Hearings of the
Committee on Rules
Thursday, May 13, 1999
The committee met, pursuant to call, at 9:30 a.m. in Room HO313, The Capitol, Hon. David Dreier [chairman of the committee] presiding.
Present: Representatives Dreier, Goss, Linder, Pryce, Diaz-Balart, Hastings, Myrick, and Reynolds.
Mr. Gekas. I am yielding.
The Chairman. We are happy to recognize the very distinguished gentleman from Michigan, Mr. Smith, and we look forward to your -- what you told me is a 2-minute presentation?
Mr. Smith. Yes, sir.
The Chairman. It wasn't my request. Your time has just begun.
STATEMENT OF THE HON. NICK SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN
Mr. Smith. Mr. Chairman, I appreciate that Rule 23, the "Gephardt rule," is repealed in here. But what appears is that you have replaced it with provisions that you can increase the debt limit as part of the overall joint resolution.
And so on page 8, section 8, my interpretation of that provision of the bill says that you can still increase the debt subject to the debt limit, which would be sort of clouded in with the whole composition of the budget resolution. I don't see that as much different than what we have now.
So I think there should be serious consideration, or at least I would request that an amendment be allowed so that we can vote on an increase on the debt limit separately. It just seems that it is so important in terms of where this country goes, the imposition that we put on future generations by clouding, whatever the correct word is, by incorporating a couple sentences in a huge joint resolution on the budget provisions that the debt limit will be automatically increased.
So I think it would be a lot more reasonable if Members stood up and took a position as a separate vote on increasing the debt limit, simply because I think it is such an important part of not only our economic future and the reasonableness and honesty of government, but still making it a -- having a little separate, more separate consideration for an issue that is so important; that is, raising the debt limit that our kids and grandkids are going to have to pay back.
John, what I just said was my interpretation of this legislation still puts an increase in the debt limit, the national debt subject to the debt limit, and includes it as part of the whole joint resolution as a provision that can be there. I would just think that this should be a separate vote.
The Chairman. Thank you very much, Mr. Smith. We appreciate you being here.
Mr. Gekas.
STATEMENT OF THE HON. GEORGE GEKAS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA
Mr. Gekas. Thank you. This is not news to the gentleman from Georgia or the gentleman from Florida nor to the gentleman from California.
The Chairman. Possibly it is to the gentleman from New York. So he should --
Mr. Gekas. Maybe I should make my remarks to him. I think the record does require me to postulate the rationale.
The Chairman. The record doesn't require that. You do whatever you feel is appropriate.
Mr. Gekas. In doing so, I am also making clear to the gentleman from New York what the legislation does. We have termed this legislation euphemistically as "instant replay." That is, at the end of a fiscal year, if an appropriations bill, any 1 of the 13, or all 13, have not been enacted by the Congress, then the next day, October 1, is an automatic instant replay of last year's budget.
What does this do? This ensures that there never again will be a government shutdown. The legislation that is before us for your consideration amply considers that and incorporates it into the total budget picture that you are trying to formulate in this legislation. I am very appreciative of that.
Since 1977, there have been some 17 separate shutdowns of government. That number is intolerable. That is almost once every year, almost every year. The most egregious one, and I reemphasize that every time that I have an opportunity to speak about it, when Desert Shield was being organized, when our half a million troops were being deployed to the deserts of the Middle East, during that period of time in December of 1990, while they were with musket in hand, our young people over in that desert, the government shut down. That is intolerable. They were actually armed, ready to do conflict for a government that didn't exist in one fashion, did not exist. We cannot sustain that. We cannot tolerate that.
What our legislation here does, what your legislation does is guarantee that that won't happen again.
One other thing. It is not just the Federal employees who are very supportive of this legislation -- as you can imagine they would be, because it would mean that they would not have to worry about when to come to work, if to come to work, and when their next paycheck is to arrive. That is part of the mystique of all of this anyway. But more importantly perhaps, or equally as important, is the fact that contractors who do business with the government, they in their continuum of providing goods and services, come to a halt. It is costly to them. It is costly to the government and the taxpayers and causes havoc in the private workplace where these contractors depend sometimes very heavily on the revenue from a government contract to keep going in their business.
On top of that, maybe a simple thing, but it was brought home several times. The shutting up of the Washington Monument or the Smithsonian Institute is a slap in the face to the American citizens. To go to the door of one our institutions and then be told that the government has shut down, they cannot enter. Although that is not -- that won't bring the end of the world, it does show a crumbling, a little crumbling of our system that shuts off other citizens from their institutions.
Anyway, these are the basic tenets of what we do. I have reviewed the provisions in the bill and they are -- they do exactly what we intend them to do.
One other fact which I cover very well: That is that the obligations that the government has as to Social Security, Medicare, et cetera, already set by other law, are unaffected by this, and they are guaranteed at whatever level their own computer indicates is due. So that the instant replay of last year's numbers may not apply to Social Security, but in all other respects, we have a continuing process that prevents government shutdown.
Well, I don't know that Doc Hastings has heard this.
The Chairman. Mr. Hastings has heard this.
Mr. Gekas. I wanted to repeat it.
The Chairman. We have a spectacular record that was developed on this issue. You see what we have done?
Mr. Gekas. Yes, it is excellent. I am very happy about that.
The Chairman. We appreciate your tenacity. It most likely would not have been incorporated in the bill if it were not for your regular appearances before the Rules Committee. However, we want to say there are other ways to get it to appear in legislation other than appearing before the Rules Committee.
Mr. Gekas. I suppose there are.
The Chairman. We appreciate your efforts on this very much, Mr. Gekas.
Mr. Gekas. I do want to thank the three men who are facing me here because they have been here with me from the beginning on this. And now the two others are going to be imbued with the same fervor as the gentlemen from California, Florida, and Georgia.
