Three Ideas for Budget Process Reform

Three Ideas for Budget Process Reform

The newly appointed Joint Select Committee on Budget and Appropriations Process Reform has begun examining ideas for making the broken federal budget process work better. The appointment of this committee is a welcome development, even if the odds of something meaningful making it through Congress this year are remote. Highlighting the problems with the current budget process through public hearings and developing some creative ideas for reform would be progress at this point.

Congress inserted the appointment of the joint committee into the Bipartisan Budget Act of 2018 (BBA), which raised the caps on discretionary spending for 2018 and 2019 by a combined $300 billion.

The BBA was a compromise bill, negotiated in bipartisan fashion by leadership in both houses. Consequently, the joint committee was structured to preclude recommendations that would lean toward one party’s point of view. The co-chairs of the committee are Republican Steve Womack, who chairs the House Budget Committee, and Democrat Nita Lowey, who is the ranking member of the House Appropriations Committee. The committee’s other 14 members are split evenly between Republicans and Democrats. Official committee recommendations require the approval of at least five of the eight appointed members from each party. Further, the law stipulates that senators retain the right to filibuster the recommendations of the joint committee, which means no bill will make it through the Senate without the support of at least nine Democratic senators.

The joint committee was put into the BBA because of growing frustration among members from both parties. Last year, neither the House nor the Senate passed a single appropriations bill before the fiscal year began on October 1. In March, nearly six months into the fiscal year, Congressional leaders went behind closed doors and negotiated a single, $1.3 trillion omnibus appropriations bill providing funds for the entire federal government. That bill was then rushed through both chambers in a matter of hours to prevent a government shutdown.

Today’s budget process seems irrelevant to many in Congress. The U.S. has mounting fiscal problems but the current process does not help them consider realistic, politically durable solutions. The Congressional Budget Office (CBO) projects the federal government will run a cumulative budget deficit of $12.4 trillion over the next 10 years. The deficit is expected to exceed $1 trillion annually starting in 2020 and never decline below that threshold again.

Bad as these 10-year projections are, it is really the long-run budget outlook that should concern political leaders. As the population ages and health-care expenditures continue to grow faster than the economy, federal spending on entitlement programs will soar and push deficits and debt to levels that will not be sustainable. Last year, CBO projected the federal government’s total debt would reach 150 percent of GDP in 2047. A new forecast, expected later this year, will show debt piling up at an even faster rate due to the recently enacted tax reform plan and the higher spending from the omnibus appropriations bill.

It will not be easy for the joint committee to settle on reforms that would make a difference and can attract bipartisan support. Republicans want changes that make it harder to increase spending, while Democrats believe the basic problem is insufficient revenue. The parties’ differing perspectives lead them to emphasize different approaches to reforming the budget process.

Still, it might be possible for the joint committee to advance reforms that both parties can support if the proposed changes are seen as not tipping the scales toward a particular outcome.

Here are three ideas that the committee should consider. They would all improve the current process and are all compatible with various perspectives on the budget.

1. Allow the budget resolution to set statutory caps on appropriated spending. The purpose of the congressional budget resolution should be modified to allow it to establish or amend statutory caps on discretionary appropriations. Caps on appropriated spending are an accepted part of federal budgeting; they have been in place nearly continuously since the 1990 budget agreement. But the enactment of these caps is not part of the standard process. Instead, they are enacted on an ad hoc basis, and often without a full and open debate in Congress. The congressional budget resolution establishes procedural limits on appropriated spending, but they are not in statute and are enforced only through points of order in the House and Senate. Further, because the budget resolution is not signed into law, the president is not bound by it.

Putting statutory caps into the budget resolution would make it a much more serious legislative vehicle than it is today. It would become the means for establishing a real budget for appropriated accounts. Investing this authority in the budget resolution would also bring the executive branch into budget negotiations with Congress earlier in the year, which might help prevent the kind of end-of-year train wrecks that now regularly occur. A bipartisan group of budget experts recently recommended a similar reform, which demonstrates its potential for broad support.

2. Scale back the time devoted to passing annual appropriations bills. The current process calls for the House and Senate to pass 12 separate appropriations bills every year. This never happens, in part because passing these bills through each chamber is time consuming. It’s not a good use of time, either. The legislative language providing funds for many appropriated accounts does not change substantially from year to year.

Congress should reduce the number bills that are expected to pass each year as much as possible (six to eight bills seems more reasonable). Further, Congress should pass adjustments to the prior year’s appropriations language each year. This would reduce the length of appropriations bills and make it easier for the public to identify the changes Congress is considering. Reducing the amount of time Congress devotes to routine appropriations matters should free up House and Senate members to spend more time examining entitlement spending, which now constitutes about two-thirds of the entire federal budget.

3. Build a long-term focus into the budget process. The most important change needed in the current process is a reorientation toward the long-term. In 2016, a bipartisan group of budget experts made a series of recommendations on such a reorientation that deserve consideration by the joint committee.

The starting point should be an effective measure of the size of the problem. For instance, one approach would be to assess the present value of projected revenue and spending over the coming three decades. The budget process should then be amended to allow consideration of tax and spending changes to close this gap on an expedited basis. Creating an effective measure of the size of the problem may help focus public attention on the challenge, thus also making it more difficult for Congress to ignore it or make it worse.

The U.S. has a large and growing fiscal problem, and the current process is not helping political leaders address it. Too much time is spent on trivial matters, while no one seems to notice that the government is piling up trillions of dollars in liabilities. The problem is too big to fix all at once, but the joint committee presents an opportunity to begin making progress. Congress should seize it.

James C. Capretta is a RealClearPolicy Contributor and a resident fellow at the American Enterprise Institute.

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