Hearing of the
Subcommittee on Legislative and Budget Process
Biennial Budgeting
Wednesday, July 25, 2001
The subcommittee met, pursuant to call, at 10:00 a.m., in Room H-313, The Capitol, Hon. Deborah Pryce [chairwoman of the subcommittee] presiding.
Present: Representatives Pryce, Dreier, Hastings of Washington, Myrick, Reynolds, and Slaughter.
Ms. Pryce of Ohio. Good morning, everyone. Welcome. The subcommittee will come to order. Welcome to an original jurisdiction hearing of the Subcommittee on Legislative and Budget Process. I am pleased to hold this hearing to examine biennial budgeting, a concept that would bring common sense reform to the current system.
As it stands, the annual budget cycle is characterized by time consuming votes, chaotic late nights and missed deadlines, and that is just the congressional budget process. In the executive branch, many of our Federal agencies' most talented managers and analysts spend their energy preparing volumes of budget justifications and responding to the same questions year after year without ever having the time to champion real reform for the programs that they oversee. In addition, the Congressional Budget Office found that in fiscal year 2000 only 5.1 percent of total discretionary spending, or 30 billion of the $584 billion appropriated, followed an unpredictable funding pattern. In other words, the vast majority of the discretionary programs follow stable funding patterns and could therefore be appropriated just as effectively for 2 or more years at time.
While biennial budgeting is not the panacea for all that ails the Federal Government, it does promise to alleviate many of the inefficiencies that currently exist. Biennial budgeting would free up time and resources, thereby ensuring more effective government oversight, enhanced long-term government planning and ultimately, the better use of taxpayer dollars. In practice, biennial budgeting would divide each Congress into a budget year and an authorization year. In that second year the legislative branch could more effectively use the authorization process to inspect, examine and review the executive branch and agencies. In turn, this increased oversight would contribute to more appropriate funding decisions in biennial appropriations bills. Additionally, Congress would not need to resort to making appropriations for programs with expired authorizations. In fiscal year 2001, $112 billion in appropriations were provided for 112 Federal programs whose authorizations had expired.
The bipartisan support that biennial budgeting enjoys is evidence enough that this idea deserves serious consideration. In addition, the fact that biennial budgeting has been addressed at more than 40 congressional or special committee hearings since 1977 shows that this is an idea with some popular support.
Today's focus on biennial budgeting does not in any way detract from the importance of other reforms to the budget process that the Rules Committee has supported. However, if we intend to move forward with budget process reform only if it is offered as a comprehensive package, complete with a red ribbon, then I fear we may be in line to have no reform whatsoever. Additionally, I consider biennial budgeting to be comprehensive budget process reform because of its potential to improve government fiscal management, boost programmatic oversight and improve budget stability and predictability.
Finally, I would like to note that in my home State of Ohio, the biennial budget process has served us well for many years. Having a biennial budget process allows legislators and managers more time for oversight and consideration of other important policy issues. The State has also found that fewer budget staff are required and better long-term agency planning is possible. More time is available for new programs to produce results before agency administrators ask for more money.
I would like to thank everyone for being here today. I look forward to receiving testimony from the witnesses on both sides of this issue, and I do know that there are two sides to this issue. The list of witnesses include distinguished Members of Congress who have experience and interest in biennial budgeting, Director Mitch Daniels from the Office of Management and Budget and representatives of two well-known budget reform organizations, the Concord Coalition and the Center for Budget and Policy Priorities.
At this time I would like to recognize the members of the Rules Committee for coming. Chairman Dreier.
Mr. Dreier. Well, thank you very much, Madam Chairman. Let me begin by extending congratulations to you for your ascension to the chairmanship of the Legislative and Budget Process Subcommittee and for the first hearing that you are holding on this very important issue.
I see Mr. Luther has just come into the room and I know that he has been joined by Messrs. Bass and Barton. And Mr. Clement told me last night that he has a statement, which I know he will want to have included in the record. But he informed me that he was ranking member of the subcommittee that is meeting at this moment and so he said that he was sorry that he wouldn't be able to be here.
This is a very important issue, and I know that it is a controversial issue in the eyes of some of our colleagues, but I will say this. We received 201 votes on an amendment that I offered in the last Congress on this question. That was a higher level of support than for any other proposal dealing with the issue of reforming the budget process. One of the reasons that I pursued that proposal was then-Governor Bush felt very strongly about the success they were having in Texas and had a strong desire to see a 2-year budget process for the Federal Government. One of the main reasons that I have pursued and been enthusiastic about this idea has been due to the strong support of members of the House Appropriations Committee who have both come before this committee and privately discussed with me the benefits of a 2-year budget process and appropriations cycle. Enhancing the opportunity for greater oversight is very, very important. Saving taxpayer dollars with the prospect of 2-year contracting is also very, very important, especially in the area of energy, which is a key issue for so many of us. Chairman Ralph Regula pointed out to me the issue of making energy purchases on a 2-year cycle, creating savings that could be passed to U.S. Taxpayers. As you can see, there is a wide range of things.
I know that most members of the House Appropriations Committee are not supportive of this proposal, and they have let me know that. Some members of the Appropriations Committee, however, are very enthusiastic about it.
Again, I am enthused about the testimony that we are also going to receive from the Director of the Office of Management and Budget, our friend Mr. Daniels. He is reflecting the President's very strong view on this, and again, I will say that when I first discussed this with Governor Bush a couple of years ago, he and others around him were very, very strongly supportive and tried to encourage me on this.
I know this is major institutional reform. I happen to think that bringing about this reform would be the most important change that we have made in a quarter concerning the whole issue of budget process.
So let me say again, Madam Chairman, that I look forward to hearing from our witnesses and I appreciate the hard work and effort that you have put into this. We will listen attentively to arguments on both sides.
Ms. Pryce of Ohio. Thank you, Mr. Chairman. I want to congratulate you, because you have led reform in many areas of this Congress over the years. They have all been difficult, and this is just another example of your leadership.
Ms. Slaughter.
Ms. Slaughter. Thank you, Madam Chair. I have an opening statement. Biennial budgeting is a complex issue with members from both sides of the aisle arguing its pros and cons. I admit that the proponents paint an appealing image. I have spent much of my legislative career involved in budget and spending battles, particularly as a member of the House Budget Committee.
Budget battles are tough and time consuming. I set out to be a legislator when I entered Congress, but the longest hours and latest nights in the Chamber belong to our budget and spending bills. When proponents of biennial budgeting say it will reduce Congress' workload by eliminating the need for annual reviews of routine matters, no member among us who would not lend a sympathetic ear. I can think of nothing that I would like more than for Congress to be able to secure an entire session dedicated to nonbudgetary legislation.
Moreover, our constituents are tired of watching us in the House Chamber, arguing over obscure spending provisions that, more often than not, have little impact on their lives. But the concerns raised by the opponents of biennial budgeting cannot be easily ignored. Congress' ability to tighten the purse string of the executive branch is our best and sometimes only instrument in our arsenal for claiming full partnership with the President.
I was one of the plaintiffs who filed suit against the executive branch over the enactment of a so-called line item veto. We asserted that the framers of our Constitution were keenly aware of the delicate balance of power that needed to prevail between the legislative and executive branch of this Republic in order for it to succeed. The Supreme Court eventually agreed and the law was struck down.
I am not suggesting that biennial budgeting is unconstitutional, but I am suggesting that whenever this institution proposes a measure that could conceivably shift the balance of power among the branches of government we should proceed with caution or not proceed at all. I have served under both Democratic and Republican administrations, and in both instances I was opposed to any diminishing Congressional authority.
My colleagues on the Appropriations Committee point out that the annual review of appropriations requests is an important part of oversight that would be lost under the biennial budget. I can think of nothing more unnerving to an agency head than having their budget reviewed line by line by a room full of members. I want these agencies to remain responsive to our constituents and to believe that the purse strings are the most effective means of oversight.
I would also note for the record that critics of biennial budgeting suggest that projecting revenues and expenditures for a 2-year budget cycle requires forecasting as far as 30 months in advance. They argue that this would result in less accurate forecasts and could require Congress to choose between allowing the President greater latitude for making budgetary adjustments in the off years, or engaging in mid-cycle corrections to a degree that would effectively undercut any reduction in workload or intended improvements in planning.
The issue is how Congress can best utilize its time. This institution is following a wildly inefficient pattern where we cram the legislative week into two and a half-day periods in the midweek. Members are left reeling after all night legislative sessions before exhaustedly boarding a plane. This is no way to do the people's business and the legislative calendar ought to reflect a rational workweek where all business of Congress, not just spending bills, are addressed. I hope this hearing can begin that dialogue. We will hear a number of viewpoints during the hearing, and I look forward to your testimony.
Thank you.
Mr. Dreier. Will the gentlewoman yield?
Ms. Slaughter. I will.
Ms. Pryce of Ohio. The gentlewoman yields.
Mr. Dreier. I thank my friend for yielding, and I would just like to say how much I appreciate the fact that she says the late night hours deal with the budget process and not her work on the Rules Committee.