The Chairman. Thank you very much.
[The statement of Mr. Gekas follows:]
The Chairman. Mr. Goss may have a question.
Mr. Goss. I think I understand it.
The Chairman. We are starting to understand it.
Mr. Goss. The issue is not one of comprehension. The issue is one of how to deal with it and how to take a good idea and put it into affect. I think that you know that has been a part of our goal. As I think that you know in our process, this has gotten a lot of attention. I can assure you that it is going to get a lot more, whether we want it or not, as we go along. We hope that you will be ready to explain it to some others.
Mr. Gekas. We will.
The Chairman. Mr. Linder.
Mr. Linder. I do appreciate the issue.
The Chairman. Mr. Hastings.
Mr. Hastings. There was a witness that was critical of that provision of the bill, saying that this would cause the Congress to take the path of least resistance and therefore that would be the path that they would take, rather than to face up to the issue and pass appropriations bill. What do you respond to that?
Mr. Gekas. We reject that. Each fear brings new areas and new areas of concern. The appropriators and Members of Congress that see something that needs to be changed in the next fiscal year are not going to be satisfied permanently with last year's numbers or last year's speeches with a particular piece of legislation.
So this dynamism that the Congress has normally will carry to today when it comes to making sure that next year's appropriations bill does have features that are required by a majority of the Congress, even though for temporary purposes we have fallen back to the instant replay.
Mr. Hastings. Thank you.
The Chairman. Mr. Reynolds.
Mr. Reynolds. I would just thank the gentleman for his insight and time.
The Chairman. Mr. Reynolds is such a bright guy that he grasped it with your first presentation. They have improved over the years. We thank you very much and look forward to it.
The Chairman. I just saw Mr. Barton. I believe he is our next witness and we are happy to welcome the gentleman from Texas, Mr. Barton. You are welcome to summarize your remarks.
STATEMENT OF THE HON. JOE BARTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. Thank you, Mr. Chairman, other members of the committee, especially our Minority friends, here in spirit if not in person. I have testified before this illustrious group a number of times on budget process reform. I think with Chris Cox, myself, and Mr. Nussle a lot of progress was made in the last Congress -- Mr. Goss, I should put his name in the loop. He worked very hard. So I do have a written statement and I will put it in.
The Chairman. Without objection it will appear in the record.
Mr. Barton. The main thing that I would ask you to do is I think this Congress really, really needs to move the bill. The process that we were working under was passed in the mid- seventies. It enhances the expansion of entitlements. It enhances the ability of a few Members, late in the session, to do back-room deals. It gives the President unusual power, again in light of Congress, if not to extort the Congress, to make it very difficult to maintain the spinning of the caps and things like this.
I have not introduced a comprehensive bill in this Congress. I am going to do that in about 2 weeks. I am working on it right now. If you take the package that Mr. Nussle and Mr. Cox and myself, Mr. Salmon, and Mr. Goss put together the last Congress, we probably need to fine-tune it a little bit, but I think that would be an excellent package.
Some of the elements are that I think we should go to a 2-year budget process. Not everybody agrees to that but we operate on a 2-year cycle. It would be good to have a 2-year budget process. I think that you eliminate the supplemental and you put in a rainy day fund to set aside a certain amount each year. You put definitions about what qualifies for emergency spending.
And then in my bill, again this is somewhat controversial and I know the Chairman has a concern about this, but I put in a supermajority requirement in order to override the definition to take money out of the emergency supplemental account.
I guess I will kind of end it there. I will put the testimony in the record. I would be happy to answer questions. I do again encourage you to try to move a bill as soon as possible. This would be one of the most important things this Congress could do is to change the budget process.
The Chairman. Thank you very much.
[The statement of Mr. Barton follows:]
The Chairman. As you know, that is why we are sitting here. It is a priority for us. You use the term "fine-tune." I think that we can do that, I hope, and come to an agreement.
Mr. Barton. I stand ready to work with whatever group this committee or others may put together to make this happen.
The Chairman. Thank you very much. We appreciate that.
Mr. Goss.
Mr. Goss. I also want to very much compliment the gentleman from Texas for his willingness to find middle ground. I know there are some things in your kit bag that you care very much about that you have been willing to leave out there so that we can get something good, but maybe not perfect in your eyes. That is the process this year. We have pledged to do that.
Mr. Barton. Could I ask the Chairman a question? What is your timetable, Mr. Chairman? Do you have a definite timetable on this issue?
The Chairman. Well, as you well know, definite timetables around here do have a tendency to move. But it is our hope to see the Budget Committee proceed with hearings on this next week. The Budget Committee is going to be holding hearings next week. And beyond that, about 2 weeks following their hearings, we look forward to marking this up.
Mr. Barton. Oh, good.
Mr. Goss. My staff has been told to do this in June. I hope that is possible.
Mr. Barton. That is good news.
The Chairman. Mr. Linder. Ms. Pryce.
Ms. Pryce. Thank you, no.
The Chairman. Mr. Diaz-Balart. Mr. Hastings.
Mr. Hastings. No questions.
Mr. Barton. I think that I am going to see your smiling face in about 15 minutes.
The Chairman. Mr. Reynolds.
Mr. Reynolds. No questions.
The Chairman. Thank you very much, Mr. Barton. Thank you for your hard work on this issue.
The Chairman. We are happy to now have the very distinguished cardinal, the gentleman from Ohio, who has some strong thoughts on this issue, Mr. Regula.
STATEMENT OF THE HON. RALPH REGULA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO
Mr. Regula. Thank you very much.
The Chairman. It appears that you have no prepared remarks.
