Budget Process and Rules
Senator David Perdue, the junior senator from Georgia, and Maya MacGuineas, president of the Committee for a Responsible Federal Budget, wrote a commentary that appeared in the Washington Times. It is reposted here.
Our country is swimming in a sea of red ink, with annual deficits projected to rise rapidly from $534 billion this year to more than $1.3 trillion by 2026 while our national debt is slated to increase by nearly $10 trillion over the next decade. The longer we wait to fix this problem, the more likely we are to have a debt crisis. In order to get our debt under control and put America back on a path toward fiscal responsibility, one of the first things we must do is change the budget process.
As part of our Better Budget Process Initiative, the Committee for a Responsible Federal Budget recently hosted a briefing on Capitol Hill called “Fixing the Budget Process.” The event featured remarks from the House Budget Committee Chairman Tom Price (R-GA) and a panel of experts made up of Maya MacGuineas, president of the Committee for a Responsible Federal Budget; Paul Posner, former federal budget managing director at the Government Accountability Office; Dr. Stuart Butler, senior fellow in economic studies at the Brookings Institute; and Dr. Marvin Phaup, public policy & public administration professor at The George Washington University. The event was moderated by Kelsey Snell, a reporter for The Washington Post. It aired live on C-SPAN and can be viewed here.
Chairman Price kicked off the event with an overview of the country’s dire fiscal situation by describing the high and growing debt and slow economic growth. He noted that many of the problems we face are attributed to “extremely weak budget enforcement,” and he stressed the importance of reforming the budget process now instead of waiting for the debt to grow to 86 percent of Gross Domestic Product (GDP) by 2026. In lieu of offering specific suggestions for reform, Chairman Price gave three basic options for policymakers to choose from moving forward: increase taxes, decrease spending, or grow the economy. He also raised questions to frame the debate for budget process reform, inquiring whether Congress should face enforceable consequences for failing to produce a budget by a deadline, whether we ought to have fiscal targets and what they should be, what authority the budget committees should have in shaping and enforcing fiscal policy, what role the executive and the Congressional Budget Office should have in the process, what the budget baseline ought to be (current law, current policy, or zero baseline), how often a budget should be presented, and what should be done with unauthorized programs.
The Fiscal Year (FY) 2017 House budget resolution released yesterday contains ambitious promises of deficit reduction to balance the budget within ten years. To take a step toward achieving those savings, the budget includes two different sets of instructions to committees to achieve deficit reduction. It also includes several budget enforcement or process reforms that attempt to keep lawmakers from worsening the fiscal situation. Here's a rundown of those proposals.
The first part involves instructions to five committees – Agriculture, Energy and Commerce, Financial Services, Judiciary, and Ways and Means – to save at least $30 billion over two years and $140 billion over ten years. This process already began last week with the Energy and Commerce and Ways and Means Committees releasing packages that would get most of the way there themselves. The budget resolution specifically mentions recovering exchange subsidy overpayments, eliminating enhanced Medicaid payments for prisoners, and ending Medicaid eligibility for lottery winners as policies that can be included – and all were already in the two packages.
The second part involves reconciliation instructions to 12 committees to achieve at least $1 billion of savings over ten years. The budget resolution describes these instructions as "a down payment on the deficit reduction necessary to achieve a balanced budget by fiscal year 2026," so this will likely be the biggest avenue to achieving some portion of the savings that the budget promises.
As House Republicans continue to discuss the Fiscal Year (FY) 2017 budget resolution, Rep. Tom McClintock (R-CA) has recommended budget process reforms in exchange for supporting the budget with FY 2017 discretionary spending of $1.070 trillion, as agreed to in the Bipartisan Budget Act of 2015.
It’s the end of the year and like so many organizations, CRFB wanted to share with you our top 10 list: a look back at Congress’s 10 top fiscal achievements of 2015.
The problem is, we couldn’t. Even pooling the creative minds of our entire staff, we could not produce 10 solid Congressional actions that reduced the national debt or deficit, or were a clear step toward a responsible federal budget.
Compiling a list of the year’s 10 greatest fiscal follies was a lot easier, so we are delighted to share that with you now.