Ms. Slaughter. Knowing where my bread is buttered, it occurred to me that I probably shouldn't bring up the Rules Committee and its exorbitant and atrocious hours.
Mr. Dreier. Well, you just have.
Ms. Pryce of Ohio. Mrs. Myrick.
Mrs. Myrick. No statement. I am just very interested to hear what all of our witness have to say on this issue.
Ms. Pryce of Ohio. Thank you for being here today. Mr. Reynolds.
Mr. Reynolds. I think you, Madam Chair, have outlined in your opening remarks the goals we have for the hearing and where we are with the legislation. I want to commend the chairman of the Rules Committee, who has actually put this bill together and gone out to solicit the support of the Congress, which has 245 Members sponsoring the legislation. I look forward to the hearing.
Ms. Pryce of Ohio. Thank you. We will begin our testimony this morning with Mr. Bass from New Hampshire. Charlie, welcome. Are we going to have the panel all together? All right. Then Mr. Luther and Mr. Barton, please join us at the table here. Just pull up another chair. Mr. Clement's statement will be placed in the record if there is no objection.
[The statement of Mr. Clement follows:]
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Ms. Pryce of Ohio. All right, gentlemen. Welcome. You may proceed.
STATEMENT OF THE HON. CHARLES F. BASS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW HAMPSHIRE
Mr. Bass. Thank you very much, Madam Chairman, and I think you and the distinguished chairman of the full committee have really covered most of the reasons why all of us are here. I believe that biennial budgets are good. I would only emphasize a couple of points. Not having to go through the budget process and have to terminate 5 weeks before Election Day is going to do the political process, regardless of what party you serve in, a whale of good. I also believe that biennial budgets will increase this Congress' ability to conduct effective planning of the budgets and appropriations.
I note that, as Mr. Dreier noted, that in the process of considering budget reform, the biennial budget issue came closer than any other vote that we had last year to prevailing in the House. I believe that this year the stars may be in line for passage in both the House and the Senate, and clearly this President will sign a bill.
I want to make one -- and then I will end my testimony here, submit a written statement for the record, if that is okay. I would just like to say that you are going to hear today testimony about why biennial budgeting is bad, and most of that testimony will involve essentially a dissection of what might happen were we to move forward. I would only point out that 22 or 23 States, including Ohio I understand and also my State of New Hampshire, have operated very effectively and successfully, in the case of my State, for over a hundred years with biennial budgets in a legislature that is only part-time. And I know that there are going to be conflicts between the Budget Committee, upon which I serve, and I am the fourth ranking member of the appropriations subcommittee and the Rules Subcommittee.
But the public wants accomplishments. They want the legislative process to work better, and they don't care whether the Budget Committee is angry with the Rules Committee or the Appropriations Committee doesn't want to lose turf. What we are here to do is to serve the people of this country. And I believe that the people of this country would be better served with the passage of the biennial budgets and appropriations.
[The statement of Mr. Bass follows:]
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Ms. Pryce of Ohio. Thank you very much for your statement, Mr. Bass.
Mr. Luther.
STATEMENT OF THE HON. BILL LUTHER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA
Mr. Luther. Thank you. Thank you, Madam Chair, and thank you, members of the committee. It is nice of you to hear from us as your first panel this morning. I will be brief as well because I have submitted my written statement. But I do think we have an opportunity this year, and I, again, want to commend those of you who are supporting this major reform, particularly Chairman Dreier for his outstanding leadership on this particular issue. It has been a joy to work with him, and I do think we have an opportunity to enact real meaningful reform in the Federal budget process.
As I said, I will be brief. But I will say this. I served in the Minnesota legislature for 20 years before coming here, and I believe 18 of those 20 years I worked on the appropriations process. That taught me that that was a better system. We had a biennial budget system in Minnesota, as I think 23 States in the country have. That taught me, and I haven't had the benefit of being -- I should say I haven't had the benefit of being part of that process here. I serve on the Commerce Committee and not the Appropriations Committee. But I believe that taught me that that is a better process. It is a better process for everyone.
I think one of the things I tried to focus on in the appropriations process was trying to meet the current needs of government by eliminating some of the things that maybe got started years ago but we no longer have a need to continue doing. I found that over a 2-year period you could plan for the phaseout of those kinds of government activities and actually achieve meaningful savings. On the other hand, if you only looked at the 1-year benefit that you would get from phasing out some of these activities, you probably wouldn't gain too much in many instances because by the time you have a normal phaseout, the unemployment costs that might be associated with it, some of the other shutdown costs, not a lot could be gained. But that if you plan ahead, you know, in a longer process that you actually could achieve some savings that could then be applied to what the more contemporary needs of government might be. And so I found it to be very helpful.I think successful businesses and families plan ahead. I believe that we could benefit greatly from more planning.
The second point that I just wanted to emphasize here is that I believe the real issue isn't, as I think was stated very well by my colleague, Mr. Bass, the real issue here isn't how we make our jobs better, but how we work for the American public. I see issues today that I believe we should be addressing in Congress. And sometimes I ask myself why aren't we doing them? Why aren't we spending real time on issues like global warming, on sprawl and getting smart growth in this country? Why aren't we spending real time on the issue of at-risk kids? Why aren't we spending real time on energy independence?
These, I think -- and this is just a small number of issues and there are many other issues that each of you could think of, but I think one of the reasons we are not spending adequate time on the real issues that are going to define us for the future is because we spend such an inordinate amount of time on the budgeting process every year. And I believe that that takes time that we otherwise could spend in a much more appropriate fashion doing the work of our country for the people of the country. So that is my feeling on this issue.
Again, I would say that with the caveat I haven't had the opportunity to serve in the appropriations process since I have come to Congress. This is my seventh year here. And I know you will hear good arguments from some of my very good friends on the other side of this issue. But my feeling is that we could all benefit and, most importantly, do a better job for the American people, and after all, that is what it is all about.
Thank you.
[The statement of Mr. Luther follows:]
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Ms. Pryce of Ohio. Thank you very much.
Joe.
STATEMENT OF THE HON. JOE BARTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. Thank you, Madam Chairman. I am tempted to say we are going to have to stop meeting like this. I have been in Congress 17 years and I think I have testified at least once or twice a year on some budget process reform before the Rules Committee. So if y'all are tired of seeing me, then let's get this thing done.
Ms. Pryce of Ohio. We always welcome your appearance here.
Mr. Barton. And I have got to tell Congresswoman Slaughter, what did you say, we stagger around here or something.
Ms. Slaughter. We do. We stagger onto planes totally exhausted.
Mr. Barton. Stagger onto planes. I have got three million frequent flyer miles on American Airlines. I could actually be an FAA certified quality control inspector if it were allowed by our ethics rules and make a little bit of money doing it.
Ms. Slaughter. I have got a chronic sinus infection from it.
Mr. Barton. I have seen it all. Well, I have a statement I am going to submit for the record, a very good statement by my staff.
Mr. Dreier. Now let's see what you have to say.
Mr. Barton. This is excellent. Now I am going to tell you what I want to say. If we were starting over from scratch, would we put together the budget system that we have? If we had a perfect blank piece of paper and they said put together the best budget system we could do, would we put together the system we have? I don't think anybody would say we would. It has just kind of happened by serendipity that we have got this system. And there are lots of budget process reform things we could do, I mean a ton, and they are excellent bills. Mr. Cox has a bill. Mr. Nussle, the chairman of the Budget Committee had a bill. Maybe he still does. But I think one thing everybody would do if we were starting over is say, well, we are in session for 2 years. We ought to have a 2-year budget. I don't think anybody today would say let's go to a 1-year budget cycle. Now, the problem is you have got to get -- we have got that transition problem. You have got a new President. We are going to have a new Congress every 2 years. We have got a new Senate this year, a new Senate majority. This is the time to do the one thing that there is, I think, the most consensus about, and that is go to a 2-year budget cycle. Now you, put in the language a transition period. There are all kinds of ways to fix it for getting from point A to point B. But if we could do this one thing. And last year, Chairman Dreier's bill had a majority of the House as cosponsors. Only in the U.S. Congress would something that had a majority of cosponsors not get a majority on the floor. Apparently, a few people were sick that day, I guess. They just didn't show up.
So I simply say take a look at the whole system. But this one reform, we ought to put -- I hate to use the word fast track, but we ought to put it on a path that we could really get this thing voted on. I think it will pass this year and I think it will save billions of dollars. It would help the authorizing committees. We could spend a lot more time on oversight if we could do this. It would help the Appropriations Committee. I think it would help the Budget Committee, so I would hope we would do it.
[The statement of Mr. Barton follows:]
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Ms. Pryce of Ohio. Thank you for your statement. All of you, we enjoyed your testimony. Are there questions? Chairman Dreier.
