Hearings of the Committee on Rules
BIENNIAL BUDGETING:
A TOOL FOR IMPROVING GOVERNMENT
FISCAL MANAGEMENT AND OVERSIGHT
Friday, March 10, 2000
The committee met, pursuant to call, at 9:30 a.m. in Room H-313, The Capitol, Hon. David Dreier [chairman of the committee] presiding.
Present: Representatives Dreier, Goss, Linder, Sessions, and Moakley.
The Chairman. The hearing will come to order.
This is the second of three hearings being held by the Rules Committee to examine various proposals for establishing a 2-year budget and appropriations cycle. On February 16th we heard from 16 of our colleagues. It was a long day in the House. We began with the Speaker of the House, Mr. Hastert, and the chairmen and ranking minority members of the Appropriations Committee.
This morning we will be hearing the perspectives of the executive branch and congressional support agencies.
Our final hearing, which is going to be next Thursday, the committee will receive testimony from our former colleague Mr. Hamilton, from the former -- your predecessor, Mr. Lew, Leon Panetta , and our former colleague, members of academia and representatives of budget reform organizations, State legislatures, and the U.S. Chamber of Commerce. Sounds like another lengthy hearing.
The prepared statements of our witnesses, along with the transcripts of the hearing can be found on the Rules Committee Web site at www.house.gov/rules. This hearing can also be heard live -- you want to hear the Web site again?
Mr. Moakley. I will be looking at it.
The Chairman. Good. This hearing can also be heard live on the Internet by going to our Web site.
Anyone who follows budget process issues is aware of the fact that at the end of the last session of Congress a bipartisan group of 245 House Members joined in introducing a resolution calling for the enactment of a biennial budget process in the second session of the 106th Congress. As we move forward with this process, our goal is to gather all of the technical expertise possible to develop consensus legislation that will be successful in streamlining the budget process, enhancing programmatic oversight and strengthening the management of government programs and bureaucracies.
As I mentioned, in our first hearing on February 16, we heard from Speaker Hastert, who called on us to work with the House Budget Committee and with the Senate in a bipartisan fashion to produce a biennial budget package for the House to consider this year. Appropriations Committee Chairman Bill Young said this was a good time to look at implementing a biennial budget process, but urged us not to load up any legislation with other controversial budget process proposals.
We also heard from a number of opponents of biennial budgeting, such as our colleague, David Obey. He raised concerns that biennial budgeting will undermine Congress' congressional responsibilities, increase the size and number of supplemental appropriations and lock Congress into policy decisions that will need to be changed as a result of changing circumstances.
I happen to believe the case for biennial budgeting is overwhelming. While not a panacea, I believe it will enhance government's fiscal management, programmatic oversight, budget stability and predictability, and government cost-effectiveness.
To get a perspective from the executive branch and congressional support agencies, I am pleased to welcome OMB Director Jack Lew. We are going to be hearing from Congressional Budget Office Director Dan Crippen; General Accounting Office Associate Director Sue Irving; and CRS Specialist Lou Fisher.
So we are very pleased to welcome you, Mr. Lew. This is, I guess, your first appearance before the Rules Committee, and it is very rare that we have anyone other than our colleagues testify before the Rules Committee, but we do occasionally have hearings. The subcommittee holds hearings. We are pleased to welcome you here, and I would like to call on Mr. Moakley.
Mr. Moakley. Oh, thank you.
The Chairman. I was getting ready to call on you.
Mr. Moakley. You have overlooked me so many times.
The Chairman. I have never overlooked you, Mr. Moakley. It is impossible. So before I call on you, Mr. Lew, I am going to call on Mr. Moakley in case you were wondering.
Mr. Moakley. Mr. Chairman, I really want to thank you for continuing these hearings on the biennial budgeting.
Although I certainly like the idea of spending less time on the budget, I am skeptical it would actually happen. I believe we could spend a great deal of time in the off year revising the budget resolution and passing more supplementals than we do. But for the sake of argument, let us suppose we spend only half as much time on budget-related legislation. Is that really a good thing?
It appeals to Members because agreeing on a budget and working out the appropriation bills are among the hardest and most contentious work we do each year. Each of us has a different set of priorities, which is why agreeing on a budget always involves making very painful choices. The only way these measures get passed at all is by everybody making compromises. In the end, no one is completely satisfied with the final result. It has been that way ever since the first Congress met back in 1789.
So it is very tempting to think we might be able to skip a year of making these hard choices, but it is our constitutional responsibility to make these hard choices. We are paid to make decisions about taxing, about spending; and we cannot, at least we should not, delegate our duties on the off year to a control board, as Ohio or some other biennial States do, nor should we expect other elected-branch bureaucrats to set fiscal policy for the Nation every other year just for the convenience of our avoiding hard work.
I have not heard any Member actually make the case for a biennial budget based on the possibility of avoiding hard work, but I sincerely believe this is what makes the idea initially appealing.
