Hearings of the
House Committee on Rules
H.R. 853, The Comprehensive Budget Process Reform Act of 1999
MR. CHAIRMAN, MEMBERS OF THE RULES COMMITTEE, I APPRECIATE THE OPPORTUNITY TO APPEAR BEFORE YOU TODAY TO DISCUSS POTENTIAL IMPROVEMENTS TO THE FEDERAL BUDGET PROCESS. HR 853 IS COMPREHENSIVE LEGISLATION THAT I AM STRONGLY SUPPORTIVE, NOT ONLY FOR ITS TITLE ON BUDGETING FOR EMERGENCIES -- SOMETHING I HAVE BEEN VERY INVOLVED IN SINCE I CAME TO CONGRESS (AND ACTUALLY WHEN I WAS GOVERNOR AS WELL), BUT FOR ITS OTHER PROVISIONS AS WELL. I FIRMLY BELIEVE THAT OUR ABILITY TO MAINTAIN A BUDGET SURPLUS, PROVIDE TAX RELIEF, RESTORE THE SOCIAL SECURITY TRUST FUND AND REDUCE THE OVERALL SIZE AND SCOPE OF THE FEDERAL GOVERNMENT IS DIRECTLY LINKED TO A CREDIBLE AND RESPONSIBLE BUDGET AND APPROPRIATIONS PROCESS.
I APPLAUD THE RULES COMMITTEE AND ITS MEMBERS, CHAIRMAN KASICH, THE BUDGET COMMITTEE, REPRESENTATIVES NUSSLE AND CARDIN AND ALL THEIR STAFFS FOR UNDERTAKING THIS SERIOUS ASSESSMENT OF OUR BUDGET PROCESS, AND FOR THEIR PERSEVERANCE IN BRINGING FORTH THIS LEGISLATION.
THE CONGRESS NEEDS TO TAKE A VARIETY OF STEPS TO IMPROVE HOW OUR GOVERNMENT SPENDS THE PEOPLE'S MONEY. A STRENGTHENED BUDGET PROCESS WILL NOT ELIMINATE WASTEFUL SPENDING BY ITSELF, BUT I BELIEVE IT CAN MAKE A SIGNIFICANT CONTRIBUTION TO THIS EFFORT, AND HELP RESTORE OUR CONSTITUENTS' FAITH IN HOW WE MANAGE THEIR TAX DOLLARS.
IN THIS REGARD, HR 853 DIRECTLY ADDRESSES BUDGETING WITH THE FORCE OF LAW, SOMETHING I BELIEVE THIS CONGRESS SHOULD SERIOUSLY CONSIDER. THROUGH AMENDING THE BUDGET ACT TO REQUIRE THE PRESIDENT TO SIGN OUR ANNUAL BUDGET RESOLUTIONS AND AGREE TO OVERALL SPENDING LIMITS EARLY IN THE BUDGET PROCESS, THE CONGRESS CAN INVOLVE THE PRESIDENT, GIVE OUR BUDGET THE FORCE OF LAW, AND PROVIDE US WITH A MORE REALISTIC LEGISLATIVE SCENARIO, ALL OF WHICH CAN TRULY HELP AVOID LAST MINUTE BUDGET STANDOFFS, VETOED BILLS, AND THE NEED FOR CONTINUING RESOLUTIONS. AS WE ALL KNOW FROM PAST EXPERIENCE, ALL THIS IS HIGHLY DESIRABLE.
IN MY VIEW, WE SHOULD ALSO STRONGLY CONSIDER PASSING LEGISLATION THAT IS CONTAINED IN HR 853 WHICH WOULD CREATE A TWO-YEAR BUDGET AND APPROPRIATIONS CYCLE. MOVING TO SUCH A SYSTEM CAN HELP AVOID ELECTION-YEAR SPENDING BATTLES. A TWO-YEAR CYCLE WOULD ENHANCE CONGRESS’ PROPER BUT OFTEN-NEGLECTED OVERSIGHT ROLE IN HOW MONEY IS ACTUALLY SPENT, AS WELL AS ALLOW MORE TIME TO FOCUS ON OTHER IMPORTANT LEGISLATION. THIS IDEA WOULD ALSO ENABLE THE FEDERAL AGENCIES TO PLAN BETTER AND SPEND MORE TIME ACTUALLY SERVING PEOPLE, RATHER THAN WORRYING ABOUT WHAT THEIR FUNDING LEVEL WILL BE FOR THE NEXT YEAR. THOUGH THERE ARE PITFALLS TO SUCH AN APPROACH, I BELIEVE IT DESERVES SERIOUS CONSIDERATION AND GENUINE DEBATE.
