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One Reform that Would Change Everything
By U.S. Rep. Christopher Cox
Chairman, House Policy Committee
For almost a quarter-century, as federal spending has increased 606%, the budget process has grown commensurately convoluted to shield this growing spending from public control. Our current system for determining how much the government spends is of labyrinthine complexity, unparalleled either in our own history or in the practice of other Western countries. Over time, it has grown so far out of control that even efforts at reform, like the Gramm-Rudman-Hollings legislation and the 1990 Budget Enforcement Act, have simply accumulated over the original 1974 Budget Act in alluvial fashion, making budget decisions even more impenetrable.
To say the budget process is complex is in fact understatement. In truth, its very complexity and unworkability has permitted Congress and the President repeatedly to circumvent it with extralegal, ad-hoc arrangements like the 1990 Andrews Air Force Base Summit and the equally tortuous negotiations in 1995, 1996, and 1997.
As a result, the way Washington now confects the almost $2 trillion annual budget of the federal government represents the worst of all possible worlds. Ostensibly it is controlled by transparent procedures set out in 54 pages of statutory small print. Actually spending is accomplished with no known rules in chaotic, secretive, unaccountable conclaves whose composition varies not just from year to year but from meeting to meeting. Even the question of which among Washington’s spending brokers will get to decide is never answerable in advance. For example, by the end of this year’s budget negotiations the chairmen of both the House Ways and Means Committee and the Senate Finance Committee were excluded from the meetings where the parameters of the Fiscal Year 1998 tax bill were determined.
The Problem
The 1974 Budget Act’s complexity is only a symptom of its deeper conceptual flaws. Section 2 of the Budget Act says that one of its key purposes is "to establish national budget priorities." Yet our current budget begins with a multi-volume enumeration of every program and activity of the federal government, described at the lowest possible level of generality. A budget should enforce the priorities it sets. But budgets under the 1974 Act are not binding laws but concurrent resolutions, which are non-binding and unenforceable. A budget should be adopted early, in time to control overall priorities. But only once in the history of the 1974 Budget Act has Congress met the April 15 deadline for completion of the budget resolution.
Indeed, virtually every requirement of the current budget process is malleable: In the 103rd Congress, two out of every three rules adopted by the House simply waived the Budget Act in its entirety. Small wonder that since 1980, Congress has overspent its own budgets by an estimated $300 billion.
The Source of the Problem
The 1974 Budget Act was written by the most liberal Congress in our history and forced upon an executive branch already gravely weakened by Watergate. It is not just because the Watergate Congress was committed to higher levels of spending that more than 90% of our $5 trillion debt has been incurred since 1974. Their revolutionary budget process guaranteed runaway spending by embracing and expanding the now-familiar system of autopilot budgeting known as "mandatory" spending – one-time legislation that expands federal spending in perpetuity, without any further action or review by Congress. By the latest count, there are now 260 such programs, accounting for two-thirds of all government spending.
Even for the remaining one-third of the budget that Congress and the President purport to decide each year, the 1974 Budget Act employs the perverse device known as "baseline budgeting" – a deceptive form of accounting in which spending increases are called cuts. Even under a Republican Congress, baseline budgeting still holds sway. It projects current policies into the future as ifthey were mandated, so that even attempts to control their growth are derailed. In these and a myriad of other ways, the Watergate Congress institutionalized a permanent bias in the budget process toward ever-higher spending levels.
The Solution
For years, it has been increasingly obvious that the 1974 Budget Act should be abandoned, replaced with a more sensible and straightforward approach. Beginning in the mid-1980's, when I served on President Reagan’s budget process reform task force as a member of the White House staff, I have studied ways to improve the budget process. Nearly a decade ago, I introduced the Budget Process Reform Act in Congress along with 100 co-sponsors, to thoroughly overhaul our broken-down budget making system. Today, the legislation that I have worked on for five Congresses has more than 200 cosponsors.
The Budget Process Reform Act deploys a battery of devices to promote rational allocation of taxpayer resources. To start with, it requires that Congress budget first, and spend second. Under the Act, Congress could not spend – or even consider spending bills in committee – without first passing a budget. Second, the Act simplifies the budget by reducing it to one page – barely 20 numbers that set overall constraints. Instead of hyper-detailed epic-length budgets that reach all the individual program accounts, focusing first on overall parameters promotes rational decision-making and facilitates agreement among political opponents. Third, the budget would be a law, not a concurrent resolution. It will therefore bind both Congress and the President. And since a budget law will be subject to the President’s signature or veto, it will invite the President into the budget process at the takeoff — making it far more likely that he will be there for the landing, and diminishing the potential for end-of-session deadlocks. Finally, it requires a two-thirds vote to break the budget law that a majority has approved — a highly effective means of guaranteeing that a budget means business.
Recent experience, as well as past occasions of budget brinksmanship such as the 1986 government shutdown, show the wisdom and necessity of providing a sustaining mechanism for federal operations that would be triggered in the event Congress and the President fail to enact either an overall budget or any individual spending bill. Rather than shutting down the federal government because of political deadlock, the Budget Process Reform Act provides for spending to be held to the level of the previous fiscal year – enough discipline to promote agreement, but not so much as to compel capitulation.
Conclusion
The American people have lived through two decades of runaway federal spending, and there is no end in sight. The recently enacted budget compromise promises balance in the future only through projected higher tax receipts – but even now, taxes as a share of the economy are at the highest level since World War II. In order to get a grip on ever-growing spending, it is time to confront the underlying process that makes it inevitable. It is time to stop addressing today’s and tomorrow’s problems using yesterday’s tools.
Now more than ever, in an era when there is bipartisan agreement that government should be streamlined, it is time for an effective, rational budget process that will permit us to achieve this result. The Budget Process Reform Act provides it.
More Information:
What Others Say About Budget Process Reform
Hope for Budget Sanity, Investor's Business Daily
Fixing the Budget Mess, By Chairman Cox
How to Fix the Budget Process, The Washington Times
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