Hearing of the Committee on Rules
"Biennial Budgeting: A Tool for Improving Government Fiscal Management and Oversight"
Co-Chairman, Committee for a Responsible Federal Budget On Biennial Budgeting
Chairman Dreier, Mr. Moakley, and Members of the Committee, thank you for the opportunity to testify today. The Committee for a Responsible Federal Budget, which I co-chair with Tim Penny, is a bipartisan nonprofit educational organization that focuses on the Federal Budget and related matters. We have just completed a project with financial support from the "Big-5" accounting firms, in which our group invited experts inside and outside government to review the Federal budget process. We will publish a report, based on that project and including the Committee's recommendations for budget process reform, the end of this month.
Biennial budgeting could save substantial time and resources in the executive branch and on Capitol Hill. Those resources could be redirected to help meet high priority public needs. Program managers, States and local governments and others who actually run federally funded activities would benefit from increased stability and longer time-horizons. More resources, longer planning horizons and greater stability should improve the efficiency and effectiveness of those programs and activities.
Setting aside an entire session of each Congress for authorizations and oversight should focus a spotlight on and improve the timeliness and quality of authorizing legislation, program evaluation and oversight. Better evaluation and oversight should help to weed out ineffective programs and improve effective ones. That in turn should help to focus resources on high priority programs and activities that work.
We support a biennial budget, appropriations and tax cycle. But we acknowledge that biennial budgeting will not address all the flaws in the existing budget process. And biennial budgets must be accompanied by biennial cycles for appropriations and revenue legislation. Otherwise, annual appropriations and/or tax legislation could undermine the potential benefits to be derived from the biennial budget cycle. It is more fun to spend money than to conduct real oversight or to work on authorizing legislation, so you need to guard against the propensity to pass major appropriations bills every year.
A biennial budget process therefore must contain significant impediments to passage of major expenditure legislation in the "off-years". Failure to include barriers—or including ineffective barriers—could cause you to drift back toward annual appropriations legislation. Inevitably there will be real emergencies, unforeseen and unforeseeable events, that will require supplemental appropriations. The question is, can you provide for such contingencies without their becoming magnets for government-wide spending or "Christmas trees" on which Members can hang all sorts of unrelated items?
One possible approach would be to limit off-year supplemental appropriations to funding presidential requests. Does anybody really believe any President would refuse to request any money at all to meet a real emergency? This scheme would permit congress to appropriate more or less than the presidential request—or nothing at all—but they could not add new items. Whether or not you find that acceptable, you need to address this issue or risk undermining the biennial process.
It seems clear to us that any biennial budget cycle must provide for fiscal policy legislation in odd-numbered years and authorizations and oversight in even numbered years. We understand that this is the schedule you are considering. No President—and no Congress—would wait more than a year after they were elected to make adjustments to budgets, spending and tax policies to reflect their priorities.
There is a potential clash between discretionary spending caps and biennial budgeting. Discretionary spending limits or caps have proven to be the most successful device ever enacted to constrain Federal spending. Notwithstanding the expansion of so-called "emergencies" to permit spending well above the levels of the caps, no other device ever has operated nearly as well to put a damper on the urge to spend tax dollars (and in earlier years, borrowed money).
In 1990, 1993 and 1997, discretionary caps were written into law as part of reconciliation bills. Reconciliation, almost by definition, is completed very late in the budget process. If you change to a biennial budget cycle, enacting spending caps in reconciliation bills would be like closing the barn door after the horse escaped. Most spending legislation for the biennium already would have made its way through Congress before the caps could be written into law. It seems literally incredible to contemplate Congress making major changes to appropriations after they are reported from the Full Committee(s)—much less after they pass the House and/or Senate—to comply with caps enacted late in the congressional session. Spending limits are so important to expenditure discipline that any biennial process must include a mechanism to write caps into law before Congress begins work on regular appropriations bills.
We believe you could write new spending caps into law through a device similar to "Gephardt rule" which the House once employed to enact debt limit legislation. The Rules of the House and Senate could provide that when Congress completes action on a budget resolution—
- A joint resolution could be deemed to have passed. The Clerk of the House or the Secretary of the Senate could be instructed to enroll the resolution and send it to the President to sign or veto.
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The joint resolution could be confined to discretionary spending caps or it could include spending and revenue aggregates, deficit/surplus and debt levels, and direct spending targets or caps.
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Congress could enforce limits contained in the joint resolution through points of order (requiring super-majority votes to waive, if you think that is advisable or necessary) until and unless the President signs the subject joint resolution into law.
Expanding the contents of the joint budget resolution referenced above—to include spending and revenue aggregates, entitlement targets or caps, deficit/surplus and debt levels—could for all practical purposes convert it to a joint budget resolution. The Committee for a Responsible Federal Budget believes that enactment of a joint budget resolution should be a major priority in any budget process reform effort. Clearly, therefore, we would see this as a salutary development—one that could produce additional benefits down the road.
Whether you choose this approach or some other, it is imperative for Congress and the President to agree on spending caps for the biennium early in your two-year budget cycle. Otherwise, the biennial appropriations process could undo the most important and effective fiscal discipline Congresses and Presidents yet have devised.
Having mentioned our support for a joint budget resolution let me take a minute to reference some other reforms the Committee for a Responsible Federal Budget believes to be important. We support separate caps for defense and non-defense discretionary spending. We also support entitlement cap. We believe that you should enact or affirm multi-year spending limits every time Congress passes a budget. Enacting spending caps for the "out-years", as part of each budget cycle, could provide a powerful incentive to complete work on new budgets in a timely manner. That is because passing a new budget would be the least embarrassing way for Congress and the President to amend the most recently enacted limits.
There are too many people, and too many committees and agencies, that have duplicative and overlapping responsibilities under the current budget process. The existing process is designed to reduce deficits and balance the budget. Its constraints are frustrating to many in this brave new world of budget surpluses. The Committee for a Responsible Federal Budget would be pleased, if you like, to provide the Rules Committee with our full report on budget process reform including all of our recommendations for improving the budget process.
Biennial budgeting is no panacea for all that ails the budget process, but we do believe it can produce real benefits. If the Rules Committee moves forward with biennial budgeting legislation, we would like to work with you.
As we indicate above, we are especially concerned that any biennial process include discretionary spending caps to be enacted before Congress begins work on regular appropriations bills. And the new process must include an effective mechanism to keep Congress from passing major appropriations and tax legislation every year.
Thank you for this opportunity to testify. Given my experience as Ranking Republican on the Budget Committee and Co-Chairman of the Committee for a Responsible Federal Budget, I am convinced that strong and effective budget process is essential to maintain fiscal discipline and to frame major policy issues in a broader economic and budgetary context. That is essential if you are to make sound policy decisions. Thus a strong budget process is necessary for Congress and the Federal government to function effectively.
