NEW YORK (CNNMoney) -- President Obama is likely to propose a substantial funding increase for Wall Street regulators in his forthcoming budget.
But there won't be any cheering in the boardrooms and hallways of the Securities and Exchange Commission and the Commodity Futures Trading Commission.
That's because Congress will probably bypass the president's recommendation and instead set funding for the CFTC and SEC at a much lower level.
The agencies have been caught in an epic struggle over the implementation of the Dodd-Frank Wall Street reform bill, a conflict that has pitted the White House and congressional Democrats against Republican opponents.
Asked by Congress to increase regulation of Wall Street firms and the murky, multi-trillion dollar derivatives market after the financial crisis of 2008, the agencies say they need additional funding to beef up their staffs, technology and expertise.
But House Republicans have consistently voted to deny the SEC and CFTC that funding.
"It is a backdoor way of trying to starve the agency on the line," said Bart Chilton, a Democrat and one of five CFTC commissioners. "The people who don't want to fund us are the same sort of people who voted against Dodd-Frank to begin with."
The blending of political and budgeting priorities has made effective regulation near-impossible, and the bitter fight has become emblematic of a herky-jerky budgeting process that has defined appropriations during the Obama era.
Opponents say the SEC doesn't deserve any additional funding without significant reform, and point to a series of failures, including the Bernie Madoff Ponzi scheme, as evidence. They also say the agency does not pay enough attention to the cost of the regulations and rules it produces.
"Before we even think about giving this agency yet another funding increase, at minimum, the agency will need to show major progress in implementing recommended reforms," Republican Rep. Scott Gar! rett, wh o chairs the subcommittee that oversees the agency, said at a recent hearing.
Politics is also a factor. The Wall Street reform law is one of Obama's signature policy victories, and Republicans have not exactly been coy about their desire to slow down its implementation.
"You have the SEC begging for more money, a lot more money, and only receiving a little more," said Bruce Carton, a former attorney with the SEC's Division of Enforcement who now edits a website called Securities Docket. "This is where they find themselves every year."
There is a lot on the line.
"If the SEC does not receive additional resources, many of the issues highlighted by the financial crisis and which the Dodd-Frank Act seeks to fix will not be adequately addressed," SEC Chairman Mary Schapiro said in a December plea for more funds.
Because the agency's budget is funded by transaction fees levied on the firms it regulates, increasing its budget would come at no cost to taxpayers.
Dodd-Frank, the law the agency is struggling to implement, suggested funding levels for the SEC of $1.3 billion in 2011 and $1.5 billion in 2012. But the agency was actually funded at around $1.1 billion in 2011. In December it received a bump to $1.3 billion for 2012 from Congress.
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Meanwhile, the SEC says trading volume in the securities markets has more than doubled over the past decade, and the agency has just about the same number of "cops on the beat" as it did in 2005, despite "enormous growth in the size and complexity of the securities markets since then."
James Cox, a professor of corporate and securities law at Duke University, said the games being played with the SEC budget amount to a "kind of kabuki dance."
"These are complex enterprises, and you have to pay for experience," Cox said. "It's pretty simple. If you don't pay for much regulation, you don't get much regulation."! ;
The story is much the same at the CFTC, where budgets have increased from $168 million in 2010 to $202 million in 2011. Late last year, the agency's funding for 2012 was finalized at $205 million, far below the Obama administration's request of $308 million.
"This means we won't do things," CFTC chairman Gary Gensler told Congress. "We won't have the people to oversee the market."
The CFTC is working to finish a regulatory framework that will allow it to police the massive over-the-counter derivatives market, which some experts estimate has ballooned to $700 trillion in size.
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"We can put the rules in place," Chilton said. "The question is can we oversee what we've put in place, and the answer to that is emphatically no."
The fight over funding at agencies tasked with regulating financial markets has played out against a backdrop of seemingly endless short-term budget measures called continuing resolutions.
In 2011, lawmakers passed seven continuing resolutions, a tactic that resulted in more than one close call with potential government shutdowns. The debate over funding levels also became entangled with the debt ceiling drama and subsequent super committee disaster.
The budget punt strategy has implications for effective governance. Continuing resolutions generally freeze spending at the prior year's levels. That forces federal agencies into a head snapping game of stop-and-go. Hiring is delayed, work is repeated, and agencies struggle to implement new legislation.
So try as the White House might, Monday's budget release won't mean too much. Ultimately, Congress has the responsibility to appropriate funds for the government to spend.
"The president's budget is one of the loudest policy announcements he can make," said Craig Jennings, a budget expert at the progressive think tank OMB Watch. "But he doesn't always get everything he wants."
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