THERE ARE OTHER IMPORTANT PROVISIONS IN HR 853 THAT ARE DESERVED OF ACTION BY US. BUT LET ME MOVE TO AN IMPORTANT TITLE OF THE LEGISLATION, AND THAT IS THE TITLE ON BUDGETING FOR EMERGENCIES.
MR. CHAIRMAN, I WAS GOING TO RECOUNT HOW I HAVE BEEN WORKING ON BUDGETING FOR EMERGENCIES FOR A LONG TIME, AND THAT AS FAR BACK AS AUGUST, 1994, I APPEARED BEFORE THE GOVERNMENT OPERATIONS COMMITTEE TO ARGUE THAT WE MUST CHANGE OUR BUDGET RULES TO REQUIRE CONGRESS TO INCLUDE EMERGENCY SPENDING IN THE ANNUAL BUDGET PROCESS, PARTICULARLY OUR ANNUAL SPENDING LIMITS. AS YOU MAY RECALL, IN 1994 THE HOUSE PASSED LEGISLATION TO PREVENT NON-EMERGENCY SPENDING FROM BEING ADDED TO EMERGENCY SPENDING BILLS. WHILE THAT PROPOSAL WAS A START, IT DID NOT FULLY ADDRESS THE PROBLEM OF HOW CONGRESS APPROPRIATES MONEY FOR DISASTERS AND OTHER EMERGENCIES.
IN FACT, WHILE WE SIT HERE TODAY, EFFORTS CONTINUE IN BOTH CHAMBERS TO DECLARE BILLIONS OF DOLLARS AS “EMERGENCY SPENDING” WHEN THOSE FUNDS CAN FIT NO DEFINITION OF WHAT A TRUE EMERGENCY REALLY IS. A STRONG ASPECT OF THIS LEGISLATION IS THAT, FOR THE FIRST TIME, IT WOULD REQUIRE BY LAW THAT THE CONGRESS FORWARD EMERGENCY SPENDING ONLY WHEN IT FITS A STRICT DEFINITION OF WHAT AN “EMERGENCY” IS. THIS IS A VERY IMPORTANT ASPECT -- THE “TEETH” OF THIS TITLE.
MY SOLUTION, A SOLUTION CONTAINED IN HR 853, WOULD REQUIRE CONGRESS TO BUDGET HONESTLY FOR EMERGENCIES BY SETTING ASIDE FUNDS IN A BUDGET RESERVE ACCOUNT, OR RAINY DAY FUND.
AS YOU KNOW, UNDER CURRENT BUDGET LAW, EMERGENCY SPENDING IS NOT SUBJECT TO THE ANNUAL SPENDING LIMITS. THIS IS A CRITICAL SHORTCOMING IN OUR SYSTEM. IT PERMITS US TO AVOID PLANNING FOR EARTHQUAKES, HURRICANES, FLOODS AND OTHER DISASTERS. WE KNOW THAT THEY WILL ALMOST CERTAINLY OCCUR, YET WE FAIL TO PLAN FOR THEM. WHEN THEY HAVE HAPPENED, CONGRESS HAS EITHER DECLARED AN EMERGENCY AND APPROPRIATED BILLIONS OF DOLLARS TO RESPOND TO THE DISASTER ADDING TO THE DEFICIT, OR ENGAGED IN A NECESSARY, BUT DIVISIVE AND DEBILITATING DEBATE OVER CUTS IN OTHER PROGRAMS TO OFFSET THE NEEDED EMERGENCY SPENDING.