Mr. Dreier. Well, let me just congratulate all three of you and to say again what I said earlier, I know that our colleague, Mr. Clement very much wanted to be here and I suspect that he would echo the statements that the three of you provided. I think that the overwhelming message of your panel is this focus on the American people. And you know, as Chairman Pryce has pointed out and others have said, during the decade of the 1990s, I was tasked firstly on the Joint Committee of the Organization of Congress, and then when we became a majority in 1994 we brought about major institutional reforms. In the last Congress we recodified Rules of the House, going from 52 rules down to 28 basically, cutting them virtually in half. It has all been done with a goal of not necessarily making Congress more efficient, because we know that the framers wanted the institution to be deliberately inefficient, the process of lawmaking. At the same time, however, it seems that we need to realize that as we look at reforms, as has been pointed out, it is very difficult because, as I said when I was working on jurisdictional reforms in 1994 and 1995, and then again when we made some major changes in the Energy and Commerce Committee, if you recall correctly that, Joe, and the now Financial Services Committee, there are some people who I felt would be more inclined to give me their firstborn than to have me take jurisdiction from the committees on which they serve. And it is --
Mr. Barton. Is that trade still open?
Mr. Dreier. I do think that there are turf battles that go on and they will continue to go on. But if we are trying to keep the goal that you, Bill and Charlie talked about, making institutions deliberative, responding to the wishes of the American people is something that we should always keep on the radar screen and I think it is going to be, again, a challenge and I know there are people who are all over and this is not a partisan issue at all.
Bill Clinton was a strong supporter of this, as is President Bush. It is more of an institutional question. And I don't know that biennial budgeting is the panacea to all the ailments of society. I suspect that it is not. But I do believe in doing our job for the American people.
Something that you all didn't mention is the issue of Congressional oversight, and that is something that, again, some of the appropriators have talked about to me before, those are proponents of this. They believe that actually in the Appropriations Committee they will be able to enhance their opportunity for greater oversight in looking at some of the issues of concern that you raised here, Bill.
So I just want to congratulate you and say that I appreciate your optimism on this, because I think it is going to be very tough for us to do, and again you are right, Joe. We had, I think 245 cosponsors is what Tom Reynolds just mentioned and we got 202 votes when we had this on the floor.
Mr. Barton. I won't say it must have been the leadership. I will not say that.
Mr. Dreier. Well, you know, there were mixed views there on this question, and I know that I will admit that some of the people cosponsored the legislation at 2, 3, 4:00 in the morning when we were in the midst of dealing with this process very late in the Congress, and it was that, a level of frustration, that I think led many people to cosponsor the legislation, and then there were other forces that came into play here
Mr. Barton. And that might be an idea when to bring it up for a vote.
Mr. Dreier. That is exactly right. But I will tell you that I think it is going to take a lot of work. And congratulations on what you have done. Thanks very much for working as hard as you have.
Ms. Pryce of Ohio. Ms. Slaughter.
Ms. Slaughter. I don't have any questions, although I appreciate the testimony. But I would like unanimous consent to submit a statement from John Pratt.
Ms. Pryce of Ohio. Without objection .
[The statement of Mr. Pratt follows:]
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Ms. Slaughter. And also for Robert Livingston, his testimony before the Budget Committee on July 19 of this year
Ms. Pryce of Ohio. Without objection, it will be entered into the record.
[The statement of Mr. Livingston follows:]
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Ms. Slaughter. Thank you.
Ms. Pryce of Ohio. Mr. Hastings.
Mr. Hastings of Washington. Thank you. When I walked in I heard Charlie making his eloquent close saying the time for biennial budgeting is now. I was very impressed and encouraged because I have been a believer in the biennial budget. And Bill, like you, I am just learning the process. I am on the Budget Committee for the first time and am still learning all of its complexities. I think that if there is one reform that we could make it really ought to be the biennial budget.
You mentioned your experience in the Minnesota legislature on how biennial budgeting works. Let me give you a case in point. In the Washington legislature right now we have a biennial budget. Just to show you how difficult things are, but how the budgeting process will at least be enacted in place for another year, the Washington legislature and the House is divided 49/49 in the House. The Constitution requires 50 votes to pass anything. So you are going to have to have bipartisan support. The Senate is 25 to 24. So you can't get any better -- any worse than that.
Furthermore, we have the initiative and referendum process. Last year there was an initiative to raise teacher salaries, and there was another initiative that passed that restricted spending. So the legislature walked into this mess with the institutional time limit of trying to come up with something. And they obviously didn't make it the first time. They had to go two extra sessions. But they passed the biennial budget. And of course, like any budget, you know it is not perfect. We have all been through that drill. They are back now in special session to deal with another issue and I don't know if they will deal with that amendment or not. But the point is, for the people of the State they will have a budget for a 2-year period. How bad and how many people don't like it is an open question, but they will have one in place for a 2-year period when they go back into an election year. And if there are some needs out there there will be a supplement. There is always a supplemental budget when you have a biennial budget. They will deal with whatever has to be done.
So I am more convinced now that if there is one reform that can be a comprehensive reform, maybe biennial budgeting is the thing we ought to do and see where we go. Because in our incubators out there in the State legislatures, this is one case where --
Mr. Barton. This is not a radical idea.
Mr. Hastings of Washington. It is not a radical idea.
Mr. Barton. It is being used all over the country.
Mr. Hastings of Washington. Case in point, we are going through this right now. They will have a 2-year budget.
Mr. Bass. If the gentleman from Washington would let me respond to his earlier point, I would like to point out that everybody who sits between me and the chairman of the Budget Committee supports the biennial budget and cosponsored the bill, and some to my right as well. The chairman of the Appropriations Committee and a number of subcommittees, chairmen of that committee supports and cosponsors biennial budgeting. The ranking member of the Senate Budget Committee, former chairman, Pete Domenici, supports biennial budgeting as two or three former Presidents. I believe our leadership supports biennial budgeting as well. That amplifies or perhaps illustrates a little more clearly why we have this golden opportunity and we shouldn't let infighting, turf battles and technicalities get in the way.
Mr. Hastings of Washington. I would agree. I think that is basically it. Thank you.
Ms. Pryce of Ohio. Mrs. Myrick.
Mrs. Myrick. Thank you, Madam Chair. Joe, thanks for your 17 years of fighting this battle along with Chairman Dreier.
Mr. Barton. Just think how good I would be if I were effective. It is one thing to fight, but let's win.
Mrs. Myrick. Well, you can't give up hope because some of the structural changes that David has been doing over these last few years we have implemented, and that encourages me because I support -- I am also a former member of the Budget Committee. I went on with Charlie in the beginning. I had one question of you, Charlie, and you others can chime in if you want. One of the biggest complaints that you hear about this process is well, the administration, executive branch will have too much control and the agencies won't listen to Congress and we will not be effective with oversight. Since you have all had experience in dealing with this in your State legislatures, I am just curious if any of those have become reality.
Mr. Bass. Well, Sue, I suggest a couple of things. First of all, we have reprogramming on a constant basis. There are agencies who always have to come back to appropriators. I would suggest that one of the reasons why biennial budgeting has been enacted in many States is because it can be argued that it actually increases the power of the Appropriations Committee because you don't have to go before the whole Congress and be submitted to full debates. I mean that is an argument for the other side, but they will make it the other way. And I just don't think that that holds any water at all. If we are worried about budget forecasting, I guess we ought not to have had a 10-year budgets forecast to begin with that we all seem to be hanging everything on. I guess we can't believe a 6-month forecast.
Where do you draw the line? Clearly, as somebody mentioned here, maybe it was Mr. Barton, we ought to work in a congressional cycle rather than 1 year here and 2 years there and 5 years and 10 years and so forth. But I don't believe that the biennial budgets would in any way reduce the accountability that agencies and arms of the executive branch have or will have in Congress. We still have the power, and it hasn't been an issue that I am aware of in other States.
Mrs. Myrick. Thank you.
Ms. Pryce of Ohio. Well, thank you very, very much, Mr. Bass, for your hard work and all of your constant efforts on this. Gentlemen, we appreciate it. All right. We will call the next half of the panel, the dark side, the appropriators. That is just a joke. Mr. Hobson, Mr. Knollenberg, Mr. Price and Mr. Walsh.
Mr. Hobson. In that order?
Ms. Pryce of Ohio. However you want to sit. That is just a joke. We all know that there are two sides to this issue. We heard the eloquent statements of the Members that favor this, and so it is your turn, and we will begin with Mr. Hobson .
STATEMENT OF THE HON. DAVID L. HOBSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO
Mr. Hobson. Well, thank you, Madam Chairman, Chairperson. I wish the chairman were here to hear this and some of the people that testified before. First of all, I would like to put into the record the GAO report on biennial budgeting which Mr. Dreier had commissioned, if it is not already in the record.
Ms. Pryce of Ohio. Without objection.
[The information follows:]
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Mrs. Myrick. He is back.
Mr. Hobson. Oh, good. I wanted you to hear this.
Mr. Dreier. Yes, I came back to hear this.
Mr. Hobson. Okay. First of all, I appreciate the opportunity to be here. My experience regarding biennial budgeting comes primarily from my service as President pro tem of the Ohio State Senate. I also served on the Budget Committee here when we did the balanced budget agreement with my leader, John Kasich. And I now sit on the Appropriations Committee. I am also a businessman by background and in my businesses I don't have 2-year operating budgets. I have a 1-year operating cycle and we have long range 5-year planning, which, I think most corporations if you look at in this country do. So when people say we want to set up a business model, let's look at the business model and see how they do things.
