Ezra Klein has gone into opposition over the spending bill and the likelihood of deep cuts next spring. He’s right to an extent, that Democrats have spent a lot more time on big bills than the regular annual spending measures (though Republican obstruction of both had a hand in that), and as a result we’re seeing things frozen at prior levels without much flexibility.

So rather than make a decision on what to do, the Senate is just going to extend its previous decision on what to do: Federal agencies will be funded at their current levels through the beginning of March.

This is called a “Continuing Resolution,” and in the words of budget expert Stan Collender, “it’s no way to run a railroad.” It basically means that if there’s something new or different that an agency wants or needs to do, that agency can’t do it. And then, continues Collender, when the agencies perform poorly, “we end up blaming them for not doing all the things we expected them to do.”

This is particularly the case when the most important legislation passed in this Congress require ramp-ups in appropriations and regulatory oversight. The health care bill has to be funded, and with a continuing resolution, that’s not possible. And it’s even worse for the financial reform bill. The SEC and CFTC in particular need to hire a lot more regulators to carry out the promise of Dodd-Frank, but that can’t happen in the short term, and probably not over the long term, either.

…the resolution does not include funding for the implementation of the Dodd-Frank financial reform law. Under the omnibus, the Securities and Exchange Commission would have seen its budget increase to $1.3 billion from $1.1 billion, and the CFTC would have gone from $169 million to $286 million.

Already, the SEC has halted implementation of a variety of measures under the law as it waits for funding. Included in this halt are new regulations for credit rating agencies and an office for financial markets whistleblowers. The Commodity Futures and Trading Commission (which is charged with implementing the derivatives title of the bill) has said that its current funding level “is far less than what is required to properly fulfill our significantly expanded role.” “The implementation of that good and historic law is in jeopardy if the CFTC doesn’t have increased resources,” Bart Chilton, a CFTC commissioner, has said.

I don’t think anyone believes that this situation will somehow be rectified when GOP appropriators work with the Democratic Senate to identify spending levels come March. Spencer Bachus, the incoming chair of the House Financial Services Committee, thinks the role of government is to “serve the banks.” He won’t allow the regulators to actually be funded. In fact, de-funding is actually at the top of his agenda.

Dodd-Frank was more a promise to write a bill than a bill itself. Congress seems determined to deny the resources to the bill writers to get that done. This is part of the danger of a purely regulatory and not a statutory approach.