Hearing of the Committee on Rules
"Biennial Budgeting: A Tool for Improving Government Fiscal Management and Oversight"
Chief Economist and Vice President of Economic Policy,
U.S. Chamber of Commerce
My name is Dr. Martin A. Regalia, and I am Vice President and Chief Economist of the U.S. Chamber of Commerce. The U.S. Chamber is the world's largest business federation, representing more than three million businesses and organizations of every size, sector and region. This breadth of membership places the Chamber in a unique position to speak for the business community. Mr. Chairman, we appreciate this opportunity to testify on behalf of biennial budget provisions, such as those contained in the Biennial Budgeting and Appropriations Act (S. 92), introduced by Senator Domenici, and in several bills introduced in the House of Representatives (H.R. 232, H.R. 493, H.R. 2985, and H.R. 3586), and we commend you for holding these hearings.
Our Annual Budget System is Too Inefficient
Increasingly, the existing Congressional budget process is unable to produce a budget in a timely fashion. The system is fraught with wasteful repetition and duplication of effort, allowing inadequate time for oversight and management of government programs, suboptimal budget predictability and stability, and even more frenetic activity during election years. The Chamber believes that the adoption of a biennial budget cycle will alleviate some of these by-products of the federal budget process.
Biennial Budget Proposals
As provided in the proposals contained in current House bills and S. 92, a biennial budget would require the President to submit a two-year budget, and would devote the first session of a Congress to developing a two-year budget resolution and attending to 13 two-year appropriations bills. A point of order would be established against consideration of appropriations legislation covering less than two fiscal years and consideration of authorization legislation during the first session until all action on budget-related legislation has been completed. The second session would have Congress concentrate on authorization activities and programmatic oversight of government agencies. If necessary, modifications to the appropriations would be handled through the mechanisms of supplementary appropriations or rescissions in the latter session.
Problems with the Current Process
Lack of Timeliness
Within the current budgetary framework, deadlines are repeatedly missed. The government regularly fails to timely enact all individual appropriation bills to fully fund the government by the beginning of the fiscal year. Since 1950, Congress has enacted all thirteen appropriation bills by the beginning of the fiscal year only three times. During the 26-year history of the Budget Act, Congress has met the deadline for completion of a budget resolution only four times. A timely completion of this year's budget resolution would mark the first time that Congress has met the April 15th statutory deadline two years in a row.
The adoption of multiple continuing resolutions to keep the government in operation has become a commonplace event – the status quo. The threat of government shutdowns – and the occasional reality of actual ceasing of operations – is a very disruptive and disheartening aspect of our system of government. It's no wonder that many Americans have lost faith in their leaders, and feel that elected officials are "out of touch" with their constituents. This annual quandary serves no one's best interests –regardless of political affiliation.
This manner of conducting "business as usual" would not hold up to scrutiny in the business world. This is no way to run a business, and it is certainly no way to run a country. Adoption of a biennial budget system would help free the government from this threat of chaos and paralysis.
Wasteful Repetition
Vast resources, both in terms of human and financial capital are wasted on repeating the budgetary process each year. The current budgetary process is very time and resource-intensive, requiring nearly three years of combined effort by the executive and legislative branches to produce and execute each annual budget. Immense amounts of time and manpower are required for budgetary preparation, review, submission and legislation. This, in turn, siphons these valuable and limited resources away from the tasks of managing and adjusting existing programs to keep pace with today's changing times, and from attending to other, non-budgetary matters. Congress often debates the same issues year after year, and seems to be mired in an ever-expanding pool of budgetary quicksand that swallows up its time and saps its energies. Agencies, too, are left drained by their continual engagement in hearings, markup sessions, conference reports, and planning for the following year's budgetary process. Biennial budgeting would streamline the budget process, reduce needless repetition of effort, and free federal agencies and Congress to better attend to the interests of the American people.
Inadequate Time for Oversight and Management
Congressional oversight is vital to maintaining the integrity of our country's fiscal health. Our system of checks and balances requires that Congress reviews, monitors, and supervises the executive branch's conduct of federal programs and implementation of national policy. Oversight ensures compliance with legislative intent; improves the efficiency, effectiveness, and economy of government operations; evaluates program performance; reviews and determines federal financial priorities; reviews agency rule-making processes; and acquires information useful in future policymaking. Congress is charged with the power and responsibility to observe and control the government, so that it may rein in its excesses and correct its flaws. Effective oversight of federal programs results in improved management, efficient evaluations of program goals and performance, and opportunities to remedy problems and prevent waste or abuse of resources.
Unfortunately, the annual appropriations process is so time-intensive that insufficient time remains for systematic and programmatic oversight of federal programs. This results in the abbreviation of the authorization process, where most programmatic oversight is conducted.
Lack of sufficient oversight has resulted in the squandering of our tax dollars on unauthorized programs. In fiscal year 1999, $101 billion was appropriated for 118 programs whose authorization had expired. Likewise, the Congressional Budget Office has reported that Congress provided another $120.9 billion for 137 unauthorized programs in fiscal year 2000.
Adoption of a biennial budget system would allow the President and his Administration more time for management of federal programs and the Congress more time for programmatic oversight over the course of the budget cycle. Identification and elimination of wasteful and unnecessary federal spending would thereby be facilitated, making our federal budget process more effective and economically efficient. Furthermore, agencies would be better able to focus on executing their programs, due to less frequent preparation and justification of future year budgets.
Budget Predictability and Stability
A biennial budget would provide more accurate predictability of funding streams for federal programs and for state and local programs that rely on the receipt of federal funds or represent joint ventures between state and federal governments. Because a biennial budget necessitates forecasting revenues and expenditures for a longer time frame, agencies and lawmakers will engage in longer-range planning. It is our hope and expectation that this will result in well-reasoned, better thought-out undertakings than those borne by annual budget-making.
Agencies may spend less in the first year of a biennial budget cycle because their appropriation authority extends into the next year. There is no incentive to deplete funds at the end of that year because of that carryforward of funding. Furthermore, longer-term planning can be expected to increase governmental efficiency.
Budgeting for the longer-term will entail greater uncertainties in forecasting revenues or projecting funding requirements of agencies or programs for the course of a budget cycle. However, supplemental appropriations and rescissions can compensate for these shortfalls, as well as for the need to adapt to changing economic and programmatic conditions.
Conclusion
In conclusion, adoption of a biennial budget process will greatly improve the efficiency and effectiveness of the federal government, and foster a new sense of trust in our elected officials and in our government institutions. We urge that Congress and the Administration join together to enact biennial budget legislation that will achieve these goals. Thank you.
