Once upon a time in Washington, D.C., a compulsive liar was in charge of the local government, the city’s legislature was beyond dysfunctional, and the District had debt as far as the eye could see. Today, a similar situation has returned to Washington, but this time it is the federal government, not the D.C. government, that has lost control over its ability to manage its finances.
In 1995, a Republican-led Congress worked with President Bill Clinton to get the District back on track. They created the District of Columbia Financial Responsibility and Management Assistance Authority — better known as the “Control Board.” The Board arguably saved D.C. from an economic collapse. Could a control board for the federal government do the same for America?
The D.C. Control Board was based on a model that had been successfully used elsewhere to help a number of jurisdictions facing fiscal and economic crisis. In 1978, after Cleveland became the first major city since the Great Depression to default on short-term notes, the Ohio legislature lent to the city to avert bankruptcy and created a state-run system for monitoring local government finances. In 1991, Pennsylvania helped Philadelphia overcome its budget crisis through the Pennsylvania Intergovernmental Cooperation Authority, which exists to this day and has the power to review and approve the city’s five-year financial plans.
In 1995, Congress went even further than these precedents, giving the Control Board broad powers over almost all of the District’s government functions.
For example, the Control Board could overrule decisions made by then-Mayor Marion Barry and the City Council; it could cancel city contracts; and it was given sole authority to borrow money from the U.S. Treasury on the District’s behalf. The Board also created an independent chief financial officer and, to insure integrity, an inspector general. The Control Board remained in existence until 2001 when the District was able to hit stringent fiscal targets — balancing its budget within four years and maintaining zero deficits for another four years.
While the District of Columbia was in a bad way in 1995, the federal government is arguably in far worse shape. Outside of a deficit-busting tax cut, few major pieces of legislation have been enacted, and the big issues of the day — immigration reform, repairing our crumbling infrastructure, reducing poverty, and curtailing the deficit — are ignored. It’s no wonder that congressional job approval is below 20 percent while the president’s continues to hover around 40 percent.
Meanwhile, the fiscal condition of the country continues to worsen. With the federal government nearly $16 trillion in the hole, our leaders in Washington are on course to increase the annual deficit to $1 trillion in the next fiscal year. Under current law, the non-partisan Congressional Budget Office (CBO) projects a debt-to-GDP ratio of over 150 percent by 2048. But assuming that current policies stay in effect (such as the GOP tax law), CBO projects a debt-to-GDP ratio of 210 percent in that year — a level CBO warns is so unprecedentedly high that its models likely understate the economic threat.
Not only have President Trump and the Republican Congress abandoned anything resembling sound fiscal policy, they’re doubling down on their budget-busting agenda with more tax cuts and military spending. And though Democrats have historically been more fiscally responsible, should they take control of the House of Representatives after the November election, they will come under pressure from the left to throw fiscal restraint to the wind and embrace costly new initiatives like Medicare for All and free college.
Over the past decade, U.S. political leaders have proven themselves unwilling or unable to impose the same fiscal discipline on themselves that they demanded of the District government 20 years ago. That’s why we need a control board for the federal government. The problem, of course, is that Congress, left to its own devices, will be loath to delegate its fiscal duties to an independent board of experts.
But U.S. voters could make it happen. By supporting candidates who pledge to support a federal control board, voters could break the political stalemate and restore fiscal responsibility in Washington. What’s needed is a broad, cross-partisan civic mobilization behind the idea of a federal control board.
Like the D.C. Control Board, the Federal Control Board should be independent from congressional and presidential control and have broad authority over spending, taxation, and contracting. To avoid partisan deadlock, it should be comprised of seven members: three Democrats, three Republicans, and one independent chairperson with bipartisan support. A majority of the board should be comprised of former directors, deputy directors, or associate directors of the Office of Management and Budget or the CBO who have the requisite fiscal expertise.
The Board would have five years to cut the deficit in half and put the debt-to-GDP ratio on a long-term downward trajectory and could be disbanded sooner if it meets its targets earlier.
For constitutional reasons, budgets produced by the Board would still require congressional and presidential approval. To ensure timely consideration of the Board’s proposals, the budget and appropriations should be voted on under “fast-track” procedures similar to those used for defense base closing and trade deals. Both the House and the Senate would be required to vote yea or nay 30 days after the Federal Control Board’s budget is submitted, with only a simple majority required to secure passage in each chamber.
Ideally, this process would lead to the Board’s bipartisan recommendations being implemented. But even if the Board’s recommendations were ultimately rejected by policymakers, they would provide a non-partisan roadmap for putting our nation’s fiscal house back in order. America’s economic independence and preeminence, as well as the well-being of its citizens, depend on restoring fiscal responsibility and controlling the growth of our debt. If the new Congress and the president are unwilling or unable to meet their responsibilities to their constituents, they must step aside and allow an independent entity not beholden to special interests to put the nation’s house in fiscal order.
Paul Weinstein Jr. is a senior fellow with the Progressive Policy Institute and Director of the MA in Public Management program at Johns Hopkins University. He was senior adviser to the Simpson-Bowles Fiscal Commission.