Hearing of the
Subcommittee on Legislative and Budget Process
on Biennial Budgeting
Robert L. Bixby,
Executive Director, The Concord Coalition
Question #1
You dismiss the claim that biennial budgeting would lead to runaway supplemental spending. Your written testimony suggests three ways to keep the supplemental process from deteriorating, including the suggestion to avoid “rosy” economic assumptions. Are there certain actions you envision as necessary to avoid such assumptions? Would you propose any specific changes to the methodologies used to make economic assumptions?
Answer
The danger of runaway supplemental spending is one that will always be present, with or without biennial budgeting. But I do not want to leave the impression that I “dismiss” the danger that biennial budgeting would lead to runaway supplemental spending. In my prepared testimony I noted that, “A key element of any transition to biennial budgeting would … be establishing a way to ensure, or at least protect, against the danger of 'death-by-supplementals.'”
An important safeguard in any Budget Resolution (one-year or two-year) is to use realistic assumptions about discretionary spending and cautious economic projections. Underestimating likely expenses and overestimating likely revenues is certain to exacerbate the effect of economic and technical changes that can be expected over the budget cycle.
Unfortunately, there is no mechanism to assure that “rosy” economic assumptions will be avoided. Congress is free to use whatever assumptions it wants. Choosing these assumptions is a judgment call that should not be constrained by a budget process rule. However, it would be possible to guard against optimistic projections by building in a specific margin for error, or “reserve fund.” Another mitigating device would be the creation of an emergency reserve fund, set at the long-term average spending level for the kinds of emergencies that meet the criteria of: necessary, sudden, urgent, unforeseen, and temporary.
I do not propose any specific changes to the methodologies used to make economic assumptions. Generally speaking, the Congressional Budget Office uses conservative assumptions. This cautious practice should be continued. But because budget projections are always uncertain ¾ as this year's revised estimates have demonstrated ¾ Congress should always be careful not to commit the entire sum of any projected surplus, even over a period as short as a two-year budget cycle. This precaution is more a matter of how projections are used than how they are made.
Question #2
Some appropriators argue that Congress' best oversight mechanism is the appropriations process, although the system was set up as a two-step system, involving authorization first (to establish, continue and modify federal programs), and then appropriation. The rules of the process require an agency or program to have a current authorization in order to receive appropriations for that year, although each year Congress finds ways to circumvent the rules, leading to millions of dollars in unauthorized appropriations. From your perspective, are there some short or long-term problems with the failure of Congress to reauthorize certain agencies and programs while still continuing to appropriate dollars for them?
Answer
There is no reason to spend taxpayer dollars on any program that is no longer necessary, and there is no reason to keep funding programs at current levels if such programs are failing to achieve their purpose. Without proper oversight, there is a current and ongoing danger that some programs, which should be curtailed or eliminated, will be funded at a level beyond what is justified.
The need to prepare for the enormous retirement and health care costs of a much older population gives Congress both a short-term and long-term reason to engage in diligent oversight of every federal program. In the short-term, Congress has adopted the fiscally responsible and bipartisan goal of balancing the budget without using the surplus generated by Social Security. This short-term goal helps prepare for the long-term by increasing debt reduction and hence national savings. While it may have seemed like an easy goal to achieve with the enormous surplus projections of recent years, the new budget estimates, and the effect of the tax cut enacted earlier this year, demonstrate the need for strict fiscal discipline if this on-budget surplus goal is to be maintained.
Moreover, even if the debt reduction made possible by the Social Security surplus actually occurs, the budget in the future will be squeezed by the need to devote an increasing share of resources to mandatory programs such as Medicare, Medicaid, and Social Security. Given the budgetary pressures this demographic transformation will bring, it is important to ensure that all federal programs be scrutinized carefully for need and efficiency. Allowing agencies and programs to be routinely funded without reauthorization is inimical to this goal.
It should be noted, however, that unauthorized appropriations are not necessarily problematic from a fiscal responsibility perspective on a short-term basis. The Appropriations Committee has a demonstrated ability to perform oversight when necessary. Because they hold the power over the purse, they have had an institutional power respected, and on some level feared, by executive agencies more than any other Congressional entity. They also bolster congressional power vis-à-vis the executive branch by maintaining institutional memory through a large membership, a large proportion of senior congressmen, and an experienced professional staff. These characteristics allow the Appropriations committee to perform oversight when authorization committees have been unable to do so-a situation that is increasingly common in today's Congress.
Furthermore, Appropriations Committee members are in the position to make programmatic spending decisions within the context of a broad view of government spending-as they have a hand in all discretionary spending decisions. Authorization committees do not have the same breath of economic focus, and thus may be more likely to authorize higher levels of spending on any single issue. Appropriations Committee members have often prided themselves on being “guardians” of the federal treasury because of this context. So, on any specific issue, in any given year, an unauthorized appropriation is not something to be fiscally concerned with.
However, over the long haul, unauthorized appropriations and the continued reliance on the Appropriations Committee for oversight, leads to a change in the character of the appropriations process, resulting in some of the problems seen recently in the congressional environment.
The need for unauthorized appropriations has placed contentious political issues on Appropriation's table, and forced the committee to re-visit those same contentious issues on a yearly basis. Such battles slow progress on legislation and have worn on appropriators. The problem for them is the constant pressure to move quickly in an attempt to avoid a congressional budget endgame where they loose the ability to control individual bills and spending decisions, as omnibus measures and institutional bargaining take over. This is one reason why some appropriators, who on the face of things appear to loose power through a switch to biennial budgeting, are on record as being supportive of the change.
If the authorization process is revitalized and those decisions are made dependably and regularly, as biennial budgeting could do, appropriators will be able to get back to their traditional minimally partisan decisions focused more on economic efficiency and efficacy than macro-political battles. Maintaining and reinforcing appropriator control of spending bills through the entire process, and avoiding recent budget-battle endgames, provides a better environment for fiscal responsibility.