The argument that we hear is based on the amount of time devoted to the budget. We are told that the Congress spends so much time on budget-related measures year after year, it crowds out the opportunity to conduct oversight hearings and enact authorization bills.
Mr. Chairman, that absolutely is not true.
I asked the Congressional Research Service, Mr. Sherman, just what proportion of floor time is devoted to budget-related legislation. They counted all the hours spent on all the budget resolutions, all the appropriation bills, reconciliation and tax measures, conference reports and all other related rules and motions. They looked at each section from 1991 through 1998. In most years -- 5 out of the 8 -- we spent less than one-fifth of our time on budget-related measures. The most contentious year, 1995, the year of the shutdown, we still spent less than one-third of our time on the budget.
If four-fifths of the time we nominally are in session is not enough time to do other legislation, I think there is something wrong with the process. It is not with us.
I think that CRS' memorandum ought to be placed in the record. I have it here, Mr. Chairman.
So, Mr. Chairman, although the idea of biennial budgeting certainly warrants further study, I have to say I don't think it will turn out to warrant the hoopla. It is Congress' job to come up with the budget no matter how ugly the process, and delegating that responsibility every other year to Federal bureaucrats is not what our constituents had in mind when they sent us here.
We have the time to do it. We just lack probably some of the inclination. Thank you.
The Chairman. Without objection, you want this article in the record?
Mr. Moakley. I want to frame it and put it on the walls.
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The Chairman. Against which portrait? I knew what the answer was going to be on that one.
I very much appreciate your encouragement of the work ethic, Mr. Moakley, and I am happy to call on one of the hardest workers here, Mr. Linder.
Mr. Linder. Thank you, Mr. Chairman. I am just pleased to be here and listen to the testimony. I have no opening statements. I am anxious to hear the testimony.
I would like to respond to one thing Mr. Moakley said, that floor time versus nonfloor time is 25 or 20 percent of what we do. But my guess is the nonfloor time on the budget takes four or five times as much as the floor time, the conference reports, negotiating back and forth with the White House; and to do that every other year would give us an awful lot of time to do oversight, which would seem to be lacking.
Mr. Chairman, I look forward to hearing our witnesses.
The Chairman. I am happy to call on Mr. Sessions.
Mr. Sessions. Thank you, Chairman. I am delighted to be here today, and I am very proud of my chairman for bringing forth full and forthright discussion.
I believe that this in-depth discussion about the idea of biennial budgeting is very, very important. And I know my colleague, Mr. Moakley, says that we don't spend too much time on the budget, and it does not consume the time that we have got; and I tend to disagree with that. I think we do spend too much time on the budgeting and too little time on oversight.
I have had a great number of dealings with Inspector General Walker. We have talked about the duty of oversight and the opportunities that we have to make this government not only work more efficiently, but to provide them with a set of tools that are necessary so that we can make government do the things and help it to perform in the ways that it should be done.
But I believe that probably the greatest avenue of success that will be coming as a result of biennial budgeting will be not just the impact on Congress but on agencies. Agencies always, I think, would tell you that if they get a budget that is early, with money that is appropriated to where they know exactly what Congress is asking them to do, they can not only perform in their planning function properly, but how they play that out.
And I remember doing a college paper back in 1977 on the effectiveness of giving the Pentagon a 5-year budget, and I am well aware that we are not talking about 5-year budgets here, but of how a 5-year budget would allow what was then the largest department of the government to move efficiently and effectively, not only through their procurement, but also on their things -- the day-to-day needs and looking forward in technology. And I think if it was true in 1977, it would certainly be true now in 2000 and 2001 and on a going-forward basis. I believe this would help us and the government to more effectively look at what we call waste, fraud and abuse.
I believe that it is a management tool that companies, many companies, Fortune 500 companies employ. They do a 5-year view, not just of budgeting, but of the actual money that will be spent, where they are going to spend it, how they are going to spend it, what the priorities are. We will have an opportunity to talk more fully with agency heads to ask them to predict and to show Congress what their needs are, instead of on a year-to-year budgeting, on a longer-looking, more forward-looking basis.
So I think if we look at what is happening in the States, we can glean the good part of those opportunities, and Mr. Chairman, I am very proud to be a part of this effort for us to have an in-depth look, an opportunity to know what the advantages could be, what the pitfalls are. And I believe that the administration, being here today as they are, will be able to present us with a view from a great deal of wisdom -- men and women who have participated with President Clinton in running this government for the last 7 years. They have been through not only trial and tribulation, but they have seen some things that I think that in their last few months might offer us an opportunity to make things better.
And it is this making better, the scrubbing down that I think is very important, and I appreciate your bringing this forward.
The Chairman. We are certainly proud to have you as part of the process, Mr. Sessions, and I would like to further buttress your arguments by providing, without objection, in the record a litany of the last decade of roll call votes we have had on the budget on the House floor showing how great that work ethic has continued to prevail here.