First, I encourage anyone with an interest in this issue to go back and review this General Accounting Office report that was requested by the chairman. And the reason I came today was not so much to fight about the issue, but to say that we need to look at this very carefully. Ohio was one of the States that the GAO investigated. So I would like to talk a little bit about Ohio's experience.
For background, Ohio has what might be called a split biennial budget cycle in that the timing of the budget is different from the operating and capital budgets. In the first year of the session, the legislature adopts 1-year operating budgets and since the mid-1980s the legislature has adopted a 2-year capital budget in the second year of the cycle. In recent years the practice has also been to include adjustments to the operating budgets and the capital budgets. In other words, the capital budget, while limited in the amount of funds it has provided, is often used as the release valve to address budget problems not addressed in the even year.
Biennial budgeting in Ohio does have some advantages. Because the really tough funding decisions are only debated once every 2 years, State legislatures have more opportunities to focus on legislative fixes for funding issues and their oversight roles. However, it might not be easy to translate Ohio State budget laws, practices and experience to the Federal level. State budgets are generally more constrained than the Federal budget as a result of balanced budget requirements and borrowing restrictions. In Ohio, all spending must be in compliance with a balanced budget requirement in the State Constitution. I don't know about your State, Mr. Hastings, but we have that. Most of these States that have these 2-year budgets have that constraint.
Also, we have a germaneness rule in the State of Ohio. You can't put a whole bunch of issues into one particular piece of legislation. Moreover, Governors generally have much broader authority than the President to limit spending. In Ohio, the Governor has extensive line item veto authority to control spending, and we just went through the experience where he line item vetoed a number of items. And there are many fewer officials with direct involvement with budget issues.
There is also in Ohio a controlling board which serves as a primary budget control in the off year. The board is a joint legislative-executive body with broad authority over State fiscal activities, including transfers, emergency spending and established new line items. It is hard to imagine a similar body being established with a similar makeup role in Congress.
And it also must be remembered that the entire fiscal year 2003 Ohio State budget is roughly the same size as this year's Commerce-State-Justice appropriations bill. If the biennial budget process in Ohio was enacted in Washington, imagine the complications inherent with trying to manage one of the really big annual appropriations bills like Labor-HHS for a 2-year period.
There is also a stark difference of scale between the State and Federal legislators. 132 State legislators making biennial funding decisions that effect 11 million Ohioans is a comparatively easy task compared with the consensus which would be required for 535 Members of Congress to make biennial funding decisions that effect 281 million lives.
Proponents of biennial budgeting believe that the Federal Government would benefit from a biennial budget process, but it is hard to allow Congress more time to give to oversight and investigations without having to constantly be involved in the budget process, and I think that is a good goal. Any time savings in the biennial budget would depend on the willingness of the Congress to make fewer changes in the off year and the ability of Congress and the President to reach agreement on how to design and enforce an off year process.
I fully understand the desire of some Members of Congress to attempt to streamline the operation of the Federal Government by switching to a biennial budget, especially when audits continually detail real problems with funding and management in many of our agencies. However, based upon my experiences in Ohio, I don't see a Federal biennial budget as a silver bullet in our budgetary problems. But I appreciate the leadership this committee has taken in reviewing the different ways we can improve the process, and I am not opposed to improving the process.
I am worried about more supplementals that would come about because they become Christmas trees and in my experience in State legislature Christmas trees were as dangerous as they are here, and especially when you are dealing with another body that has different rules than we have. Those are very dangerous places to tread. Regardless of what procedures are used, Congress will always have to make tough decisions to maintain a true commitment to fiscal responsibility to make the appropriations process more efficient.
Mr. Chairman, I thank you for the opportunity to testify before this committee and would be happy to try and answer any questions that you might have later on.
[The statement of Mr. Hobson follows:]
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Ms. Pryce of Ohio. Thank you, Mr. Hobson.
Mr. Walsh.
STATEMENT OF THE HON. JAMES T. WALSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK
Mr. Walsh. Thank you, Madam Chairman, members of the subcommittee, for giving us an opportunity to come in. I have a real concern about any change in any shift in constitutional power. This is a very delicate balance that was established many, many years ago, and while I am just as frustrated with the process of budgeting as the rest of you, I think we have to be very careful.
The line item veto that Mrs. Slaughter mentioned is a great example. I voted for that with my eyes wide open. I think the Supreme Court saved us from ourselves. They reminded us that there are certain powers invested in each body. The last major reform that was passed by the Congress was a Reform Act of 1974, which resulted in trillions of dollars in deficit budgeting. Trillions. We never experienced anything like that prior to 1974 in this country, other than World War II. Prior to that, the Appropriations Committee, Ways and Means Committee created the budget together. And it has been suggested that maybe the way -- one of the reforms that should be considered is to combine members of the Ways and Means Committee and the Appropriations Committee in a Budget Committee, as had been planned previously, and eliminate the additional layer of legislative bureaucracy. I am just as concerned as Mr. Hobson about this issue of supplementals. If you go every 2 years, it doesn't give the Congress the time to react as we often do. We are a reactionary body in many cases. But it slows down our ability to react. Revenue projections.
I remember going down to the White House when the current President's father was there with a group of Republicans. They were twisting our arm to vote for this tax increase that the President had proposed, and they gave us this 5-year budget scenario, and I said, Mr. President, how can you expect us to accept 5-year budget projections when you are already off 50 percent this year? And he turned to Dick Durbin and he said that is a good question, Dick. Answer him. And he couldn't. So to try to make assumptions that are 24 or 30 months is folly. And it just creates a situation where we are going to be doing these supplementals, as Dave Hobson mentioned, as my father who served here used to call them, they are Christmas trees. We will have Christmas in July and August and September and the Senate does not have a germaneness rule.
So we are handing all of our authority over to the Senate. Right now OMB drives most of the policy in this country. They tell the new incoming Secretaries of each Department what they think is good and what they think is bad. You ask the new Secretaries that are coming in now if their policy prerogatives are being implemented, they will tell you we go down to OMB and they say we don't think that is such a good idea, why don't you try this. So with OMB driving policy, and the Senate hanging their ornaments all over the supplementals two or three times a year, I think we create a real serious problem for ourselves.
So we need to be careful whenever we talk about reform. The House has the power of the purse. It is our greatest power. We need to protect it diligently, vigilantly, and so any discussion of reform, while we are all frustrated by the budget process, any discussion of reform needs to be very, very cautious.
Thank you.
[The statement of Mr. Walsh follows:]
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Ms. Pryce of Ohio. Thank you.
Mr. Price.
STATEMENT OF THE HON. DAVID PRICE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA
Mr. Price of North Carolina. Thank you, Madam Chairman. I am pleased to be here to testify on this important institutional issue, to be here with my colleagues. I feel like we are being type cast a bit as turf guarding appropriators. But far be it from that, I hope and believe that we are speaking for institutional prerogatives that go far beyond the Appropriations Committee.
Let me briefly offer three reasons why I think we should resist this siren call of biennial budgeting. I grant its attractiveness and the fact that many good, responsible Members have worked on it for a long time. But I do think in the end we should resist. And I will give you three reasons.
First, biennial budgeting would weaken Congress' power to shape national priorities and to hold the executive accountable. Biennial budgets, I believe, would weaken the best instrument Congress has for claiming full partnership with the executive in shaping national policy, and that is the power of the purse. Members of Congress, according to most scenarios, would write appropriations bills only in the early months of a term, and would be fiscal lame ducks thereafter, reduced to seeking sufferance from executive agencies and/or trying to put together sporadic supplemental appropriations bills and, believe me, there would be many, many more supplemental appropriations bills. By the time another regular appropriations bill was debated, some Members would have retired. Elections would have been held, committee memberships would have changed. And believe me, the executive agencies would be well aware of that. This would weaken congressional authority and embolden the executive.
Almost every political scientist that I know of who has looked at this issue would agree with this prediction of an institutional weakening. And on a question like this I do think those outside analysts should be taken seriously. We should protect the legitimate powers of the entire Congress.
Now, yes, there are impressive statements of support from Presidents from both parties. Why should that surprise us? George W. Bush likes the idea. So did Bill Clinton. So did George H.W. Bush, and Ronald Reagan and virtually any President you could speak of. All have supported biennial budgeting. That does suggest that it is not a partisan issue. But it certainly also should suggest that this is an institutional issue. That is a red flag. This is an institutional issue that we gloss over at our peril.
Secondly, oversight without the power to reduce or increase appropriations is often oversight without teeth. I think the most ironic argument for biennial budgeting is that somehow it would give us more time and more resources for oversight. Goodness knows, the most careful oversight we give the executive branch is through the annual appropriations process where agency budgets and performance and needs are reviewed program by program, line by line. And that oversight has teeth because we are after all writing appropriations bills.
We have the power of the purse and the agencies know that. Without the need to produce an annual appropriations bill, appropriations would lose a great deal of its bite.