Mr. Regula. I will send them over this morning. I didn't get back to the office, with school kids visiting from Ohio, but you may even have a copy here. I am here to speak about the 2-year budget. I worked with it as a legislator in Ohio. I have introduced legislation to establish a 2-year budget in every session since I have been here.
Let me say as a Chairman of an appropriations subcommittee, I am even more aware of how important it is. I do a lot of oversight. We have had six or seven oversight hearings this year. I think that if you are going to have good management, you need to find out what is happening and you need to visit, in my case, parks, of course, and so on.
What I would see with a 2-year budget is you could do a lot better planning and the people in the field could do a lot better planning, because I know park superintendents don't know until maybe the middle of October what they are going to have for the year. Then pretty soon they are trying to put together next year's budget. They therefore cannot contract efficiently because they can only contract for a year at a time. They are in a 1-year time frame. In Congress we just don't have enough time to do oversight.
What I would think would contribute significantly to improving management would be to have a 2-year budget, because you can deal with the interim problems with the supplemental, as we are trying to do right now. We finished up about 1:30 this morning and we are back in today. It is contentious and, of course, the supplemental becomes a train that is going to leave station. Our brethren on the other side find it very convenient.
In any event, if you could do a 2-year time frame the first year of the session would be used to make budget and appropriations decisions. The second year could be used to do oversight to bring people in to talk about what works and what doesn't work. I find oversight hearings extremely valuable and it is good discipline for the agencies because they have to come up and justify their management. What I try to do and I think the other Chairmen do likewise, is to get some management discussions during these hearings. There is no reason when you are operating with a trillion and a half dollar budget you shouldn't think about management. Every company in the world does it or they don't survive.
We have instituted a number of changes as a result of oversight hearings. For example, just a couple weeks ago we had the GAO do an oversight report on the Everglades. We are going to spend as you know, Mr. Goss, probably -- I think probably 20 to $25 billion before we complete that project. So we sent the GAO down, they did oversight over the project, they came in and testified before the subcommittee. We gave the opportunity for others involved to come in too. As a result, we will make hopefully better decisions in the allocation of the resources.
So I see a lot of pluses to a 2-year budget. I believe President Bush supported it. There is just a certain amount of lethargy that keeps it from happening. Of course, frankly, some Members probably like the fact that an annual budget gives you more control because obviously you have got a bite of the apple every year. When you are on the Appropriations Committee the annual budget has some leverage involved; but I just think in terms of managing and being cost effective as a government on behalf of the taxpayers, a 2-year budget makes sense.
We are making some changes on the way parks get their money for buildings and the way that they manage their construction budget. It is not that we will necessarily save a lot but we will be able to do more things that members would like to have done because we can spread the money further and get what I call more bang for the buck. So that is why I feel strongly that a 2-year budget would be a good way to go.
And one last thing, in 1987 we had in effect a 2-year budget agreement. It wasn't exactly a 2-year budget, but it was a projection of where we would be. In 1988, was about the only year that we got all 13 appropriations bills out on time because we had a road map in place. We could think in terms of the 2-year cycle, and it worked. I would guess that we could well end up with another omnibus this year. That is not a good way to manage the federal budget and federal programs.
[The statement of Mr. Regula follows:]
The Chairman. Thank you very much, Mr. Regula. The only question that I would pose is how -- do you envision the appropriations process on 2-year cycles?
Mr. Regula. Yes. You would appropriate for a 2Oyear cycle, because that would give the executive branch the ability to manage in a 2-year cycle. They could contract for services for 2 years and get a better price, obviously. And then the second year would be used to pass needed supplementals but would also be used more importantly for oversight and for visiting facilities.
The Chairman. As you know, one of the priorities of this Congress has been policy and programmatic oversight, and trying to focus on that. I happen to concur that your proposal is one way to deal with that.
Mr. Goss?
Mr. Goss. I do, too. The problem is that no one is running from the debate on it at all. It is just that we don't hear the drumbeat. Some friends on the other side say, push, push, but we are just not hearing it. We are trying to find stuff that we can put in that is good for the process of reform.
This is something that I find, when you start toying with it, is they haven't really given it the kind of thought that we have given it and people have to deal with these problems. I have looked at the pluses and minuses on it and I am convinced that there is time for a debate on it. I think this would be right to have a debate. I don't know how the debate would come out, but sooner or later --
The Chairman. Would you yield for just one quick question? I wonder how your colleagues on the Appropriations Committee would respond.
Mr. Regula. I think they would like the idea, because you certainly do a much better management job. I would daresay that private industry wouldn't even think about trying to operate on a 1-year cycle in terms of budgeting projections for plant improvements, et cetera, et cetera. I would hope your committee will bring in a couple of CEOs or CFOs to say from a management standpoint how they do it and how it works out in the private sector.
Mr. Goss. I thank you, Mr. Chairman. I know that the business cycle, and how you do it and when you do it and time of year is very important. I agree that there is a lot of technical information that we need.
In my own bill, the intelligence bill, we are required by law, because of the extra level of oversight needed, to do the oversight annually. I frankly don't want to change that. You have got to be on top of that to do the oversight job. But the leverage that is involved with the budget, I think is very important. I agree with you on things that out and about in normal business activity, day in and day out in this country, if we can improve management, this is a tool that ought to be looked at.
Mr. Linder. I agree with you.
The Chairman. Ms. Pryce.
Ms. Pryce. Thank you, Mr. Chairman. I think that you have significance for this committee. I am happy to hear an appropriator come forward and say that this is a good way to go because I have seen some resistance or perceived resistance from that committee. It is good to have you here to show us that you all are not of that ilk. Thank you very much.
The Chairman. Mr. Diaz-Balart.
Mr. Diaz-Balart. It really makes a lot of sense.
The Chairman. Mr. Hastings.
