Budget Process and Rules
Kent Conrad, a former Democratic senator from North Dakota, and Judd Gregg, a former Republican senator from New Hampshire, are both former chairmen of the Senate Budget Committee. They recently co-wrote an op-ed featured in Roll Call. It is reposted here.
Since ratification of the constitutional authority given to Congress to tax and spend in 1788, our government has struggled to manage the federal budget. After numerous failed budget concepts and commissions, the Budget Act was finally enacted in 1974 to establish the modern-day budget process. Almost exactly 40 years since the Budget Act was signed into law, there is growing consensus among policymakers and budget observers that the system no longer functions as intended.
As former chairmen of the Senate Budget Committee, we have personally witnessed the transformation away from a functioning regular order and toward an ad hoc approach to fiscal policy. Congress adopted an annual budget resolution, approved by both chambers, each fiscal year from 1976 through 1998. Since then, however, there have been eight fiscal years in which Congress has not approved a budget resolution. Government shutdowns, fiscal cliffs, temporary fixes and retroactive policy changes — all without serious consideration of our nation’s fiscal health — have become the new budgetary world order. Even when budget rules are in place, lawmakers evade them with gimmicks, emergency designations and waivers that result in the costs being added to our debt.
One of the core functions of Congress is to review and allocate discretionary spending each year through 12 appropriations bills. If not done by the beginning of the fiscal year on Oct. 1, then either the government shuts down or operates on a continuing resolution. As the Committee for a Responsible Federal Budget points out in a new paper detailing the problems with the current process, the average length and breadth of continuing resolutions has increased in recent years. These temporary funding extensions, along with shut downs, postpone important funding decisions and hamper the efficiency across the federal government.
We also know too well that even when budgets are produced on time, they are often political documents that lawmakers never expect to implement or enforce. Consideration of budget resolutions on the floor of the United States Senate in particular often devolves into late-night “vote-o-rama” sessions where hundreds of political messaging amendments geared to inspire campaign commercials are filed, while there is little debate on the ways to address the long-term drivers of our debt such as the need for tax reform and entitlement reform. In fact, we found the constraints of the budget process and the lack of political will to address the debt so stifling that we worked together to author legislation to create a special commission, later known as the Fiscal Commission or Simpson-Bowles, to bypass some of these process challenges.
Yesterday, the Commmittee for a Responsible Federal Budget released a paper detailing the problems with the federal budget process. In light of the 40th anniversary of the enactment of the Congressional Budget and Impoundment Control Act of 1974 this past Saturday, the paper details many problems facing the current budget process.
The paper focuses on three main issues -- each with many aspects to them -- with the modern budget process: lack of transparency, lack of accountability, and lack of a long-term focus. These issues have resulted in poor planning and policy around the debt, with the process increasingly becoming ad hoc, ineffective, and short-sighted in practice.
Continuing our series of transportation-focused blogs, this blog discusses the budgetary treatment of the Highway Trust Fund (HTF). While most of the attention regarding the HTF has focused on proposals to address the impending exhaustion of the HTF, the need to reauthorize highway programs by the end of September presents an opportunity to reform the budgetary treatment of spending from the HTF to provide greater transparency in highway spending.
One of the wonkier fiscal debates that arises from time to time concerns the accounting method used to measure the size of the budget deficit. This week, the U.S. Government Accountability Office (GAO) published an online primer that explains the different ways to measure the deficit and what these measures say about the government’s fiscal health.
The International Monetary Fund recently published a study on budget institutions in G-20 countries. The study takes stock of these countries' progress in reforming their budget institutions and examines whether having strong budget institutions has helped countries tackle their budget challenges in the aftermath of the financial crisis. While it is difficult to measure the impact of institutional arrangements on budgetary outcomes, the IMF's verdict is that they do matter.
Credit programs involving loans and loan guarantees are accounted for differently than most other programs in the federal budget. Whereas other programs record outlays and revenue as cash goes out and comes in, the cost of credit programs are calculated by recording the lifetime cost of the loan/guarantee in the year it is originated. However, a new report from the Congressional Budget Office (CBO) raises questions as to whether we are measuring these programs appropriately.
Congressman Jim Renacci (R-OH) introduced the The Federal Financial Statement Transparency Act of 2014 today. This legislation would make major changes to the composition and structure of the Federal Accounting Standards Advisory Board (FASAB), which recommends the standards used in the federal government's financial statements.
Appropriations season is in full swing. The House has already passed the Legislative Branch and Military Construction-Veterans Affairs bills, while the Senate Appropriations Commitee is scheduled to officially set 302(b) allocations and mark up the Military Construction-VA and Agriculture bills this Thursday.
Congressman Reid Ribble (R-WI) and Congressman Mark Pocan (D-WI) introduced the Long-Term Studies of Comprehensive Outcomes and Returns for the Economy Act, or Long-Term SCORE Act, today.
In a new and informative series on Reforming the Budget, the Brookings Institution looked at challenges facing the budget process and proposed strategies to improve its shortfalls. Given the frequent breakdown and tardiness in the process and the limitations of federal budget data, there are a number of ways to improve budget process and accounting in order to facilitate better decision making.