Hearings of the Committee on Rules
"Biennial Budgeting: A Tool for Improving Government Fiscal Management and Oversight"
Philip Joyce
Associate Professor of Public Administration, School of Business and Public Management,
The George Washington University
1. You seem to conclude that the major reason why there is less than an optimal amount of detailed oversight is because members don't particularly like to do oversight. If biennial budgeting is not an answer to this problem, as you suggest, what do you think should be done to strengthen the authorization process and enhance Congressional oversight? Or, do you believe that the current level of oversight conducted by Congress is adequate?
I don't think that the current level of Congressional oversight is adequate, particularly given the complexity of issues that the federal government deals with, and the necessary extent to which the Congress must delegate to executive branch agencies the power to "fill in the details" of policy. Saying that the current level is inadequate, however, is not the same thing as suggesting what would be necessary to increase Congressional attention to how programs actually work. In order to increase this kind of attention, the incentives must be present for the Congress to do more oversight. The Congress does not, quite rationally, spend its time on issues that have little or no electoral benefit. I do not believe, therefore, that there is anything that the Congress could do to increase time devoted to oversight until and unless the public demands it, and rewards members for spending their time on understanding the way federal programs work (as opposed to, for example, on casework, or pork barrelling, or raising campaign money). In fact, it is probable that meaningful campaign finance reform would do more to improve the likelihood of oversight than biennial budgeting.
2. Your testimony briefly alludes to the benefits to the agencies of moving to a two-year budget cycle. Could you elaborate on what you think these benefits are and could you try to quantify them in terms of time saved, resources saved etc.?
I think that the benefits to moving to biennial budget for agencies would be twofold. First, they would likely spend less time and attention justifying budget requests to the Congress. This might necessitate smaller budget staffs in the agencies and OMB, keeping in mind that during budget years, the budget demands would be at least as great as they are now. For this reason, these staffing reductions would likely not result in substantial savings, particularly given the fact that the biennial process (if adhered to) would be a higher stakes, more complicated process than the annual process. Second, it would simply be easier to manage federal agencies if the flow of funds received by them was more predictable. Currently, the annual process in some agencies of waiting a month or more into each fiscal year before there is any clear direction of the funding level for that agency works against precisely the kind of planning and results focus that laws like the Results Act are trying to encourage.
3. Given your concern about more and larger supplementals under biennial budgeting, are there additional process changes that should be considered to guard against the possibility of allowing the two-year process to "degenerate" into a one-year process?
The keys to minimizing the size of supplementals are: 1) reducing the probability that unpredictable events would trigger increased demands for spending; 2) discouraging changes in priorities in the off-budget year; and 3) lessening the odds of remaking the budget in the non-budget year to meet specified budget targets in response to changes in revenue or expenditure projections. There seems to be very little that the Congress could do to improve the overall quality of budget projections. The existence of OMB and CBO already serves to create an environment where there are sufficient incentives for "honest" projections; remaining errors tend to exist because of the inherent unpredictability of revenues and (particularly) entitlements. As to the other two reasons for supplementals, there might be a number of possible reforms that could address them. I would encourage the Congress to review the recommendations of the Budget Committees and others concerning emergency spending (for example, requiring disaster spending to be funded at historical average levels, or requiring emergency spending to be offset by cuts elsewhere in the budget), as many of these would reduce the incentives to resort to supplementals. You might also consider requiring some kind of a supermajority vote to pass a supplemental in order to create the presumption against them. These kind of supermajority votes, however, come with a cost, since they would make it more difficult for the Congress to be responsive to changing circumstances.
4. You suggest possibly including a sunset provision for biennial budgeting. How long would you argue would it take before we could assess whether the new 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?
I would suggest that you would want a biennial process to operate for two full biennia (the 108th and 109th Congresses, for example; it is getting a little late in the process to have the biennial system start next January, in my view) before assessing it. You might then want to assess its usefulness during the following Congress (the 110th) with an eye toward whether it would be reauthorized for the Congress after that one (the 111th) or whether you would revert to the previous annual process. If you follow this timetable, you would pass a law that made the biennial process effective from January 2003 through December 31, 2008 (that is, for the fiscal year 2004 budget through the fiscal year 2009 budget). The Congress would decide during 2007 and 2008 (again, the 110th Congress) whether the process would continue after January 1, 2009.
I would suggest a number of useful questions to focus on. On the Congressional side, did the process free up Member time for other activities? Was this true in both the House and Senate? What was this time spent on? Was more oversight done? Was it more substantive oversight than was done prior to the institution of biennial budgeting? Were there more and larger supplementals? Did the longer time horizon create forecasting challenges that interfered with the ability of the Congress to make coherent policy? Did the Congress have difficulty responding to demands for changes in priorities? From the standpoint of the executive branch, were the agencies able to free up time and/or save staff resources? If the Congress spent more time on oversight, how did that change the relationship between the agencies and Congressional Committees? Was the flow of funds to agencies and recipients of federal money more predictable? These are examples of the kinds of questions that occur to me now, but others would undoubtedly arise as the Congress and the executive branch gained experience with the process.
5. What role do you see the authorization process currently playing in the budget process and do you think that role should change? Do you think changing or strengthening its role would improve the role and condition of programmatic oversight?
The current role of the authorizing process is not really budgetary, in my view. That is, authorizations create federal programs, and specify the terms and conditions under which money will be spent, but they do not really provide funding. The authorizing committees likely have the greatest level of expertise to do oversight, since they have the most detailed knowledge of agency operations. On the other hand, since they do not control resources, agencies have less incentive to take the wishes of the authorizing committees seriously than they do the appropriations subcommittees. I do think that giving more "teeth" to the authorizing process would improve the conditions for oversight; short of some effort to combine authorizations and appropriations, however, it is not immediately obvious to me how to make that happen. One possibility would be to fully enforce the prohibition against unauthorized appropriations. If authorizations had to precede appropriations, it might increase the likelihood that agencies would take the oversight process seriously.
