Hearings of the
House Committee on Rules
H.R. 853, The Comprehensive Budget Process Reform Act of 1999
Chairman Dreier, Congressman Moakley, I am pleased to have the opportunity to appear before you this morning to testify on the reform of the congressional budget process.
It is certainly time for a review of the process by which we in Congress, as well as the executive branch, make budget decisions. It has been a quarter century since the creation of the congressional budget process, including the Budget Committees, the Congressional Budget Office, and the existence of a budget resolution.
We began this process in the House more than one year ago when Chairman Kasich created the Task Force on the Budget Process. I am particularly encouraged by the bipartisan approach which marked the establishment and deliberations of the task force. While we have strong partisan differences regarding the substance of budget policy, I believe we must seek to keep the budget process free of partisan biases. There is nothing inherently Democratic or Republican, liberal or conservative about supporting a budget process that improves accountability and gives the American people an accurate and clear picture of the federal budget. Six months of hearings on a wide range of issues was followed by bipartisan consultations and discussion. As a result of those efforts, Congressman Nussle and I introduced the Comprehensive Budget Process Reform Act, H.R. 835.
The bill Rep. Nussle and I introduced proposes a number of important reforms. I would like to highlight a few of them for you.
We stand at an interesting time in the evolution of the congressional budget process. On one hand, our fiscal outlook is stronger than it has been in decades. When we contemplate the prospect of trillions of dollars of budget surpluses over the coming years, on the heels of the largest deficits in our country's history, there is reason for satisfaction over the direction of fiscal policy.
On the other hand, we have seen troubling failures of the congressional budget process. In the past few years we have had government shutdowns, gridlock between the executive and legislative branches, and the breakdown of the process in Congress. These events demand a careful review to determine how we can make it work more efficiently.
The legislation we have introduced offers protections against future recurrences of the problems that have arisen under the existing system. One such reform is that we propose that the concurrent resolution on the budget be transformed into a joint resolution, requiring the signature of the President.
This change would bring the President into the budget process earlier in the year. Under the current system, after submitting a budget proposal in February, the president withdraws from the process. He does not fully engage until the final negotiations on budget reconciliation legislation and the appropriations bills in the days leading up to the start of the new fiscal year. The result, as we have seen too often, is the reality or the threat of government shutdown.
This proposal would require Congress and the President to resolve their differences much earlier in the legislative year, thereby helping to avoid crisis as the end of the fiscal year approaches. The potential advantage of this approach is again in evidence in the current budget cycle. Congress has adopted a budget resolution by narrow partisan margins. The policies envisioned in the budget cannot be achieved without the President’s signature on the appropriations bills or the tax and mandatory spending changes. By bringing the President into the process earlier, we would avoid last-minute deals that frequently meet with the strong disapproval of the American people.
Another potential advantage is that by making the budget resolution a joint resolution, which has the force of law, we could also deal with any required increases or extensions of the debt ceiling in the budget resolution. Extensions of the debt ceiling are direct consequences of the fiscal policies adopted in the budget resolution. Common sense dictates that we should, in passing a budget resolution, recognize the consequences that flow from it.
An additional provision of this legislation that is designed to guard against the uncertainty and instability of future government shutdowns would provide for an automatic continuing resolution. This proposal addresses the situation in which any of the annual appropriations bills has not been enacted by the start of the fiscal year. It provides that in that circumstance, the agencies covered by the appropriation will receive the same level of funding they received in the previous year, until such time as the regular appropriation bill is enacted.
It is important to point out that this provision does not prejudice the deliberations of the Congress. An automatic CR provision can only work if it is neutral in effect. That is, it should not be a tool that either increases or reduces spending for the affected agencies.
In addition to these broad changes in the budget process, the bill also addresses a number of more discreet issues. We propose an overhaul of the process by which we fund emergencies. For too long, the federal response to emergencies has been funded almost entirely through supplemental appropriations. We should bring basic planning principles to bear on this area of federal spending.
We will always have occasions that will demand supplemental appropriations to respond to natural disasters and other emergencies. But we can do a much better job of including emergency funding in the regular budgetary process. We propose to do that by using a rolling five year average of emergency spending. Importantly, this change would not affect the current caps.
In addition, we provide, for the first time, a definition of emergency. We have all been troubled by the inclusion of non-emergency items in emergency supplemental bills. As recently as last week, we passed an ‘emergency’ spending measure that included funding for many priorities which would not satisfy the criteria established for emergencies. By defining the term, we can help limit the types of spending that can be included in these bills.
I would like to call special attention to one of the more far-reaching and innovative proposals in our bill. As you know, the federal government, unlike virtually every other large organization in this country, reports all its outlays and receipts on a cash basis. While this approach accurately portrays some aspects of the budget, it also creates significant inefficiencies and distortions in the policy decisions we make.
Our bill proposes the application of accrual accounting principles to certain federal insurance programs. It simply makes no sense for us to continue to ignore the long-term budget consequences of our actions. When we issue a flood insurance policy, we have a reasonable expectation of the costs that will ultimately be imposed on the treasury. We should enter that liability on our books then, recognizing that the premiums paid on the policy are obligated for the purpose of paying future claims, rather than providing a source of easy money for making that year’s bottom line look good.
There are several other important budget reform provisions in the bill which address the sensitive issues of enforcement and accountability. They are the result of extended give-and-take, and I look forward to further discussions as we consider this legislation.
The fundamental process by which we budget has benefitted by the expanded capacity and involvement of the Congress. The legislation Rep. Nussle and I have introduced will further improve coordination between the legislative and executive branches. It will help reduce the threat that a breakdown in the budget process leads to a shutdown of the government. It will improve the management and accountability of federal resources.
I appreciate the opportunity to appear before you today, and I would welcome any questions you might have.