Now, what about the authorizing committees? It escapes me why this question is relevant at all to the authorizing committees. It wouldn't give them more time to conduct oversight. They have that time now. They don't pass appropriations bills now. Authorizing committees already have the power and the time if they will choose to use it to conduct rigorous oversight.
Finally, let me address the importance of multi-year budget planning. It is important to do multi-year planning to take account of the likely fiscal situation in the outyears.
Mr. Bass in the previous panel stressed rightly the question of what is the appropriate time frame for our budget projections and deliberations. That is an important issue. That is not the issue, however, of biennial appropriations. Multi-year budget plans, like those of 1990, 1993, and 1997, can be important instruments of advance planning and fiscal discipline. And unlike biennial budgeting, they don't weaken Congress' hands in shaping national priorities and holding the executive accountable.
So the question of the appropriate time frame for budget projections needs to be separated from the question of biennial appropriations.
So, Madam Chairman, I strongly believe that biennial budgeting would weaken Congress' power and its performance in both budgeting and oversight, and I appreciate the chance to share these concerns with members of the committee.
[The statement of Mr. Price follows:]
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Ms. Pryce of Ohio. Thank you.
And now Mr. Knollenberg. Thank you, Joe, for being here .
STATEMENT OF THE HON. JOE KNOLLENBERG, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN
Mr. Knollenberg. Thank you, Chairman. Thank you very kindly for holding this hearing, allowing us to offer our commentary, our thoughts about biennial budgeting. I think at least three of us at the table served both on the Budget Committee and the Appropriations Committee at one time or another. So I don't think you can say that we come here with a lack of experience with respect to budgeting. But in any event, let me go through some points. I will probably parallel some of what my colleagues have said, particularly Mr. Price. As a member of the Appropriations Committee and former member of the Budget Committee I have seen both processes work, and I know first hand some challenges that both the budgeteers have and the appropriators have. And while much of the dissatisfaction with the budget process in recent years has been the result of divided control of the Congress and the executive branch, it is unlikely that a shift of biennial budgeting would have made any difference. Nor should we let the frustrations of the past few years push us to a system that simply may not work.
We must ask ourselves what we are trying to accomplish here and is this the most effective way to accomplish that goal. Simply, in my judgment, biennial budgeting is not the answer.
It is the uncertainty of budget projections. Biennial budgeting could jeopardize the very thing that many of us in Congress hold most dear; preserving the surplus for debt reduction, for tax relief and any other pressing needs. As we all know, budget projections invariably rise and fall with economic trends, emergencies and others factors that are outside Congress' immediate control. For example, over the last 4 years, CBO has incorrectly estimated the deficit or surplus for the upcoming fiscal year by an average of 99.5 billion. That is not even close. 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 relief 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 appropriations bills can discretionary levels be changed. In the case of entitlement reforms the budget resolution can protect these measures from a filibuster. Welfare reform may never have reached the President's desk had it been considered in the second session of the 104th Congress. You have to look at what the Senate did that year. They had a vote of 52 to 47; not enough to get to the 60, needed to overcome a filibuster. And that would have been the demise of welfare reform.
On the oversight situation, one of the most talked about advantages of biennial budgeting is allowing time, additional time to focus on oversight, and my colleague Mr. Price covered some of that. Ironically, as he said, biennial budgeting would actually reduce oversight, because the most practical oversight is accomplished through the appropriations process. In that process, we write the checks, up or down from what the budget resolution actually states. As a result of the appropriation process, 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 appropriation reductions for agencies that fail to adhere to authorizing statutes, consult with Congress on agency operations or meet performance goals.
And further, with no regulation, no regular appropriations 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 leadership, which means less Member input and oversight. My colleague mentioned Christmas in July. I thought it was an event. Well, here it tends to be one because of supplemental appropriations bills.
On cutting taxes, not only will biennial budgeting make it tough to keep the budget in balance, it could also eliminate any hope for tax relief in election years. The budget resolution includes an instruction to the Ways and Means and Finance Committees to report a tax bill. This tax bill is then protected in the Senate from a filibuster. Any tax bill not reconciled by the budget resolution from the previous year will effectively need 60 votes to pass the Senate. It is a very high hurdle for those who came to Congress with a mandate to provide tax relief for American families.
I am aware that several of my colleagues have had positive experiences with biennial budgeting in their State legislatures. But the current trend among States is a shift toward annual budgeting. These numbers sre from a recent GAO report, which may or may not be dated. Currently 30 States budget on an annual basis, however 26 States have dropped biennial budgeting in favor of annual budgeting, over the last 40 years.
RPTS STUART
DCMN MAYER
Mr. Knollenberg. In addition, unlike States, Congress must necessarily address a myriad of both domestic and international issues. This broad array of responsibilities requires attention every year. Some of those needs are spontaneous; they come up tomorrow.
On the issue of ceding power to the administration and the Senate, I think this is somewhat frightful. I do have strong concerns there, because I do believe that we would see power from this House shift to the Senate and to the Presidency. Senate rules allow endless amendments to supplemental appropriations bills, giving Senators great flexibility in off years.
Keep in mind they only run every 6 years; we run every 2 years. We have got to face the heat every 2 years and they don't. Members of Congress would write appropriations bills only during the early months of a term, and as my colleague mentioned, would be fiscal lame ducks thereafter, subject to the will of the administration, forcing sporadic supplemental measures.
The House must act responsibly and not cede power to the Senate or to the administration.
Madam Chairman, and, ladies and gentlemen of the Rules Committee, I appreciate very much the opportunity to come before you. Thank you for holding this hearing.
[The statement of Mr. Knollenberg follows:]
******** INSERT 2-1 ********
Ms. Pryce. Thank you very much, gentlemen. As I noted at the beginning, there are two sides to this, and we appreciate your perspective very much.
And now if there are questions from the committee, with the caveat that Director Daniels has been there waiting -- so if you can keep your responses to the point.
Mr. Dreier. Thank you very much, Madam Chairman. Let me first of all say that all four of you know that I have the highest regard for you and your work. And this is an institutional issue, which I think is important. And as I have looked at the reforms that were proposed and worked on, and implemented and worked on over the past several years, I have not in any way wanted to gloss over or pass to the executive branch any of the power that clearly does exist with the power of the purse here.
It is an interesting irony, as I look at the diverse views just coming from the State of Ohio. We have a very strong statement that was made by Chairman Pryce here in support of this.
You, Mr. Hobson, obviously are an opponent.
Mr. Hobson. I served in the legislature.
Mr. Dreier. Your colleague, Mr. Regula --
Ms. Pryce of Ohio. I was a taxpayer.
Mr. Hobson. So was I. And I was in private business. And I don't think Mr. Regula shares the view today that he did when he signed on.
Mr. Dreier. So he has changed his mind on this?
Mr. Hobson. I think that is true for Mr. Young also.
Mr. Walsh. If the gentleman will yield, I think he may still consider the idea of biennial budgeting. I just spoke to him about this yesterday.
But the idea of an automatic continuing resolution, I think, scares the daylights out of him.
Mr. Dreier. Well, it scares the daylights out of me too. I have never been a proponent of the automatic continuing resolution. I don't know how anyone would necessarily tie the two together; I think that is a horrible idea.
So Ralph Regula and I are still in complete agreement here on this issue. But I know from having spoken with him last night that he is -- he has provided me most of the arguments in support of this.
I mentioned earlier when he was dealing with the energy issue, he provided very compelling testimony here which played a role in convincing me that looking at the fuel costs, the idea of seeing the Federal Government save taxpayers like Deborah Pryce their dollars by going through a 2-year contract arrangement is something that was very -- let me just raise a couple of the issues that came from your testimony.
All four of you talked about this potential deluge of continuing resolutions that we are going to face. Since 1974, there have been, on average, three supplementals that we have seen -- or not supplementals -- supplementals, on average, every year. And right now, with the annual structure that we have, that basically, with the budget resolution and 13 appropriations bills, means that there are basically 18 a year. And I know that there is a real fear -- well, 18 budget resolutions and three supplementals.
Mr. Walsh. Three supplementals a year?
Mr. Dreier. Since 1974, on average, there have been three supplementals a year; and you add to that the budget resolution and the 13 appropriations bills.
And the -- the point that I would make is that I know that we have this great threat of a deluge of supplemental appropriations bills, but it seems to me that if you look at what we do on an annual basis today, that we are in a position where we obviously have an awful lot of votes in that area.And so I would simply argue that it is quite possible that if we were to go to a 2-year cycle, that we would end up with fewer than we face today, when it comes to this process itself.
And on the issue of -- one of the points that came forward from Dan Crippen in his testimony that he provided us -- I think it is really interesting to know that the Director of the Congressional Budget Office, he has a great institutional commitment here, and he said that it seems unlikely that agencies would be less responsive to the Congress just because they would be requesting regular appropriations every other year.
Also, a biennial budget cycle, by setting aside time for congressional action or oversight in authorizing legislation might relieve the appropriations process of time-consuming debates on substantive policy issues which can actually improve congressional control of spending.
So I would argue, as several of your colleagues on the Appropriations Committee have argued, that this would actually enhance the power of the Appropriations Committee if we were to move ahead with a 2-year cycle.
