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Hearing of the Committee on Rules

"Biennial Budgeting: A Tool for Improving Government Fiscal Management and Oversight"

Statement of Congressman Joe Knollenberg (R-MI)

Thank you Mr. Chairman for holding this hearing and allowing me to share my concerns with biennial budgeting. I am concerned that in our haste to push forward this legislation we are overlooking many consequences that will drastically affect our budget process. I have the benefit of brining a balanced insight to the consideration of this issue as a member of both the Appropriations and Budget Committee. I understand the appropriations process is tough, however, we should not let the frustrations of the past few years push us to pass a bill that may not work. Clearly, much of the current dissatisfaction with the budget process is the result of divided control of Congress and the Executive Branch and it is unlikely that a shift to biennial budgeting would make any difference. We must ask ourselves what are we trying to accomplish here and if this is the most effective way to accomplish that goal. I truly believe biennial budgeting is not the answer.

Uncertainty of budget projections

Biennial budgeting could jeopardize the very thing that many in Congress hold most dear-preserving the surplus for debt reduction, tax cuts and other pressing needs. Despite today's projections of huge surpluses, these numbers will invariable rise and fall with the economic cycle, emergencies and other factors that are outside Congress' immediate control. For example, over the last four years CBO incorrectly estimated the deficit or surplus for the upcoming fiscal year by an average of $99.5 billion.

Given these inevitable fluctuations of economy and federal revenues, Congress needs every tool at its disposal to ensure that there are sufficient surpluses each year to meet its target for tax cuts and debt reduction. The budget resolution provides the framework to make year-by-year changes in entitlement programs, tax policy, and discretionary spending levels. Only through actually passing appropriation bills can discretionary levels be changed. In the case of entitlement reforms, the budget resolution can protect these measures from a filibuster. Welfare reform might never had reached the President's desk had it been considered in the second session of the 104th Congress under biennial budgeting, because it passed the Senate in 1995 by a mere 52 to 47.

Oversight

One of the supposed advantages of biennial budgeting is allowing additional time to focus on oversight. The irony is that most experts think that biennial budgeting would actually reduce oversight because most practical oversight is accomplished through the appropriations process when the agencies are dependent on Congress for more funding in the near term. While the Appropriations Committee would continue to hold oversight hearings during the second session, they would lack the threat of an appropriation reduction for agencies that fail to adhere to authorizing statutes, consult with Congress on agency operations, or meet performance goals.

Further, with no regular appropriation bills in the second session, Congress would be forced to consider massive supplemental bills or correction bills to take care of changing priorities, unanticipated events, and emergencies. Supplementals tend to be more directly under the control of the Leadership which means less member input and oversight.

Cutting Taxes

Not only will biennial budgeting make it tough to keep the budget in balance, it could also eliminate any hope for tax cuts in election years. If the budget resolution includes an instruction to the Ways and Means and Finance Committees to report a tax bill, it is protected in the Senate from a filibuster. Any tax bill that was not reconciled by the budget resolution from the previous year will effectively need 60 votes to pass the Senate. This is a high hurdle for those who came to Congress with a mandate to provide tax relief for American families. For example, the marriage penalty relief bill could not have been possible under biennial budgeting. Leadership did not predict this piecemeal tax approach last year and if it was not included in the Budget Resolution, Senate Democrats would have been able to filibuster the bill in the Senate.

Biennial Budgeting and States

I am aware that several of my colleagues have had positive experiences with biennial budgeting in their state legislatures. However, the current trend among states is a shift towards annual budgeting. Currently 30 states budget on an annual basis with 26 states dropping biennial budgeting in favor of annual budgeting over the last 40 years. According to GAO, the States tend to switch to biennial budgeting when their legislatures move from a biennial to annual sessions of Congress.

Thank you Mr. Chairman for giving me the opportunity to express my concerns today. I hope we have the opportunity to explore and understand the consequences of this issue fully before rushing this legislation through the House.

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