Mr. Hastings. I agree with you, too. I have always felt that that is the way to go, precisely because of the reasons you said and because of the oversight aspect. You just don't have that many steps and pressures, particularly in your area that you deal with, contentious as they are. So if you put something in place and you don't know if they work or not because -- well, I just think that you are right on. I appreciate it.
The Chairman. Mr. Reynolds.
Mr. Reynolds. No questions.
The Chairman. Thank you very much Mr. Regula.
Mr. Goss. May I give one piece of advice?
The Chairman. Mr. Goss.
Mr. Goss. You have heard here a little bit of an outpouring of appreciation for your wisdom. We find that our colleagues on the Budget Committee don't share that.
The Chairman. Respect for his wisdom?
Mr. Goss. I would very much appreciate it if you would spend some time with them.
Mr. Regula. I understand.
The Chairman. Thank you very much, Mr. Regula.
The Chairman. Now, we are pleased to welcome the distinguished gentleman from Delaware, Mr. Castle. We are happy to have you here and your remarks will appear in their record in their entirety without objection. You are welcome to provide any kind of summary that you wish.
STATEMENT OF THE HON. MIKE CASTLE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF DELAWARE
Mr. Castle. Thank you very much, Mr. Chairman. I would like the assumption that everybody here will read my prepared remarks thoroughly and I will refrain from reading them myself. And frankly, in your case and in the case of some of the others here, what I have to say is not necessarily original or new to a lot of people in this Congress. I have been talking about some of these issues almost since the day I arrived here. I am strongly in support of H.R. 853. I am only going to talk about certain portions of it, but I don't know any part of which I am not in support. I think the budgeting appropriation process is without a doubt the engine that drives the Congress of the United States. I think it is the portion procedurally of what we do that is most out of whack with what it should be.
Frankly, it is my hope that you all, as I guess one-half of this with the Budget Committee as esteemed Members of Congress, lesser mortals such as myself, could never envision being on the Rules Committee, but you have the ability to really carry this. I just hope to the Lord that you will run with this. I just think this is really, really important.
I am tired of the naysayers who say that we should not change the budget process. I think somebody needs to take a different look at it. I think that you all are in a position to do that. So more than anything else, I would have to say that if we are going to have a credible and responsive budget process, I think that is what has to happen.
Just a couple of brief thoughts and I would answer any questions that you might have. One is I heard Mr. Regula testify to some of this, but I believe that the President should be a part of this process. The President is part of the financial process of how we spend money in the United States of America in a big way, and in my judgment should be brought into the process early on in terms of budget resolutions and signing onto it. If he or she does not like that, then he or she can veto it or come to the Hill and lobby or whatever it may be. I just think that is an absolutely essential part of it.
When was the last time that we ever got through the appropriations process without a series of summons at the White House? And all of it springs from the budget resolutions which would pass here. So I am strongly in favor of that. I am also in favor of the 2-year budget and appropriations cycle. The planning that is needed for the long-range things which are done, in my view, needs longer term than 1 year, particularly when that 1 year ends up being less than 1 year because sometimes of the way that we go about our appropriations. Obviously, you could make adjustments in a timely fashion in off years if need be. But the whole concept of running 2 years to me makes all of the sense in the world.
The part of the bill that I am most focused on from a personal point of view, because I have my own legislation and they adopted most of my legislation, is budgeting for emergencies. I don't know how many of you stayed up last night to see the conference discuss the emergency appropriations which is going on right now. Apparently it ended at 1 o'clock in some sort of a stalemate. I frankly don't watch a lot of C-SPAN unless I am trying to figure out how I am going to vote on something. I don't stay awake at nights watching it. If I did, I would probably fall asleep. But there were people who were galvanized by this. Some probably stayed up until 1 o'clock, like watching a championship playoff game or something, who couldn't take their eyes off of it. And they were just amazed at what was going on here in terms of the people trying to pen in every program in the world.
We don't have an emergency process in this Congress. We simply don't have it. What about our States? The States all basically have this. Just about all have some sort of emergency process. They appropriate the money and they have a process by which something is declared an emergency and then the money is spent. Only in the Congress of the United States have we reached the point where we ignore this altogether, and we have found, because we have trouble with our caps and budget resolutions in terms of what we appropriated to us, as we saw recently in the House-passed bill with the extra military expenditures. Only in the Congress of the United States do we have the system to avoid it, the cap problems, that avoid addressing the cap problems and is called add it to the emergency spending and making everything an emergency. Any need which is out there now becomes an emergency so that we could do this.
I just think that it is an abhorrent process, one which is an extraordinarily difficult one, made more difficult, I might add, by this senate which believes in its filibuster rules they have to get 60 votes for everything. I say let them filibuster over there. Let them read from the Bible and the Constitution for a while. Let's stand up to some of the actions that are going on in the Senate of the United States.
That is my view of it all. The bottom line is it is a process that I think is tried and true and failed completely. It is up to us in the House to make the changes which are necessary. I am not going to go through a lot of details of it. I think that some of you have been through this with me before. You know what we have tried to do. Essentially it is each year to appropriate a sum of money that would be for emergencies. As I said, they do it in the States now. That means that some first year you have got to start this. You have got to find that 5 or $6 billion dollars. You have got to squeeze it into an already tight budget.
Our revenues are quite a bit higher than they were when we set the budget caps. I am not one to necessarily be persuaded that we have to hold the budget caps forever. Everyone winks about that, that we are not going to have budget caps in the end. I say we face this issue early on. What we need to do is this. By the way, I am far from a big spender. I just truly believe that we should spend adequately, and we are not doing it. You have to have a rainy day fund. We can set the amount based on looking back over 5 years or so. And it does come out to about 5 or $6 billion. It doesn't take a Kosovo in your consideration. You obviously have to have breakers on this in a sense so that if something significant happens you can go beyond it.