And again I know that there is disagreement and I know that most of the members here today don't agree with that assessment. But I think that there are a number of independent observers of this that have clearly come to that conclusion.
Mr. Hobson. If I might, I would refer you to page 15 of the report, the GAO report, where it says that this may be true in one State, but in contrast, Ohio and Connecticut have neither mandates nor plans for increased oversight in the off-year.
I am not sure that in those States which the GAO looked at that they have actually experienced the oversight. I can tell from you my experience in the State as the chairman of Health, Human Services and Aging, which is one of the largest budget items in the State of Ohio when I was there, that you do have a problem dealing -- and especially today -- in those States with term limits. The bureaucrats are far more difficult to deal with.
And when I first came here, I had a bureaucrat tell me down at one of the agencies, I will outwait you. You won't be here very long, and I will get what I want.
And I think -- you know, we can't overuse our power in that, but I think it is very difficult to deal with some of these agencies if you don't have the ability to have the pursestrings.
And we had some outlets in Ohio. We had some other -- while it looks like we have strict biennial budget, we had some safeguards and some release valves that we did. But I can tell you that just as there they became Christmas trees when we did supplemental bills.
Mr. Dreier. I would like to just pose one question for you.
That is, as I said in my remarks earlier, I don't -- I don't believe that this is a panacea. But would you all have difficulty if we were to just make an attempt at this process, and then if it didn't work, go back to an annual process?
Mr. Knollenberg. What do you mean by "attempt"? How much of an attempt is it? All the water out of the bucket?
Mr. Dreier. Basically, we would go through a 2-year cycle and see if it worked. Then, if not, we could come back to an annual cycle. I mean, it would be just looking at this and having it sunset after a while and -- I mean, with the process itself.
Mr. Walsh. I would -- just as I did at the beginning of my statement, I just urge extreme caution. Any time you are tinkering with this process, there is the rule of unintended consequences that occurs.
While fewer of those would occur in a short time frame, say a 5-year sunset, it -- I just think if we are going to do it, let's do it in a thoughtful way and live with the consequences. But I would just urge caution.
Mr. Dreier. That is sort of the idea behind -- having the sunset is, do it in a cautious way.
Mr. Walsh. Well, it will be easier to support a bill with sunset.
Mr. Hobson. Let me say two things on that. I think it is very dangerous to mess with this process in one House. Unless you can get agreement with the Senate, we might as well just give up our jobs here and say we are going to do whatever the Senate wants.
The second thing is, we passed the lottery in the State of Ohio; and it had language in it that if didn't achieve certain objectives, we would get rid of it. It has not achieved those objectives; it is even worse. And it is in there, and we can't get rid of it, sir.
So that is why it worries me about the unintended consequences.
Mr. Dreier. Thank you very much, Madam Chairman.
Ms. Pryce of Ohio. Mr. Hastings.
Mr. Hastings. Very briefly, I would concede a couple of points that you made, that the size of the Congress is something to consider, and we are not going to reduce that size. I would concede the point of the Senate; because their rules are very different, they have to be part of the problem. But I don't think those are deal killers.
You are going to have to work on the process. What it boils down to, to me, is that we will start this year and we will work who knows how long. Maybe we will ask Mr. Daniels later on. But I suspect that we will be here late this year. And when we leave, we will be totally exhausted, oh, but we have done such a great job.
Then we come back in January and it is like it is all over again, and then the next pressure will be the deadline of the elections, maybe we will get out the end of October or middle of October, totally exhausted and start all over again.
Now, that -- that is a process that is not good. And I will go back to what I just mentioned about the experience in Washington State. As difficult as it is, they will have a biennial budget. And next year, as difficult as it is going to be in a very close election, at least the people will be served by having a document in place which -- to me, that is worth at least exploring.
But I will concede those points. They are real points.
Mr. Hobson. Well, maybe we could go to longer terms for House Members.
Ms. Pryce of Ohio. Mrs. Myrick.
Mrs. Myrick. Well, in the interest of time, thank you for your insightful comments.
Ms. Pryce of Ohio. Thank you very much, gentlemen.
Now, we have two votes here -- three votes. We have got the suspension from last night.
Director, we have three votes. We will be down there for 15 minutes, so we will be in and out. How long is your presentation?
Mr. Daniels. Why don't you go vote?
Ms. Pryce of Ohio. You can begin . Why don't you start? And someone give us a warning, all right?
We will proceed with the hearing now. And we are very honored to have Director Mitch Daniels, OMB.
Director Daniels, I really never knew how powerful you were until I heard Mr. Walsh's testimony. So we are more and more honored, because of the previous statement. And so thank you for taking the time out of your busy day and thank you for your patience, and we will at least begin your testimony and then come back for questions.
STATEMENT OF MITCHELL E. DANIELS, JR., DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
Mr. Daniels. Well, I thank the committee and, you know, I very much enjoyed the chance to hear the pretty illuminating byplay over this issue.
In the interest of your time, you have my statement. Let me just summarize or abstract very briefly from it.
I think I would sum it up by first affirming, on behalf of the President, that he does support this reform. He feels that he benefited from it as Governor of Texas, that it worked effectively there and would here, as well.
I would note that this is -- in looking back over the recent history, that biennial budgeting has become a perennial idea. My three predecessors, at least, have testified to it, or three of my predecessors from the last administration; and there was support for this idea in administrations before that. I guess my hope is that we will now get serious about this idea, you know, and act on it; or I guess agree that we just simply cannot get agreement.
I very much subscribe to the view which was debated in the last panel that on a net basis there would be a marked improvement in the oversight of the Federal Government, and in the management of the Federal Government if we were not consumed, as the Congress now is -- as Congressman Hastings reminded us -- end to end, by budgetary matters.
I don't know when we will get out this year, Congressman, but as you know, from the very outset, the President has indicated and tried to contribute to a somewhat more orderly and timely budget process. And one reason for that is so that his administration and the Congress, in its role, can pay more attention than gets paid today to management improvement in government, as well as the oversight that is your special responsibility.
We are hard at that at OMB, but I will tell you that it is especially burdensome given the primacy that the budget, certainly in months like this, places on our calendars.
I mentioned another item that maybe troubles only me, but I do think that the current process leads to a curious disproportion of attention on the now one-third -- merely one-third of the budget, which is so-called "discretionary." two-thirds of the budget, which we call "mandatory" or "automatic," gets relatively much less scrutiny than I think it deserves; and I submit that the reform you are considering might allow us to balance our attention more wisely and consider modernizations and reforms of those very large programs in the proportion that they deserve.
I guess I would just close by saying that things that the previous panel talked about are all very real concerns. I have nothing to -- perhaps no place in the institutional debate that we heard.
The implementation issues, I don't think should trouble us. It is not as though we are dealing with a perfect system today. And we would have to resolve to -- to implement a new 2-year approach in a way that is disciplined, that does not lapse back through supplementals, for instance, into a rough replica of the system we tried to leave behind; that does not lapse back through, for instance, even more earmarking than is already going on, into the kind of micromanagement that defeats the purpose, some of the purposes that we were all out to achieve.
So, on behalf of the President, I certainly salute the committee for its leadership, and its persistence in keeping this issue in front of the public, and will just say that this administration hopes that this can be the year that something real takes place.
[The statement of Mr. Daniels follows:]
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Ms. Pryce of Ohio. Well, thank you very much for condensing your testimony and for being here with us today. Would we like to ask the Director to wait?
Mr. Dreier. I would like to ask a question, if I could
Ms. Pryce of Ohio. Do we have time?
Mr. Dreier. Apparently we have just got one vote downstairs now. So it will be -- I just, first of all, thank you very much for your willingness to be here and for all of the hard work that you have put into this.
And I want to welcome back the former Deputy Director of the Rules Committee, Mr. Pelletier, who I know is doing a very good job for you.
And I wanted to say that on this issue of the transfer of power from the legislative branch to the executive branch, which was raised by Mr. Price in the last panel -- or I guess a couple of the others maybe mentioned it. But the whole issue of -- well, of course, all of the executive branch, bipartisan support from the executive branch by virtue of the fact that we are giving them so much power, what would your response to that be?
Mr. Daniels. I don't think it is a real concern, to tell you the truth. I suspect that in a true and disciplined 2-year process, there would be vastly more oversight and reflection on the performance of government and on the efficacy of the programs that we have.
My own view with respect to the one we heard is that the current appropriations process doesn't spend much of its time on that. It can't. And it tends to be much more dollars-and-cents, sort of arithmetic exercises, only occasionally, I think, probing into how well an administration is doing its job.
So I read the prospects very differently than he did.
Mr. Dreier. Thank you.
Thank you.
Mr. Hastings. I have a few brief questions.
Ms. Pryce of Ohio. A minute left.
Mr. Hastings. Real briefly, there has been some talk about budget reform. This is off biennial budget, but would you talk about budget reform, about the administration's submitting a much more broad outline, rather than detailed line-by-line items?
Just give me a brief thought on that report, the issue that you would like, from the administration's standpoint.