FROM A BUDGETING STANDPOINT, THE WORST PART OF THE CURRENT SYSTEM IS THAT THE CONGRESS IS NOT REQUIRED TO OFFSET EMERGENCY SPENDING BY OTHER SPENDING REDUCTIONS. WHILE THIS REPUBLICAN-LED CONGRESS HAS AT LEAST ATTEMPTED TO IDENTIFY TRUE OFFSETS, A FUTURE CONGRESS COULD STRICTLY PRACTICE ADDING EMERGENCY APPROPRIATIONS TO THE DEBT ON A REGULAR BASIS -- SOMETHING WE ARE DANGEROUSLY CLOSE TO DOING NOW.
AS WE HAVE SEEN ALL TOO RECENTLY, WHEN CONGRESS DOES CONSIDER OFFSETTING THE COST OF EMERGENCY SPENDING, THIS DEBATE OFTEN BECOMES OVERLY DIVISIVE, CAN ACTUALLY SLOW PROMPT ACTION TO HELP THE VICTIMS OF THE NATURAL DISASTER, AND REDUCES THE PUBLIC’S VIEWS OF HOW EFFECTIVE THE CONGRESS CAN BE, SOMETHING THIS INSTITUTION CAN ILL-AFFORD. THIS IS AN UNFAIR, UNNECESSARY, BUT ANTICIPATED AND AVOIDABLE CONFLICT.
ANOTHER PROBLEM WE HAVE SEEN IN THIS CONGRESS AND OTHERS IS THAT BECAUSE EMERGENCY APPROPRIATIONS ARE NOT SUBJECT TO ANNUAL SPENDING LIMITS, IT HAS ENCOURAGED THE ADDITION OF FUNDS FOR NON-EMERGENCY PROJECTS WHICH ARE CLEARLY NOT PART OF THE EMERGENCY AT HAND. AND USING EMERGENCY SUPPLEMENTAL APPROPRIATIONS TO AVOID BUDGET CAPS SET BY LAW MAKE IT MORE DIFFICULT TO DEFINE TRUE EMERGENCIES, WEAKENING OUR ABILITY TO CONTROL BOTH THE AMOUNT OF SPENDING AND WHAT IT IS SPENT ON.
MR. CHAIRMAN, WE CANNOT PREDICT THE EXACT TIME AND NATURE OF A DISASTER, BUT IT IS QUITE PROBABLE THAT THEY WILL OCCUR. CONGRESS SHOULD MAKE AN ATTEMPT TO ANTICIPATE, PLAN AND PAY FOR THESE EMERGENCIES -- WITHIN EXISTING BUDGET LIMITS.
MY PROPOSAL, H.R. HR 537, WOULD CREATE A BUDGET RESERVE ACCOUNT INTO WHICH CONGRESS WOULD ANNUALLY APPROPRIATE FUNDS FOR EMERGENCIES. THE FUNDS IN THE RESERVE ACCOUNT WOULD BE INCLUDED IN THE ANNUAL DISCRETIONARY SPENDING CAPS SET BY THE BUDGET RESOLUTION AND ADMINISTERED BY THE APPROPRIATIONS COMMITTEE. THE FUNDS IN THE RESERVE ACCOUNT COULD HAVE THE EFFECT OF LOWERING THE AMOUNT OF FUNDS AVAILABLE FOR OTHER PROGRAMS, BUT THE BUDGET COMMITTEE HAS CHANGED THIS PROVISION SOMEWHAT TO FULLY ENGAGE THE APPROPRIATIONS COMMITTEE AND THE BUDGET COMMITTEE IN A RESPONSIBLE, FAIR WAY. THIS IS A KEY POINT AND IS THE ONLY RESPONSIBLE APPROACH TO SPENDING.
THE TEETH IN THIS PROPOSAL IS THAT IT WOULD ELIMINATE CONGRESS'S AUTHORITY TO SPEND MONEY OUTSIDE THE BUDGET LIMITS, AND IN FACT, IN THE CASE OF HR 853, ELIMINATE THE EMERGENCY SPENDING DESIGNATION ALTOGETHER IN THE BUDGET ACT. THE PRACTICAL EFFECT OF THIS WOULD TRULY BRING BETTER BUDGETING TO THE CONGRESS.