But you would do this, you would have a definition as to what an emergency really is. You would have a panel that could review true emergencies that would be able to supersede some appropriator's interpretation of what an emergency may be, which would be a process to go by. You wouldn't have to get into this incredible offset fight that we have now with respect to what we as a Congress, and particularly Republicans, are trying to do.
I happen to believe in offsets now. But if you have it as part of the appropriations process, you would get away from that. I think that is something that we should do as well. It also means, by the way, that communities which are devastated by the tornados and hurricanes and earthquakes would get their money in a faster sense. It also means there would be a review process for that. I can tell you right now that those communities, the smallest ones to the biggest State out there, are submitting claims that are probably close to -- I was going to say "fraudulent," but strike that word and say "excessive," because they figure they get a percentage of this.
If we had some sort of system for review of emergency requests, that would be extraordinarily helpful, too, something that is missing as far as the Federal Government is concerned.
All of this has to be within existing budget limits. It would be part of the budget process. Whether or not it ended in that in terms of determination of who metes it out with appropriations or budget is something that could be resolved by any of you, I suppose, but I just think that we absolutely need to address is. Frankly, this is about the third or fourth year in which we are getting into a situation in which we going into emergency spending as a way of trying to do things that we need to do. We have a series of appropriations bills, I would say 2 or 3 maybe 4 or 5 emergency appropriation bills that aren't going to get done. We are going to sit down with the White House sometime in October or November and have this big combat and get a bill that none of us can handle, which John and the Democrats as well as the Republicans are going to say is excessive. It is just not a good way to go about our business in my judgment.
I come to you, pleading with you, because this is something that virtually everyone agrees on. It should be done. But there is always some handful of people out there that have more power than some of us do that manage to stop this. I would hope that you all with the strength that you have would really run with this and hopefully do something about it.
The Chairman. Thank you very much, Mr. Castle.
[The statement of Mr. Castle follows:]
The Chairman. We appreciate your being here and for the time and energy you have put into this. I have had discussions with you about this before. I know that we will continue. We are hoping that we will be able to move as expeditiously as possible and have it in this legislation. Your thoughts will certainly be taken into consideration.
Mr. Goss.
Mr. Goss. I would like to bottle that and spread it around. It is very encouraging to hear that kind of enthusiasm for this. I really mean that. This is not a task that has ignited a lot of what I would call colleague interest, mostly people who are concerned about it, and people say somebody ought to do something. We seldom get a member ready to jump in the fracas and I very much appreciate that.
Mr. Castle. I am equally as enthusiastic with the intelligence authorization.
Mr. Goss. That fine.
The Chairman. Mr. Linder.
Mr. Linder. Did you have a 2-year budget in Delaware?
Mr. Castle. No, we did not. That is a good question, actually. Most States do not. I never pushed for it, in fairness, but we had a bond process. So all of your long-term spending was tied up in that. You didn't have aircraft carriers tied out over 7 years, or whatever it may be. You had a process by which any long-term spending you had was put into a bond bill and understood from that point of view. Plus we would report on the -- in a longer-term sense, too, we had reports on it. But we were handicapped by the Federal Government. We weren't sure what they were going to do each year. We would have to go back each year and review it. It is a smaller problem, a more manageable process so we are able to do it.
I think there is a difference between the States and the Federal Government. However, I think the States should be looking more at this, too, in terms of longer-term planning. But their processes, I think, lend themselves to a little bit of longer-term planning now. It is a little bit of a simpler process. We did not have it in Delaware. We are not pushing for it in Delaware; that is, the present Governor is not pushing for it.
Mr. Linder. Have you looked at the question of a capital budget?
Mr. Castle. I have looked at that question. I am a capital budget fan, obviously, in the way that you don't go into the market necessarily quite as clearly in terms of debt. But I think it helps tremendously with the planning. Most people know where things are to separate all of that out and do it separately. I am not sure that is in this bill or not, but I do personally support that concept. I have not really reviewed it in terms of how you would actually do it. I get personally frustrated when you have long-term projects going on in the Federal budget. I don't think it gives you a very good picture. It takes a genius to figure out what the heck is in all of the appropriation bills, as we all know. I think some sort of a separate capital budget, long- term budget process, at least in terms of designation, would be in order.
The Chairman. Thank you. Mr. Hastings.
Mr. Hastings. Did you have a capital budget in Delaware?
Mr. Castle. Yes, we did.
Mr. Hastings. Was that constitutional limits or bonded indebtedness or constitutional indebtedness?
Mr. Castle. Actually, we did not. We had a very high bonded indebtedness for various reasons which never made me very happy. But we did have constitutional limits in terms of expenditures. Delaware had an Economic Financial Advisory Council. Boy, could we use that down here. We have got to get something like it. Basically, it was made up of both political parties, public and private experts, and they projected what the revenue was going to be each year. You could not exceed that revenue.
Mr. Hastings. By the Constitution?
Mr. Castle. Actually put in the Constitution. We had a rainy day fund, which I think was equal to 5 percent of the budget. Then we had another 2 percent set-aside which was a little softer than the rainy day fund. We had a huge budgetary problem back in the seventies. That is when all of this happened. You could spend the 2 percent a little more easily, but I don't think that we spent the rainy day fund yet. We carried it over from year to year.
For various reasons, my recommendation here is to use it to retire debt and then reappropriate it the next year. We carried it over. We had two stops before you would get outside the budget. We didn't even get close to that amount.
We have now, I think, the highest financial rating of any State; if not the highest, the next category down. I think that we just went to the highest with a handful of other States because of a lot of the budget processes which we adopted. We also, by the way, reduced our per capita debt tremendously in spite of the fact --
Mr. Hastings. The reason that I ask that, Washington State has a constitutional limit. I don't know what the figure is. Statutory is lower, but you need some sort of mechanism like that on capital funding. We don't have that here. By the way, I was one of those that stayed up and watched Congress until I saw my issue addressed, and then I went to bed.
