Budget Process Reforms in the Ryan Budget

The FY 2013 House Republican budget resolution, which has now been passed by the Budget Committee 19-18, contains a number of sweeping changes to the federal budget. And budget process is no exception. Congressman Ryan's budget seeks to bring in a number of changes from existing House Republican legislation (some of which we summarized here).

Many changes would affect the way that the baseline is calculated or how legislation is scored. The budget endorses fair-value accounting for all federal credit programs, explicitly brings the GSEs on-budget, and eliminates the inflation adjustments that CBO generally assumes in its discretionary spending baseline. Also, it would require CBO to provide an alternate baseline that assumes the extension of current policies (which they just started doing this year), and it would require CBO to provide an alternate estimate for major legislation to incorporate dynamic scoring (the macroeconomic effects of legislation). 

The budget also contains a lot of changes that would create hard caps on spending. It would create a new FY 2013 cap and reflect the sequester in future caps. It would cap total spending and "major categories" of mandatory spending at the levels in this budget resolution, extending the usual caps that would apply to discretionary spending only. In addition, it would seem to extend these caps over the long-term, although it isn't clear. Other actions to make the budget process more long-term-oriented would allow for the reconciliation process to be used beyond the ten-year window for savings in Social Security, Medicare, and Medicaid; create a point of order against any legislation that increases direct spending beyond ten years; and require that budget resolutions include long-term numbers.

The focus on long-term spending control in the budget is a positive step, but lawmakers also need to apply the same kind of limits and oversight on tax expenditures -- the spending in the tax code. The House budget would seek to limit them as part of broader tax reform efforts, but the details still need to be filled in.