congress only sent two to the President’s desk. It is hard to argue the problem was White House intransigence when they signed one bill that was sent to them and vetoed the other. In fact you have to go back to the battle of 1995 to find a similar failure to deliver enacted spending bills, and at least then they passed the bills, they were vetoed. There have been several years where only two were enacted (like last year) and then an omnibus.

In back room negotiations, Congressional leadership has been trying to craft a home run spending plan – making everybody equally happy and unhappy at the same time. But just like in baseball, when you swing to hard for the fences you often end up striking out. Instead Congress needs to put the spending ball in play. Don’t just stand there – legislate – and let the chips fall where they may. Then everybody is on the record, and negotiations can start.

We’ll let you know what we know when we know it…