Mr. Castle. I don't want to ask what the issue was.
The Chairman. Thank you very much. Mrs. Myrick.
Mrs. Myrick. I too thank you. I am real encouraged by what you had to say. I agree with you completely. I think that some of the points you made are especially important, having done a budget for a city, not a State.
Mr. Castle. Maybe as big as Delaware.
Mrs. Myrick. It is anymore. But we had a separate capital budget as well. It is very simple to do that. You know exactly what you are spending and when you are spending it. It just makes so much sense as well as the limits. We have a AAA bond rating still, and had it for many, many years. That contributes to it.
The Chairman. Thank you very much, Mr. Castle. We appreciate you being here and again for your very thoughtful remarks. We look forward to continuing to work with you on that. Thank you.
The Chairman. We are now very happy to welcome as our final witness today, the distinguished Ranking Minority Member, the gentleman from South Carolina, Mr. Spratt.
STATEMENT OF THE HON. JOHN SPRATT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH CAROLINA
Mr. Spratt. Thank you, Mr. Chairman. I am happy to have this opportunity. I am sorry I don't have the required number of copies of my statement. I got a copy of it from my staff last night. I took it home and worked on it until late last night and managed to save it in such a way that I reinstated the original document and wasted all of my effort.
The Chairman. Welcome to the 21st century.
Mr. Spratt. That is what you call leading with your left.
Mr. Chairman, I am grateful for the opportunity to testify about H.R. 853 because the bill is comprehensive, wide-ranging and covers all kinds of items. I think it is critically important that we study it carefully and I would like to call attention to several provisions of it. I don't want to slight or diminish the work that Mr. Nussle and Mr. Cardin and others on the task force put into it, but I take exceptions to the major provisions of the bill. There are parts of it that I think are positive, but on the whole I am not convinced that it moves the ball forward. I am a big believer that if it ain't broke, don't fix it.
We last made major changes in the budget process in the Budget Enforcement Act of 1990. Since 1992 this process has helped us from a deficit of nearly $300 billion to a surplus this year of more than $100 billion.
I am not here to tell you that we can't make improvements or shouldn't make improvements in the budget process, but a budget process that helps us improve the bottom line by $400 billion in 7 years ought to enjoy some presumption that it is working in the right way.
If there is a Congressional majority that can agree upon an overall plan, the process that we have got allows that majority to make a budget plan and implement it. We did that in 1997. There is a will to do it. Last year we didn't do it because there was not a will, not a common majority to get it done. If we are in earnest and do have some kind of consensus, what we have got in the budget process that is on the books now are quite a few enforcement tools, so that the broader outlines of the plan can be laid down, not just for 1 year but many.
We are typically now budgeting for at least 5 years and this year we ran our projections of the budget in both houses for 10 years.
Let me mention four main concerns that I have with the bill before you. The first is with the provisions of this bill that we can statutorily -- the Pay- As-You-Go requirement. The second is with the automatic continuing resolution, the automatic CR. The third is with the movement that this bill would make towards a joint resolution, a law rather than a concurrent resolution. The final is with the way that this bill will take the budget resolution and diminish it substantially, strip it down to just a few bare bones essentials, aggregate spending, aggregate revenues, and the resultant deficit of the surplus: the 20 spending functions that are now typically the House's, Congress's opening expression of our priorities. Our only real programmatic statement of a budget would be put in the committee report, diminish in staff. So would the reconciliation instructions be taken down a notch by putting them in the committee report rather than the text of the bill itself.
Let me first mention weakening the so called Pay-As-You-Go. I think you would agree this is one of the disciplines that has helped us get from huge deficits to substantial surpluses. This bill would repeal the requirement that entitlement increases or tax cuts be fully offset. It will allow projected on- budget surpluses to be used as offset.
Now, the problem is the same for entitlement increases or tax cuts, but let's take tax cuts as an example. Suppose a tax cut is enacted that uses up all of the projected on-budget surpluses. You can understand easily these projections are over-optimistic. Congress will be faced down the road with several choices: a large tax increase, a large entitlement cut, a large discretionary spending cut, sequester, none of them pleasant choices.
Basically, I don't think that it is wise in any event to invite the wiping out of our on-budget surpluses or even a large portion of it until we have actually squared up and dealt with Social Security and Medicare for the long term. I don't think that it is safe to run our projections far into the future, 5, 10 years. That has been notoriously unreliable. Keep in mind that the CBO's projection of the surplus of 12 months' time has increased by $750 billion over a period of 10 years. Anything that goes up by $750 billion in 10 years can come down by $750 billion because it is all in the commerce construct. It is on paper. It is not a reality yet.
I have a problem, just willy-nilly across the board saying, okay, we don't need this rule that has helped discipline us since 1990. We can dispense with it now and allow on-budget surpluses to fully offset even entitlement increases or tax cuts.
This budget bill would also turn all existing discretionary appropriations into capped entitlements. That may come as a neurotic surprise to you, but by enacting an automatic continuing resolution, that is the end result. That is the effect. Congress, if we have this automatic CR will no longer need to pass or even consider an appropriation bill. Right now, failing to appropriate is mostly unthinkable. It happens sometimes, but with an automatic CR, failing to appropriate could become routine.
The risks are substantial to this institution, to both houses. I beg you to weigh these risks. Let me just suggest a couple of the unintended consequences that could ensue. We use "must pass" bills like appropriations, a way to define priorities each year, to get the President's attention, to make the agencies of the government more responsive to us. But it is poor tactics for us, I think as an institution, to give up these vehicles. This is the way that we assert ourselves.
