Hearing of the Committee on Rules
"Biennial Budgeting: A Tool for Improving Government Fiscal Management and Oversight"
Biennial budgeting has a lot of appeal on the surface. It appears to reduce the budget workload on Congress, freeing up time for oversight and other work. We should be aware, however, that it would be the most significant congressional budget reform since 1974 and would have far reaching ramifications. We need to stop for a moment and consider some of the problems that biennial budgeting could pose.
Specifically, we need to think about how biennial budget will alter our relationship with the executive branch, endanger our finances, and impede our ability to deliver tax cuts and other legislation for the American people. At the same time, I'm convinced that the claimed benefits will prove to be mostly illusory.
Losing the Power of the Purse
The congressional control over the purse is our best tool to manage agencies. Congress makes best use of this tool when it keeps the executive agencies on a short leash. The problem with biennial budgeting is that it lengthens that leash and would inevitably shift power from Congress to the executive. Experts who study biennial budgeting, including those at CBO, CRS, and the National Association of State Budget Officers have stated that biennial budgets shift power to the executive branch.
I know that when I served in the Nixon Administration we took Appropriations very seriously. We'd do what we had to to keep Congress happy. There will certainly be less pressure on agencies to do that in off-years of a biennial budget.
Endangering the Balanced Budget
The difficulty of estimating revenue two years ahead will increase error. Just since October, the CBO baseline on the FY 2000 budget has shifted $40 billion, from a $17 billion on-budget deficit to a $23 billion on-budget surplus. Budget projections have shifted by more than $100 billion over the course of a year. Not all of these shifts will be positive like the recent ones have been. The longer projections necessary for a biennial budget multiplies this uncertainty. GAO cited the uncertainty of budget projections as one of the chief reasons why 26 states have changed from biennial to annual budgeting since 1940.
Congress has few options for dealing with this uncertainty, none of them without problems. First, Congress could pass bare-bones budgets with minimum funds in anticipation of supplemental appropriations, where necessary, in the second year. Under this approach, Congress maintains greater oversight but sacrifices much of the time savings that motivates the shift to biennial budgeting.
Bare-bones budgeting would be difficult politically. It is unlikely that an Administration and powerful Members of Congress would accept stingy funding of their priorities on the promise of a supplemental. In addition, the "must-pass" nature of massive supplemental appropriations has frequently led them to be vehicles for special-interest pork. Relying on off-year supplemental appropriations could lead to an even less disciplined budget process.
The more likely option is generous budgeting with greater flexibility for agencies to shift money between accounts or contingency funds. Agencies will undoubtedly ask for additional budget padding to compensate for uncertainty about the future. The political difficulties of enacting rescissions to recover "unnecessary" money in off-years or meet budget targets would be substantial. As a result, Congress would exercise less control over agencies than it does now and would face still greater pressure for higher government spending that could threaten our currently balanced budget.
The Myth of Oversight
One of the supposed advantages of biennial budgeting is that it will free up time for increased oversight. On consideration, however, this benefit turns out to be more apparent than real.
First, it is important to note that the authorizing committees have the primary responsibility for oversight and that biennial budgeting would have little or no effect on oversight by authorizing committees. This bill will not change their work load. The only major government function currently authorized every year is the Defense Department. Other programs are already on multi-year authorization schedules.
The annual oversight hearings conducted by the Appropriations subcommittees now are some of the most effective oversight Congress does. Assuming that the Appropriations subcommittees are not caught up in the supplemental appropriations and rescissions generated by a two year budget, they would have some additional time for oversight. However, they would also lack the tool of pending appropriations that commands the agencies' attention and gives their oversight teeth.
Our oversight problems that prevent program authorization generally involve political conflicts that biennial budgeting will not address. Biennial budgeting, for example, will not make it easier to authorize foreign aid. Even if more time is made available for oversight and the political will exists to conduct that oversight, the new process cedes much of Congress's power over the agencies that makes oversight effective. The strong support for biennial budgeting from the Reagan, Bush and Clinton Administrations, and Vice-President Gore indicates their judgment that biennial budgeting will give the executive branch more power.
No Tax Cuts or Entitlement Reforms in Off-Years
The budget reconciliation procedures empower the congressional majority. By banning filibusters in the Senate, reconciliation allows the congressional majority to frame important issues by putting tax and entitlement bills on the President's desk. Under a biennial budget, Congress would lose that power in off-years. This year, Ways and Means Chairman Archer intends to pass a series of tax bills under reconciliation procedures. Under a biennial budget, one or more of them might be filibustered.
Reviewing the last decade, much critical legislation would likely have been defeated without reconciliation, including the 1990 and 1993 tax increases, the 1995 welfare reforms, and the 1997 tax cut and balanced budget package. The loss of reconciliation would obviously weaken the congressional leadership and cripple its capacity to lead in off-years.
Conclusion
Congress has passed an annual budget every year since 1789. While our current budget process is far from perfect, its problems are not caused by annual budgeting. In fact, the steady shift of states over the last fifty years from biennial to annual budgeting suggests that the biennial budget may raise problems rather than solve them. As Budget Chairman Kasich has noted that biennial budgeting will do nothing to reduce spending. I would add that the discipline for oversight is going to have to come from the Members rather than the process.
I encourage my colleagues who have signed on to biennial budgeting resolution to rethink their support.