Democrats and the White House are at odds over what amount of temporary funding the Securities and Exchange Commission should get in the next few months, until Congress and the president can decide on a final budget for fiscal 2003.
The fight reflects a more fundamental difference between the two sides that has persisted since the summer over what the final budget for the SEC should be at a time when the agency's resources have been stretched thin by corporate scandals.
Democrats, led by Senate Banking Committee Chairman Paul S. Sarbanes (D-Md.), want the agency's final budget to be $776 million in fiscal 2003, a 77 percent increase from the agency's $438 million 2002 budget. The White House wants it to be $568 million, a 30 percent increase.
Now Sarbanes and the White House are arguing over the temporary funding level.
The 2003 fiscal year began Oct. 1, but Democrats and Republicans failed to reach a budget agreement. So Congress passed a continuing resolution to temporarily fund the federal government at 2002 levels while lawmakers and the White House try to work out their differences.
Though lawmakers have said they hope to hammer out a final package before leaving for their Christmas break, the continuing resolution could continue to determine the funding level well into 2003.
If that happens, Sarbanes and SEC officials say, the agency's temporary funding should be increased well beyond 2002 levels.
SEC spokesman Brian Gross said the agency isn't pushing for more than the $568 million that SEC Chairman Harvey L. Pitt told the White House in July that he needed, although the agency would accept more. Gross said the SEC can operate at 2002 budget levels for a few months, including meeting deadlines to create a new oversight board for the accounting industry and have it up and running by April. "It will all get done, but it will stretch our resources," he said.
Sarbanes wrote a letter Friday to Bush expressing doubt that the SEC can do its job for even a few weeks at last year's funding level. "This situation creates very urgent problems for the SEC," Sarbanes wrote.
Congress authorized an SEC budget of $776 million in the Sarbanes-Oxley Act, which it passed and President Bush signed this summer to tighten oversight of the accounting industry and corporate governance policies. But Congress has yet to appropriate those funds.
White House spokeswoman Claire Buchan said yesterday that there is nothing contradictory about Bush signing a corporate reform package with an authorized budget that is far higher than what the president thinks the agency should get.
She said that continuing resolutions are not the place to change budgets and that if Congress wants to resolve the SEC funding dispute, it should pass a final 2003 budget.
The General Accounting Office, the research arm of Congress, said in March that over the past decade the SEC's ability to fulfill its mission has become increasingly strained "because its workload substantially outpaced the increases in SEC's staff." And that was well before the recent spate of corporate scandals.
In the past 10 years the agency's regulatory workload has increased between 60 and 264 percent, depending on the department, while its staffing has grown between 9 and 166 percent, the report says. The staff that investigates complaints increased 16 percent, for example, while complaints rose 100 percent, the report says.
In January, Bush asked Congress for $467 million to fund the SEC in fiscal 2003. That's essentially the same amount as provided in the previous year but with an extra $29 million to cover unavoidable costs, such as a rent increase. In the summer, in a speech in New York to try to reassure investors, Bush announced that he was asking for an additional $100 million for fiscal 2003.