WHAT IS AN ADEQUATE AMOUNT IN ANTICIPATING OUR EMERGENCY SPENDING NEEDS? I THINK CONGRESS AND THE PRESIDENT SHOULD TAKE A CAREFUL LOOK AT THE AMOUNT OF EMERGENCY FUNDS NEEDED IN PREVIOUS YEARS AND BASE THE RESERVE ACCOUNT ON THIS EXPERIENCE. FOR EXAMPLE, THE AVERAGE COST OF EMERGENCY APPROPRIATIONS BILLS FROM 1991 TO 1997 WAS ABOUT $5.2 BILLION. IF CONGRESS SET ASIDE ROUGHLY THAT AMOUNT IT WOULD GIVE OUR GOVERNMENT ENOUGH FUNDS TO HANDLE MOST DISASTERS AND PROVIDE PROTECTION AGAINST UNNECESSARY DEFICIT SPENDING, OR SPENDING THAT COULD DEPLETE THE SOCIAL SECURITY TRUST FUND.
IN MY LEGISLATION, IF WE ARE FORTUNATE ENOUGH TO ESCAPE HURRICANES OR FLOODS IN A PARTICULAR YEAR AND THE RESERVE FUNDS ARE NOT USED, THEY WOULD REVERT TO THE TREASURY AND THEREFORE LOWER THE DEFICIT.
MEMBERS OF THE RULES COMMITTEE, I HAVE BASED THIS LEGISLATION ON MY OWN PRACTICAL EXPERIENCE AS GOVERNOR OF DELAWARE. MOST STATES MUST OPERATE WITH A BALANCED BUDGET. THIS IS TRUE IN DELAWARE. WHEN THE STATE HAS A SURPLUS AT THE END OF ANY FISCAL YEAR, THESE FUNDS ARE PLACED IN A BUDGET RESERVE ACCOUNT WHICH IS NOT TO EXCEED 5% OF THE ESTIMATED STATE REVENUES. WHEN THERE IS AN EMERGENCY THE GENERAL ASSEMBLY CAN ALLOCATE THE RESERVE FUNDS BY A THREE-FIFTHS VOTE. I BELIEVE THE FEDERAL GOVERNMENT HAS THE SAME OBLIGATION TO ADOPT THIS CONCEPT.
IN DELAWARE, THE RESERVE FUNDS ARE ROLLED-OVER FROM YEAR TO YEAR. I DID NOT ADOPT THAT FEATURE BECAUSE IN THE FEDERAL BUDGET AN ANNUAL APPROPRIATION IS STANDARD PRACTICE, AND FRANKLY, BECAUSE ON THE FEDERAL LEVEL ACCOUNTS WITH MONEY IN THEM FROM YEAR TO YEAR TEND TO BE SPENT.
I BELIEVE MY PROPOSAL IS A SOUND ONE, BUT I WILL NOT INSIST THAT IT IS THE ONLY APPROACH WHICH SHOULD BE CONSIDERED. I AM QUITE OPEN TO MODIFYING MY CONCEPT WITH YOUR HELP TO IMPROVE IT AND MAKE IT MORE ACHIEVABLE. THE BUDGET COMMITTEE HAS DONE JUST THAT AND I COMMEND IT, ITS MEMBERS AND ITS STAFF.
THE CRITICAL CHANGE WHICH MUST BE MADE IS TO BRING EMERGENCY SPENDING WITHIN THE BUDGET LIMITS. IT IS NOT "FREE" MONEY AND SHOULD BE ACCOUNTED FOR JUST LIKE ANY OTHER EXPENDITURE. I URGE THIS COMMITTEE TO REPORT FAVORABLY THIS IMPORTANT OMNIBUS BUDGET PROCESS REFORM LEGISLATION THAT HAS TRULY EVOLVED INTO SOMETHING THAT CONTAINS ELEMENTS WE ALL CAN SUPPORT.
THANK YOU; I’D BE HAPPY TO ENTERTAIN ANY QUESTIONS OR COMMENTS YOU MAY HAVE.