It would be unwise also, I think, to allow 41 Senators to kill regular appropriation bills by way of a filibuster. That is what an automatic CR would do. By the same token, it would allow the President to kill a regularly approved appropriation bill, if he preferred the status quo, by vetoing it. Then a small minority of the Congress could sustain the status quo in reference to any appropriation bill. These powers wouldn't enhance the ability of the majority to run this institution.
In addition, this bill provides for something that I understand the purpose of, but I am not convinced is achieved by what it proposes; and that is, it calls for a budget resolution which is now a concurrent resolution to be made a joint resolution, which means the President would have to sign. I took part in the negotiations in 1997 between the President and the Congress. I think it was a constructive experience. I think that it is something that we ought to emulate. I think the President out to get engaged in the process earlier rather than later. We don't need to have this all crammed into the end of the year to be resolved in some patchwork process as it was last year.
I am troubled by this provision to a joint resolution for a couple of reasons. The first is I think if we require the President to engage, we will just impede the budget process. We are required by statute and by joint resolution in those years where the President or the Congress, together or separately, really don't want anything resolved early. They aren't ready to make the compromises as we were in 1997 to reach a common agreement. If you have a strong-willed President who has decided that he is going to change the direction of the government, he can throw a monkey wrench into the whole budget process by simply extending the negotiations, holding out the prospect of an agreement, and then vetoing the resolution obstinately when it gets to him.
By the same token, Congress can spin its wheels inordinately, trying to get a resolution like that. What happens when the resolution fails? This bill says, well, we don't have a fast track procedure so that if the President vetoed the resolution, he could bring the same resolution as the current resolution up on the House floor. In all probability, if you go that far down the road towards giving the President a resolution which you hope is a product of your negotiations he might sign, you would probably make concessions in it that you would want to withdraw before you put it into the form of a concurrent resolution and offered it as your resolution. You would want to start the negotiation over.
What does that mean? We are into June, July. We are cramming the process into the latter months of the fiscal year once again. I don't think that helps us at all. Ironically, the bill, after having proposed it, we enhance the budget resolution by making it a law, a joint resolution which the President signs, turns around and diminishes the contents of the bill and the statute of the bill by stripping out of the bill the 20 function levels which, as I said, are the one effort that we make to give some sort of programmatic statement of our priorities across the board of Federal spending.
It also takes the reconciliation instructions and, with the 20 functional levels, puts them into the committee report, taking them down a notch in legal significance. The remaining resolution is a bare bones resolution. Now, we have engaged the President, invited him to negotiate, put off the budget process until we can reach some agreement, but what is the end result of the agreement? Aggregate spending, aggregate revenues, resulting deficit of surplus and some committee report language about funding levels and reconciliation. All of this effort comes to a very, very small end result, hardly worth achieving if we are really going to have budget reform.
Let's go back to the one big compromise made in 1974 contained still in 302(b) look at the 302(b) allocation process. If you are going to work towards a process where the President and the Congress are building on the foundation of a common budget where we have made our compromises and come to some accord, then that budget resolution has got to contain the elements of that accord.
When we got to the end of the balanced budget agreement in 1997, we had a problem as to how to state all of the things in binding form, semi-binding form that we just agreed to. How to do lay them out for a 5-year period of time? This bill doesn't begin to address that. Instead it moves in the opposite direction by reducing the budget resolution to some simple numbers that don't begin to address all of the disputes that we will have with the President over whether the money goes to defense or education, health care, or highway building. So I don't think that this is helping the process at all. I really think it may move the ball backwards instead of forward.
Finally, Mr. Chairman, as I look at it, I am curious as to why the bill skirts some of the bigger issues. You and I were on the Hamilton committee dealing with legislative reorganization. We batted back and forth on biannual budgeting and didn't come to any clear settled conclusion about it. I think the conclusion we came to is that if we had biannual budgeting we would probably have a big appropriations process one year and a mini-process the next year. The supplemental would be a much bigger than the supplemental that we are doing now. You wouldn't get away in the second year of the biannual process of some sort of appropriation.
Social Security. You have got a bill that is moving, I understand would deal with the segregation of the Social Security surpluses. That is something that we seem to be converging on the end at least, if not on the means, but there are other trust funds, as Mr. Shuster reminds us. This is a problem, too, that we should address. We have got a number of trust funds, over 150 in the Federal budget, which are dedicated and earmarked. The moneys that are collected and put into these trust funds are supposed to be spent on the dedicated purposes. But by and large, there are a lot of misses between the cup and the lip. There are a lot of cases where the money just doesn't get there because it is appropriated for other purposes.
If we are going to do true budget reform, I think we probably ought to take a systematic look at that. As I said, anybody who wants to touch the third rail, 302(b), if we really are going to do budget reform, if we are really going to involve the President, that is the kind of allocation process we should be talking about institutionalizing.
The Supreme Court also has invited us to do something when they threw out the item veto. We have had expanded and enhanced procedures on the floor. It is not the equivalent of an item veto but it is better than what we have got under the existing statutes. Certainly things like this out to be considered for inclusion in this bill.
I have got a number of other things in my testimony which I will file for the record, where I think there have been positive contributions made by this bill and this task force. But I urge you, plead with you, to weigh these changes carefully and consider whether or not we are in many of these cases moving the ball forwards or backwards if we adopt them.
The Chairman. So what do you really think of the bill?
Mr. Spratt. I wouldn't vote for it in its present form.
The Chairman. You have gone through extraordinarily well virtually every item in it. As I listened, I wanted to see if I could find something that you didn't touch on. One of those was the emergency fund.
Mr. Spratt. I think they have got the basics of something that we should consider, but the mechanics still need to be worked.
The Chairman. What do you see as the problem with that?