Biennial budgeting was the subject of a recent Senate Budget Committee hearing, the second in a series on budget process. Testifying were Senator Johnny Isakson (R-GA), Senator Tom Carper (D-DE), and Representative David Price (D-NC), as well as Mr. William G. Batchelder, the former speaker of the Ohio House of Representatives, and Mr. Robert L. Bixby, the Executive Director of the Concord Coalition.
CRFB generally supports the concept of biennial budgeting, although it is not a substitute for the difficult policy choices that must be made to address the long-term debt. CRFB President Maya MacGuineas has testified on multiple occasions before Congress on the matter. This past spring, she published a letter praising legislation introduced by Rep. Reid Ribble (R-WI) and Rep. Kurt Schrader (D-OR). Rep. Ribble will testify when the House Budget Committee holds a hearing on biennial budgeting on Wednesday.
Recent press reports indicate that the ongoing budget negotiations between Congressional leaders and the White House may lean on the use of the Overseas Contingency Operations (OCO), or war funding, account to boost defense spending. Doing so would allow them to spend above the defense budget caps without offsetting the cost.
As policymakers work toward a plan to offset the cost of sequester relief, they should resist the temptation to make their job easier by relying on the OCO gimmick. We recognize that there is significant pressure to increase defense spending above the caps. Indeed, over 100 House Republicans signed a letter insisting on at least $38 billion above the Fiscal Year (FY) 2016 cap for defense, or $561 billion total.
As Congressional Quarterly reported (paywall) recently, the author of the letter, Rep. Michael Turner (R-OH) said:
“We would be willing to do OCO . . . As long as we get the aggregate amounts of spending, I think we’re comfortable that we will have funded our national security,” Turner said.
The Senate Budget Committee held a hearing this week, the first in a series, on the need to reform the federal budget process. Testifying were Michael Peterson, President and CEO of the Peter G. Peterson Foundation, Douglas Holtz-Eakin, President of the American Action Forum and former Congressional Budget Office (CBO) Director (2003-2005), and Deborah Weinstein, Executive Director for the Coalition on Human Needs.
Chairman Michael Enzi (R-WY), began the hearing pointing out the many problems with our country’s current budget process and how it has failed taxpayers. He highlighted how a well-managed budget process is supposed to strengthen democracy by giving citizens a better idea of government’s role and ensuring that their tax dollars are being spent wisely.
Enzi noted that prior to this year’s balanced budget resolution, the last time one was passed was in 2001. He further explained that once the budget resolution establishes the top spending levels, Congress must pass 12 annual spending bills before the start of each Fiscal Year, but in the past 40 years, the appropriations bills have been done on time in only four years. Enzi noted:
In most years, Congress didn’t even come close to enacting all annual spending bills, in 15 of them, not even one appropriations bill was enacted on time. Instead, there were 173 short-term spending bills (CRs) to prevent government shutdowns, funding the government for an average of 186 days per year, more than half of the year.
Yesterday evening, Treasury Secretary Jack Lew indicated that the extraordinary measures Treasury is using to avoid breaching the debt limit will run out on about November 5, sooner than previously thought.
In the spring, we published a paper through our Better Budget Process Initiative making recommendations to improve the debt limit, and in July the Government Accountability Office released proposals for reform.
The Senate Appropriations Committee earlier this week posted a draft bill that would extend government funding until December 11 and avert a government shutdown. Unfortunately, it also uses the war spending account as a budget gimmick to provide a backdoor increase in defense spending above budget caps. There are no offsets for the additional spending.
The draft did contain language removing funding from Planned Parenthood, which drew a veto threat from the President, but that version did not receive the 60 votes necessary to proceed in the Senate. Press reports indicate that the same continuing resolution (CR) without the section defunding Planned Parenthood will be voted on Monday.
Regardless of the politics on Planned Parenthood, the bill sets regular discretionary levels at the previously-approved levels of $1.017 trillion. It does so by taking the spending levels for Fiscal Year (FY) 2015, which totaled $1.022 trillion after certain one-time savings in the FY 2015 appropriations bills are excluded, and applied a reduction of 0.5 percent (of which about 0.2 percent was an across-the-board reduction and the remaining is from net reductions fromcuts reffered to as "anomalies"). Colloquially, "the sequester" is back in full effect; the sequester refers to the reduced discretionary spending caps mandated after the 2011 "Super Committee" failed to produce savings.