Hearings of the
Committee on Rules
"Biennial Budgeting: A Tool for Improving Government Fiscal Management and Oversight"
Submitted Questions and Answers
Robert L. Bixby
Executive Director of the Concord Coalition
1. Could you explain your point of view with regard to the statement in your testimony that, in an era of surplus, reconciliation bills are no longer necessary? Reconciliation is a process designed to bring about changes in entitlement and revenue policies – changes that might not occur under the regular order, especially in the Senate. Your testimony appears to argue that without a deficit there would be no reason to want to seek to make such changes in law. Please elaborate on why do you believe that, in times of surplus, we should not be considering revenue changes that might include tax relief for the American people?
In my prepared testimony, I noted that, "with budget deficits at least temporarily erased, there is no longer the need for an annual reconciliation bill, or for a Congressional Budget Resolution requiring it." (emphasis added).
The fact that we have projected surpluses, or that we may move to a biennial budget cycle, does not mean there would be no further need for reconciliation bills. Presumably, Congress would still use reconciliation as a vehicle for tax and entitlement changes. But any such changes as may be deemed appropriate could easily be handled through reconciliation bills enacted in the first year of the two-year cycle. Indeed, frequent changes to the tax code and in entitlement programs can be destabilizing and confusing both to the public and to the agencies charged with administering them.
Moreover, it should be noted that there is a significant difference between an era of projected escalating deficits and projected escalating surpluses. In the former situation, there is a critical need for action to prevent a fiscal meltdown. Annual reconciliation bills provide the opportunity to take such action. In the later situation, there is not the same need for immediate action. Unlike deficits, projected surpluses are consistent with the new bipartisan consensus to truly wall-off the Social Security surplus, and to pay down the publicly held debt. Even with the longest economic expansion in our nation's history the budget in fiscal year 1999 was in surplus, excluding Social Security, by just $704 million. Future surpluses are contingent upon continued strong economic growth, slow growth in health care costs, and fiscal discipline ¾ none of which is guaranteed. In Concord's view, a biennial budget cycle, including reconciliation bills, would provide ample opportunity to address needed changes in permanent law, while limiting the temptation to dissipate the surplus.
2. You discuss the likelihood that, under a biennial process, there would be a need for a mid-session "corrections" bill. How likely do you feel it to be that procedural constraints could be enacted and enforced to keep the biennial process from degrading back into a defacto annual cycle?
The benefits of biennial budgeting would be lost if the process were allowed to fall back into a defacto annual cycle with 13 supplemental bills, or a like amount, replacing today's 13 regular appropriations bills. But there is no reason to assume that this will happen. Under the current annual cycle the Administration and Congress routinely handle supplemental bills to deal with unforeseen emergencies, and in some cases, to reorder priorities. These bills can be contentious, but they do not require anywhere near the time it takes for full consideration of 13 annual appropriations bills. Thus, if the mid-session corrections bill is treated more as a supplemental bill and not as a reopening of the basic budgetary framework agreed to in the first year of the session, it should be possible to prevent falling back into a defacto annual cycle.
Of course, no one can guarantee that this will not happen. But the possibility of failure should never deter innovation. Obviously, any process reform, indeed any new idea, might not work. In this case, the question of success or failure largely depends upon the good faith effort of the people in the congressional and executive branches who will have to make it work. I am confident that if Congress chooses to adopt biennial budgeting it will not turn around and squander the benefits of this change by allowing the supplemental process to get out of control.
In addition to good faith efforts, other process reforms might help make biennial budgeting work. One is the idea of converting the Budget Resolution from a Concurrent Resolution, which does not require the President's signature, to a Joint Resolution, which does. Bringing the President into the process at an earlier point, as would occur with a Joint Resolution, would help ensure that the framework established in the first year would hold up over the second year, with only minor adjustments.
Another process reform that might help is setting aside a realistic amount for legitimate emergencies, particularly natural disasters. One major problem has been that not enough is appropriated through the conventional appropriations process to finance adequately the disaster relief programs. Scarcely a year goes by without a devastating fire, flood, drought, earthquake, tornado, or hurricane somewhere in the nation. About the only things that are predictable about such disasters is that they will occur, and that Americans will willingly provide assistance to the devastated victims. Over time, the cost of responding to these tragedies is also roughly predictable. Although we never know what disaster or emergency lies ahead, it's safe to assume that there will be one. Yet, year after year, insufficient funds are appropriated through the basic 13 appropriations bills to finance even an average level of disaster spending. Instead, minimal amounts are appropriated for FEMA and the other disaster relief accounts, and the rest of discretionary funding is used up for other purposes. Then when disaster strikes, it's too late to say, "we should have kept some funds in reserve," or, "we should have originally provided more disaster funding." By then, spending limits have already been reached, and the only way to provide disaster relief is through emergency spending.
A third factor that would help prevent supplemental bills from getting out of control would be the establishment of realistic discretionary spending caps. Much of the recent explosion in dubious emergency spending, and other budgetary gimmicks, stems from having discretionary spending caps set at an unrealistically low level. Tough, but realistic spending caps would help ensure that second year "corrections" bills do not necessitate whole new budgets.
3. Some have suggested possibly including a sunset provision for biennial budgeting. How long do you think it would take before we could assess whether a biennial process is working? What would be the criteria you would use to judge its success or failure? Do you have any thoughts on another suggestion that has been made that we should consider implementing biennial budgeting on a pilot basis just for certain segments of the budget?
The Concord Coalition would prefer that biennial budgeting be adopted on a permanent basis for the entire budget. Doing otherwise would signal a lack of commitment to the concept, resulting in confusion, and potentially, reluctance to fully comply with the new procedures. As noted above, good faith cooperation will be required to make the biennial budgeting work. It can be anticipated that there will be implementation problems in first one or two cycles. If those opposed to the new system know there is a clock running, their temptation may be to run out the clock rather than figure out how to make the new system work. But, in any event, it is clear that Congress can always undo any process reform that turns out to be untenable. So, even without a sunset provision biennial budgeting would only survive if those who must abide by it find it to be an improvement over the current system.
It is difficult to say how long it will take to assess whether biennial budgeting is working. At a minimum, I would allow three biennial cycles to make a fair test. The first cycle, almost by definition, will be experimental. Allowing two more cycles to work out the bugs and to see whether two-year agreements can hold up through a couple of election cycles will be important measures of success.
There are probably no objective criteria to use in judging whether biennial budgeting works. But much of the desire for biennial budgeting comes from a sense that Congress has insufficient time for long-range planning and government oversight. Thus, one measure of success would be whether biennial budget actually frees up time for such activities, and whether Congress actually takes advantage of this time to engage in more effective planning and oversight. Other measures of success would be the extent to which budgetary gridlock is alleviated, particularly in the second year of the cycle, and whether the level of unauthorized appropriations comes down. It would also be important to receive feedback from the executive branch and the General Accounting Office on whether biennial budgeting results in better program management.
Requiring separate cycles for different parts of the budget would be counterproductive. One of the perceived benefits of biennial budgeting is that it would help streamline the budget process. Putting the budget on two different cycles may well result in added confusion. If so, this would not be a fair test of biennial budgeting, which might be blamed for the added confusion. Such a pilot test might also provide the opportunity for new gimmicks, such as shifting funds between annual and biennial cycles. It would be best to set the same rules for the entire budget.
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