Mr. Daniels. Say it one more time.
Mr. Hastings. Well, there has been some talk about when the President submits his budget, he doesn't go into all of the details -- dot every "i" and cross every "t" - it is more broad. Obviously, you have some areas that you want to emphasize there, but just give me your thoughts on that. Is that something --
Mr. Daniels. Well, I think the Congress is owed and eventually does get the detail. I think that this year there was a separation, we were a little late relative to history, not very, but due to the abbreviated transition. But it would be both I think entirely appropriate and our ambition to, in the future budgets of this administration, provide as much detail as early as we can.
I think there is still a purpose for a separate document that lays out the broad themes and outlines of what an administration is trying to accomplish, something that can make sense to, you know, a broader public than those who can really abstract the meaning from the detailed, itemized budget.
So I think that both have a place, but I think that we owe the Congress the full itemization as early as we can get it here.
Mr. Hastings. The second one is, with all of the budget reforms we are talking about, we heard today here, for example, that maybe this is the one that should be at the highest level. Do you suggest that perhaps we approach this on a piecemeal basis, say, do this one, take the biennial aspect and maybe something else down the line?
What would be your views on that?
Mr. Daniels. The President endorsed a series of reforms in his campaign and would like to see action on all of them at some stage. I think that he would place this one at or near the top of the list in terms of the immediate difference that it could make and the contributions that it could make.
I think that he remains very attracted to the idea of a joint budget resolution, along with the force of the law which would bring executive and legislative branches together earlier in the process, have a little -- perhaps stronger chance of holding and not being abridged later on.
But I have not asked him to rank-order his ideas, which include enhanced recision authority, for instance, something like the line item veto, but constitutional more likely.
Mr. Hastings. Thank you very much.
Ms. Pryce of Ohio. Mrs. Myrick.
Mrs. Myrick. Well, quickly, do you have an opinion on the supplemental issue that keeps coming up, that is, the Christmas tree, which it always has been.
You did a good job this time in making sure that that didn't happen; and with this administration, I feel very comfortable that there is that control
Are there any ways for us as a Congress to control that in the future with other administrations when you don't know how maybe the control would be at the administrative level, and we don't have the heart to do it a lot of times?
Is there anything that you have seen or experienced that would help?
Mr. Daniels. That is an excellent question, and certainly one that ought to an absorb us if and when we move forward seriously on this proposal.
I think in the first and last instance this will be a matter of discipline on the part, first of Congress, but also of an administration. And, as you say, if you get a confluence of a Congress, particularly of a Congress that is going to be eager to spend more and the administration is going to spend more, the current rules and nothing about this reform would preclude it.
I think it is possible to conceive a further tightening in the Budget Enforcement Act, but -- if we review it, I think of the definitions of what can be -- what ornaments can be put on the tree.
But, let's face it, people in public life are pretty inventive, and any rule that you that you and I might sit down and write, somebody would figure out a way around eventually.
Mrs. Myrick. That is true. Would you be willing to consider giving some suggestions along those lines to us?
Mr. Daniels. Yes, Congresswoman, absolutely. I think you know how the President has made a point of trying to diminish what we see as abuse of the emergency, for instance, designation.
And I have to commend Congress and members of both parties and both bodies. So far, it has been a very successful year. And things we were told were just absolutely now common practice here have not happened. And so that, I think, gives you some encouragement.
Mrs. Myrick. Well, I would be very interested in that.
And again we appreciate all of the due diligence that you have done in making this process work.
Mr. Daniels. Thank you. It is mutual.
Ms. Pryce of Ohio. Thank you, Mr. Director. And because of our votes -- and this is sort of disjointed -- would it be all right with you if we submitted some questions in writing that you could take some time to answer, so we wouldn't have to feel so rushed here?
Mr. Daniels. Please do.
Ms. Pryce of Ohio. The committee really appreciates your presence and your thoughtful testimony and thanks you very much. We won't keep you any longer. And the committee will be in recess until right after the last vote.
[Recess.]
Ms. Pryce of Ohio. The subcommittee will reconvene and we will call our third panel: Robert Bixby, the Concord Coalition; and Richard Kogan, Center on Budget and Policy Priorities.
STATEMENTS OF ROBERT L. BIXBY, EXECUTIVE DIRECTOR, THE CONCORD COALITION; AND RICHARD KOGAN, SENIOR FELLOW, CENTER ON BUDGET AND POLICY PRIORITIES
Ms. Pryce of Ohio. Mr. Bixby, I understand that you have some time constraints, so we will allow you to begin. If anybody comes, we will see if they have any questions for you.
And your full statement can be submitted for the record. If you would like to summarize, that would be fine too.
STATEMENT OF ROBERT L. BIXBY
Mr. Bixby. Well, I certainly will summarize rather than read the whole thing, because I tend to get a bit long winded in the word department when writing.
Well, thank you very much, Mrs. Pryce, for inviting me to testify on behalf of the Concord Coalition in favor of biennial budgeting for the Federal Government, something that the Concord Coalition has long been in favor of.
The Concord Coalition is greatly heartened by the improvement in the fiscal condition of the government over the last several years. We tend to forget when the 1990s began, the Nation was mired in large and growing budget deficits, and the budget process was primarily aimed at reining in and ultimately eliminating the deficit. The Budget Enforcement Act of 1990 established caps on discretionary spending and pay-as-you-go limitation on mandatory spending and revenues.
By helping to constrain spending, these budget enforcement mechanisms made a direct contribution to the more favorable fiscal situation we find ourselves in today.
The lesson that we take from this is that overall success of the Budget Enforcement Act means that budget process reform, while not everything, can certainly be an important tool in achieving strategic long-term goals, and it is the long-term perspective that the Concord Coalition always focuses on.
As I said, no amount of process reform can cure the situations, the problems, with the current budget process, or certainly they are no substitute for the hard choices and policy issues that you face. But the Concord Coalition believes that moving the budget to a biennial budget cycle would help shift the emphasis from the immediate and often repetitious year-to-year battles over budget resolutions, appropriations bills and the like to broader questions of strategic planning, oversight and reform.
First, biennial budgeting fits the 2-year congressional cycle. I think one of your earlier witnesses mentioned that, that it -- I think it was Mr. Bass -- said that Congress functions on a 2-year cycle. So moving the biennial budget -- moving the budget process to a 2-year cycle makes sense. With each 2-year cycle, if Congress first enacts a budget resolution, those policies that are put in effect at that time ought to carry through for 2 years. And then -- unless budget events or subsequent political events render the situation totally untenable.
But it makes sense to start from a 2-year perspective, adopt one political statement, which is basically the budget resolution, and the President's budget is also a political statement, and that gives you your political statement for that term of Congress.
Then, to pick up on a point that one of your other witnesses also mentioned, the Concord Coalition has always believed that another advantage of biennial budgeting is that it would enhance the opportunity for congressional oversight. In conforming the budget cycle to the congressional rhythm makes sense in this regard. It could replace wheel-spinning with productive work, including more attention to oversight.
Ideally, as has been mentioned, the first session of each Congress would be spent on setting priorities and establishing funding levels; and the second session would be devoted to long-term planning and oversight.
Now, granted the work of oversight is more painstaking and perhaps not as immediately rewarding as appropriating, and as others have noted, moving to a biennial cycle would not guarantee that time would be made available for oversight or that oversight would be any more thorough than it is now.
But perfection should not be made the enemy of the good; and the key question in this regard is whether biennial budgeting, if successfully implemented, would improve the current situation.
As I said in my prepared testimony, in the final analysis, you are really the experts on that. I mean, you take testimony from outside experts, you did last year, you have this year. But whether or not you feel that you would have more time is something that Members of Congress themselves are best able to assess.
Another relevant consideration here involving both the congressional and executive branches is how you can best make use of the Government Performance and Results Act of 1993. You are now beginning to accumulate a wealth of information that you requested, and adequate time must be made available to properly integrate the GPRA results into your decision-making. We think biennial budgeting, if it works, would help you to do that.
On a broader level, now that the budget process need not be focused exclusively on deficit reduction, thank goodness, you have a window of opportunity to do some weeding out, modernizing and updating of government programs before the demographic and fiscal pressures of the baby boomers' retirement hits. If ever there was a time to reinvent government, now is the time; and it is a short window of opportunity.
In the Concord Coalition's 1993 zero-deficit plan, we suggested programs should be eliminated that no longer are needed, that don't work, or are inefficient; that we can no longer afford, or that provide subsidies to narrow interests. Granted, many of those are subjective judgments. But the point of going to biennial budgeting is that it would be giving you more time to do some of the broader, strategic planning regarding the discretionary programs and the mandatory programs that Director Daniels mentioned.
Just because we have a budget surplus doesn't mean that we have to keep funding every program that we have in the budget at current levels, or even at all.
Also, some of the mandatory programs really require a great deal of thought and research and tiering. I am going from here to a forum on Social Security reform. You will be considering prescription drug benefits for Medicare at some point this session. Some of these longer-term issues are much more important than the repetitious work of the annual budget.