Mr. Spratt. Well you can have big years of evaporations that would skew the average. I will tell you a problem we have had before with funding FEMA. If you put a lot of money in for FEMA or for any Federal agency, and at the end of the fiscal year if they haven't spent it, there is a great temptation to find places and ways to spend it. I remember we used to fund part of a -- authorized part of FEMA's budget on the MILCON Committee in Armed Services. When we gave them the actual money, we found they spent it even though there weren't emergencies. We looked to see what they were spending it on. They were doing all kinds of paper consultancy contracts. All over the Beltway somebody had a contract working with FEMA because they had this money at the end of the fiscal year. So I think we need to get some refinement as to how much we should budget for emergencies, but clearly, we have got a good example now as to why we need more teeth, more discipline in the process of budgeting for extraordinary causes and emergencies.
The Chairman. Thank you, John.
[The statement of Mr. Spratt follows:]
The Chairman. Mr. Goss.
Mr. Goss. Your testimony is obviously very helpful. It is challenging. I think that we started out with a much bigger idea and we ended up sort of fishing for supper or fishing for a trophy. You are suggesting that we go back to fishing for a trophy. I don't disagree with the overall goal. I just don't think that we are going to be able to do it in one step. This is something that is going to take a process of education, constituent-building among our colleagues of what we are trying to accomplish.
I do think the efforts that were made in the area we have singled out for debate on this are ripe. I think that the abuse on the emergency spending thing is egregious beyond description, as we are seeing that as we sit here. I think the problem of not getting the President on board up front is a serious problem. I agree there are problems in what you do downstream, but I still think it is worth getting in upfront.
I think that the items that we picked, the little fishing that we are going after here, is a good place to begin this. I hope that it is not the final work, but I hope there is enough progress for people to say, yes, with a little effort we can do better, and maybe with a little more we can do better yet. So that is the way that I am looking at this.
Mr. Spratt. Let me call your attention to one problem that is so bad you have to read it several times or you have to have somebody like Richard Kogan on our staff to read it before you can even discern what the problem is. The way that we read the bill, this bill, assumes that after discretionary spending caps expire in 2002 there is a presumption in forecast subjecting future surpluses and deficits, that the level of discretionary spending will be frozen at its level in 2002.
Now, with that forecasting assumption, you have inflated on budget surpluses too. We all know, I think, that discretionary spending caps are already too tight. We are bursting the seams right now. To assume that these will be set at existing low levels and not increase over time and that on-budget surpluses will be a function of these is to assume, therefore, that on-budget surpluses are going to be a lot larger than they really will be. That invites big tax cuts to be offset by these on-budget surpluses that are not likely to materialize or, for that matter, entitlement increases, contributions to Social Security.
Mr. Goss. What I guess we are trying to do is to get into a box where we can set up a process that works a little better, get a better result without some of the problems that we are seeing. We are trying some things out.
I agree, if you take Alan Greenspan's pulse and you don't like it, the whole thing falls out; or Robert Rubin resigns, the whole thing goes crazy. What I want to do is try to get a process that gives us a better handle so that when something unexpected does happen, we don't have midnight sessions of the Appropriations Committee and conference reports going on ad nauseam, especially the Rules Committee, which fortunately our wise Chairman --
Mr. Linder. -- has kept to a minimum.
Mr. Goss. Has kept to an absolute minimum. We look at this, and last year clearly was a benchmark. If we can't do better than that, we probably ought to give up trying. That is the way that I feel about it.
The Chairman. Thank you. Mr. Linder.
Mr. Linder. John, you mentioned the enhanced provisions or veto. I would like you to comment on that. The growing body of legal opinion is, I think, that the President already has the authority to item veto under any act of Congress. Each item is going to occur at some point or another in a subcommittee.
Mr. Spratt. Well, I will quote no less a constitutional authority than Judge Bork, who said if the President has a line item veto, why is it that no President has noticed it in the last 200-odd years, including George Washington who presided over the Constitutional Convention and wrote a letter clearly stating that he did not have such authority. I think the Supreme Court's decision pretty well sealed that. An enhanced and expedited procedure simply says that the President likes something in the bill, he can send it back up here and shine a spotlight on it, make us vote on it within a fixed period of time, and it would be enhanced to the extent that it could apply to targeted tax provisions and things like that, as well as spending items. It is, I think, a constructive substitute if we can't have an item veto.
I voted for the item veto. When I voted for it, I said I don't think this is constitutional, but I am willing to let the Supreme Court say whether or not it is. They said that it isn't. So we have got an alternative. I don't want to amend the Constitution, but I think that we can have statutory enhancing and expedited rescission that would give the President a little more leverage and help him cull out appropriation bills of all kinds of extraneous riders.
The Chairman. Mrs. Myrick.
Mrs. Myrick. Thanks for your really thoughtful testimony. The service that you do on the Budget Committee is very fair and I appreciate that. Again, the only other thing that I would say is I tend to wonder and question that the budget process is responsible for the balanced budget because I come from the other side; that I think that we did a balanced budget in spite of the budget process that we currently have.
Mr. Spratt. Well, the discretionary spending counts, the PAYGO rules have helped. I was here before them and here after. I think they made a difference.
Mrs. Myrick. I appreciate it.
The Chairman. Thank you very much, Mr. Spratt. We appreciate you being here. Let me just state for the record that we are expecting testimony from our colleagues, Mr. Obey and Mr. Cox, and a couple of others so we plan to keep the record open for that. I am told that we may even have some testimony submitted from the Office of Management and Budget.
[The information follows:]
The Chairman. This concludes the hearing and your entire statement will appear in the record, Mr. Spratt, without objection. With that, the hearing stands adjourned.
[Whereupon, at 10:34 a.m., the committee was adjourned.]
