Budget Process Reform

 

Former House Budget Committee Chairman Tom Price has been a vocal critic of the current budget process—calling it “cumbersome, frustrating and ineffective”. He is not wrong, either; in fact, Congress has not passed all appropriation bills before the start of the new fiscal year since 1994. Has the process become so complicated that Congress has abandoned it completely in favor of its own de facto system?

 

The Congressional Budget and Impoundment Control Act of 1974 (or the ’74 Budget Act) set the precedent for the current budget process in the U.S. The ’74 Budget Act not only established the procedures for Congress to pass a budget, it also created the Congressional Budget office—the nonpartisan agency that provides economic and budget information to Congress—and weakened the presidential power of impoundment. However, the 1974 Budget Act has been modified a few times throughout the years, most notably in 1985, 1990 and 1997, complicating the process even further.

 

The Gramm-Rudman-Hollings Balanced Budget Act in 1985 aimed to control the growing federal budget deficit, which at the time was the largest it had ever been in the history of the country. It created a budget sequester, which is an automatic, across-the-board budget cut that is triggered if spending levels exceed those laid out in the budget. It was altered even further with the Budget Enforcement Act of 1990, which set a cap on how much appropriated spending there could be as well as a pay as you go procedure for various entitlements and taxes. The Balanced Budget Act of 1997 was a process used to balance the federal budget by 2002, though some changes were made to it in 1999 and 2000.

 

More recently, the Budget Control Act of 2011 was passed to raise the debt ceiling and cut spending in order to reduce the deficit and the Bipartisan Budget Act of 2013 raised the sequestration caps and made various cuts throughout the budget.

 

Former Chairman Price is not alone when he says we need a complete rewrite of Congressional budget practices. Patrick Louis Knudsen, a visiting fellow at the Heritage Foundation, and James Capretta, a resident fellow at the American Enterprise Institute, have both laid out their own recommendations for reform.

 

Price and other scholars have suggested a smorgasbord of reforms that could help fix the broken budget process and encourage Congress to halt their egregious spending habits. For instance, they include:

 

Combining Authorizations vs. Appropriations

Doing so could decrease the number of steps necessary throughout the entire budget process and potentially make it easier to finish in time. Under the status quo, short-term continuing resolutions and omnibuses are drafted behind closed doors with leadership usually making the final call right before the deadline. Opening up the debate for all lawmakers enables scrutiny to all levels of various spending.

 

Taking on Baseline Bias

Currently, spending occurs along a baseline, meaning it is expected to increase every year and holding it steady is considered a cut. An option is to change the Congressional Budget Office (CBO) and Office of Management and Budget (OMB) baselines several ways, including eliminating automatic extensions of expiring programs or taking away the assumption that mandatory programs will increase every year. Removing these kinds of assumptions could make it easier to reform programs.

 

Ending Budget Gimmicks

Currently, congressional committees are able to use accounting tricks, such as one-time savings from asset sales or timing shifts, to offset increases in spending. These gimmicks do not result in true savings, and eliminating their use could result in more serious consideration of priorities.

 

Fixing the Debt Limit

There are many options for fixing the US debt limit process, but everyone can agree there is a serious problem. The debate over the debt limit occurs when the money has already been spent, making the arguments a losing fight for fiscal conservatives. The enforcement of the debt limit should be changed in the model of other countries that have experimented with spending limits to much greater success.

 

Taking on Unauthorized Programs

Congress needs to establish a procedure to deal with programs that are continuing past their authorizations. One way would be to reduce discretionary spending by the amount of unauthorized appropriations. This sets the expectation that unauthorized programs, or those with expired authorizations, will not continue to receive funding on autopilot and could force Congress to carefully examine which programs are necessary and where cuts can be made.

 

Congress Must Act Fast

Many political leaders and scholars share the desire for reform and have outlined countless budget modifications that are effective and attainable. These solutions, such as the ones listed above, have the potential to turn things around for Congress’s broken budgeting. Encouraging politicians to have fiscal responsibility will not be easy, but implementing serious reforms would be a terrific first step in the right direction.