It is not that the money is any less important, but it would be -- you know, sometimes Members complain not just about having to go through the annual budget process every year, but the lack of time that they have to look at some of these longer issues. And so, from our perspective, we have always been in favor of biennial budgeting, because we hope that it would free up time to give more thoughtful consideration to items like tax reform, items like prescription drug benefit or Medicare modernization, and indeed Social Security reform.
Now, some of the arguments against biennial budgeting are quite valid. I mean, as Mr. Drier has said, it is no panacea; and there are pitfalls that would have to be guarded against. One of them that has been talked about is what I call "death by supplementals," if all that happens is that we go to a 2-year cycle, but the second year is spent de facto doing the first year all over again and doing a bunch of supplementals, which might be uncoordinated and might have all sorts of horrible things attached to them, then the purpose would be defeated.
So moving to a biennial budgeting cycle would require Congress to have to adopt some sort of regular second session review and stick to that, rather than do the second year in sort of ad hoc supplementals, which could indeed get out of hand.
Planning for emergencies is another thing that I think is a good thing. The House has been in favor of putting emergencies into the annual budget resolution. You made a shot at that this year; it didn't quite work out. But I think that was a good effort, to plan an advance for emergencies, because otherwise, it is disingenuous just to plan as if no disasters will happen.
And in a biennial budgeting cycle, it would make sense to plan for emergencies in the biennial cycle and in the budget resolution itself.
In summary, moving to a 2-year process is not a guaranteed success. There are difficult transition issues, perhaps not as difficult as the transition issues in Social Security reform that I will soon be talking about. But it would help, we think, to preserve future budget surpluses, improve efficiency, increase oversight, and focus attention on the vital task of preparing for the fiscal challenges ahead.
Thank you.
[The statement of Mr. Bixby follows:]
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Ms. Pryce of Ohio. Well, thank you very much, Mr. Bixby. And in the interest of your time and your next testimony, wherever that is to be, we will allow you to go, if you don't mind our submitting some questions in writing.
Mr. Bixby. I would be happy to do that. That is always easier. I can be more thoughtful.
Ms. Pryce of Ohio. Good luck in your next presentation. That probably has a little bit more challenge to it. And we wish you good luck.
Mr. Bixby. Thank you. I am happy to be here, and I know I will hear my colleague, Mr. Kogan's comments. On this, we disagree, but on many things we do agree.
[The information follows:]
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STATEMENT OF RICHARD KOGAN
Mr. Kogan. Thank you very much, Madam Chairman, for inviting me and also putting me on the same panel with the Concord Coalition. The Center on Budget and the Concord Coalition agree on many issues, but this isn't one of them.
On balance, I think the biennial budgeting is not a good idea. Most of the reasons that I think it is not a good idea were expressed by the second panel, and they expressed them better than I could have.
So while I am submitting my testimony for the record, and I would like it included --
Ms. Pryce of Ohio. Certainly. Without objection
Mr. Kogan. -- I won't just go through the arguments again. I would like to focus, therefore, on only two of the points that I made in my prepared testimony.
The first has to do with the nature of uncertainty in budget projections. I included in my testimony a chart which showed CBO's baseline budget projections made in January of 1998, and then again the next year, January of 1999, and so on over a 4-year period. And one of the things which that chart shows is that projections can change rapidly, not only over the long term, which is important for what the Budget Committee, with a 5- or 10-year perspective, deals with, but even over the short term.
For example, in January of 1998, CBO projected that the unified budget for the coming fiscal year, the budget year, fiscal year 1999, would be essentially in balance. This was for the budget year that was going to start 9 months in advance, not 21 months in advance. And this projection was off by about $125 billion.
Looking two years in advance, the second year of the biennium, the figures for the second year of CBO's projections were off by 240 billion. In the next year, the next cycle, in January of 1999, CBO's projections for the first year were off by perhaps $100 billion, and for the second year, off by perhaps $150 billion.
These numbers are large enough so that they can change the broad perspective of how Congress wants to think about what is affordable- what sort of tax cuts are affordable, what sort of program improvements are affordable and so on. And what they indicate is that we have difficulty even planning 1 year in advance. Planning 2 years in advance might be too much of a bite for us to take.
I would point out that most States deliberately adopt taxes that are more stable, revenue streams that are more stable than the Federal revenue streams, less responsive to the economy. Sales taxes and property taxes, for example, are more stable over time and they tend to be less responsive to the economy, though not always. And so, to a certain extent, States do not suffer as much as the Federal Government does from budget errors in the initial forecast, when they make biennial budgets.
Even so, States, as you well know, sometimes get into serious fiscal problems, when the second year of the biennium, or even the first, does not turn out the way they want it to. And most States have delegated large amounts of authority by their constitutions or by their statutes to their governor to make relatively unilateral changes in budgets.
That gets me to my second point, my final point; for that reason, and as otherwise explained by the second panel, it is almost certain that biennial budgeting will give the executive branch more authority than it now has over the day-to-day implementation of programs. It will ease the way for the executive branch to do its job.
I am very sympathetic to their perspective-why they would want biennial budgeting. It makes perfect sense that this isn't a partisan issue. The budget officers would not have to spend all their time creating new budgets and then defending them and not being able to implement the budgets that have just been passed.
I am perfectly willing to concede that biennial budgeting could make budgeting at the executive level more efficient, possibly more rational. It could even make budget outcomes a little bit better, though there is no guarantee about that. But I am also just as convinced that it would make the outcomes less democratic.
The proposal that was sent out when we talked about testifying was one in which the biennial budget would be put together in the first session of every Congress. To me, this is a fundamentally inappropriate way to do it.
As we all know, voters have a very high discount rate. They want to know what you have done for them lately. And thinking about what happened 16 months ago is perhaps beyond their thinking horizon. It seems to me right that tax cuts or increases, budget cuts or budget increases should be debated in election years. They should be enacted in election years. They should not be enacted in the year before the election year; the election year shouldn't be a year in which we are, in essence, staying away from the voter.
So when I weigh the values of efficiency and rationality on the one side and that of democracy-what is appropriate in a democratic republic-on the other side, for better or worse, I think that what I like best about the institution of Congress -- and particularly the institution of the House of Representatives -- is that the members are so close to their constituents, that they do care, they do listen, they do vote, they do hear; and that biennial budgeting will move them one step farther away from being the peoples' representatives, away from democracy in action.
And that is my main concern. In some senses, it is a conceptual and philosophical concern rather than a practical concern, but I think it is one that I want to add to the general list of thoughts, that have been presented to this committee.
[The statement of Mr. Kogan follows:]
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Ms. Pryce of Ohio. Well, thank you very much for your thoughtful testimony. And that is something that we had not heard yet in the mix.
So would I be safe in assuming that you would not like to see us do a trial program, or a pilot program, because any step in that direction you believe would be wrong philosophically?
Mr. Kogan. Philosophically, I would rather budget the way that we do. If we were going to do a pilot program -- I know it seems very strange, but I would rather do one in which the biennial budgeting was done in the election year rather the nonelection year.
It does mean that the new Congress that comes in will spend its whole first year preparing to think about what it is going to do as its ultimate act just before it leaves, which has its own strange ramifications.
If you do conduct a pilot program, however, you don't necessarily need to change law. The part of the budget process that is run by the Budget Committee is particularly well-suited to doing a pilot program, because the budget resolutions agreed to by Congress remain in force if no other budget resolution is done in the intervening period. The second-year numbers prevail. There would need to be minor tweaking, particularly in the House of Representatives, to some of the rules in the Budget Act, which you could do on a trial basis.
The Appropriations Committee, of course, can enact a 2-year appropriation. They do that already for some programs for which they enact regular appropriations for the budget year and advance appropriations for the budget year plus one
A few years ago -- maybe it was longer than that -- the Armed Services Committee passed an authorization saying that defense appropriations should be done on a 2-year cycle, and the President's the next year submitted actual, hard numbers for both years of the biennium, rather than just for the coming year. But the Appropriations Committee chose to ignore the outyear requests. It could have moved on them.
Because we can move right now on a trial basis, I think that one way to conduct a trial is to find one of the subcommittees of Appropriations that in the House (and if the Senate is willing to do it for its agency, or agencies), will give bionnial appropriation a try and see how that works. And if they did it and could report to their fellows that it wasn't bad, that they really didn't lose control over the bureaucrats and so on and so forth, that would have a lot of weight.
If they came back and said, we tried it, on balance, we would rather not continue it…
Ms. Pryce of Ohio. If there were to be a pilot, do you have a preference as to which appropriation you would start with?
Mr. Kogan. I don't know enough to answer that question. My instinct says it that would work most easily on program areas that are not in hot public debate right now, that are ongoing programs. Unfortunately, I can't think of any programs that are not contentious one way or another;
Ms. Pryce of Ohio. All right. Well, since the committee has kind of dwindled here, if there are any questions, do you mind if we submit them?
Mr. Kogan. I would be happy to answer them
[The information follows:]
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Ms. Pryce of Ohio. Thank you very much for your participation.
That concludes the hearing. And thank you for all for your hard work.
[Whereupon, at 11:54 a.m., the subcommittee was adjourned.]