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The Chairman. So with that, Mr. Lew, we again welcome you and look forward to your testimony.
STATEMENT OF JACOB J. LEW, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
Mr. Lew. Thank you, Mr. Chairman.
Mr. Chairman, thank you very much for the invitation to appear at the committee this morning. It may be my first time testifying before the committee; it is by no means my first experience working this committee. I had the pleasure 25 years ago working for the now ranking member, Mr. Moakley, and learned a great deal about --
Mr. Moakley. I think you just blew it, Jack.
The Chairman. Thank you very much for being here.
Mr. Lew. And the chairman at the time was Chairman Bolling, whose picture is sitting right over Mr. Moakley's shoulder right now. I learned a great deal about the House and this committee and the important role it plays in making sure things work well, both in the House and in the Government of the United States. This may be an issue where Mr. Moakley and I don't agree 100 percent, but I can tell you, I have the greatest respect and I am grateful for the work you do.
I would like to start, if I could, by sort of recognizing where we have been on this issue and how far we have come to get to the hearing today. Since 1993, the administration has supported biennial budgeting. It was part of the National Performance Review recommendations. There are a number of recommendations that were made there, some of which we have already implemented, that will help us reduce the size of the Federal work force, reduce the deficit, and this is an important piece of the overall set of proposals that were made.
Two of my predecessors, as you noted, Leon Panetta and Frank Raines testified before the committee in support of biennial budgeting, and at the time it was not an idea that seemed to have very much support. The difference sitting here today is that we are in the middle of a discussion where people are asking, is it really going to happen this year; and I would like to change a little bit the focus of the way we testify.
Rather than making the case strictly for biennial budgeting, I would like to associate myself with the remarks my predecessors have made, and I would just focus on some practical considerations, what I think would need to be worked through for biennial budgeting to work, because I think there is, whenever you make significant changes, the risk that you sometimes don't address just the problem that you are trying to solve, but other things that may create problems, or fail to deal with some of the practical considerations.
I think the important challenge before this committee is to work on getting a proposal enacted into law and how to get a proposal that works, and I would like to focus on some of those issues.
Any law that provides for biennial budgeting will set forth procedures. I think it is important that the procedures be realistic, and I would start by saying that I don't believe it is realistic to think that the second year of a biennium will be a year of no executive branch proposals and no legislative actions. I think that the law has to provide for a realistic updating process so that in the second year there would be an orderly review of supplemental requests and changes, so that there would be an active policy process in the second year.
The challenge -- the challenge is to have it be an orderly process so that in the second year we don't end up doing 13 separate appropriations bills that become a kind of disorderly way of accomplishing what we do today with the regular appropriations process; and in there is a lot of the challenge of making biennial budgeting work.
I think there is a need for flexibility in the executive branch for biennial budgeting to work. There will be a need for reprogramming authority. There will be a need to give agencies some more discretion, but there will also be a need to have the committees, the appropriations committees, have oversight responsibilities through notice, through approval mechanisms; and I think the challenge is going to be to find the right balance, to have the balance be so that the executive branch agencies can work in a smooth way and so that the appropriating committees don't end up micromanaging at such a small level that we have a kind of paralysis in the second year.
It won't work if we end up with no ability to change in the second year. It won't work if we end up with too much executive discretion. It won't work if we have too much legislative micromanagement. I think it comes down, beyond process, to questions of comity between the branches and whether we can make it work.
A lot of the problems in the current appropriations process are not written in the rule book, not written in the statutes. The problem has been a difficulty of reaching agreement and reaching agreement in a timely way.
To the extent that we have to do it once, not twice, in a 2-year cycle for all 13 appropriation bills, I think that is a good thing. I think it will certainly allow more time for management issues to get attention in the executive branch. I believe it will allow more time for management issues to get attention in the legislative branch as well.
Now if it turns out that reaching agreement on 2-year appropriation bills is more difficult than we think and if the process leaves us in a state of limbo for a long period of time, that will be a concern to me. And I would note that points of order as an enforcement mechanism are very useful as a tool for blocking certain action, it is not a very powerful tool for forcing action; and I think that we have to all think very hard about what we can do to make the process work, so that there will be action on a 2-year budget if we have a law that creates these rules to provide for 2-year budgeting. Because if you get into the 15th, 18th month of a cycle and you don't have an agreement on the 2-year budgeting, then you are expanding the window of uncertainty that we often have at the beginning of the fiscal year now when we run for a month or two on continuing resolutions.
I would like to address two other issues briefly, and then I would be delighted to answer your questions. The idea that biennial budgeting is an answer to all the problems of the budget process, I think is not correct. I think there are many things about the budget process that need to be addressed. The President's budget made several proposals, including having a Social Security solvency lockbox, providing for Medicare transfers to ensure Medicare solvency; extending the PAYGO rules so that we have fiscal discipline in the time of surplus; and extending realistic budget caps, discretionary caps, so that we have discipline in the appropriations process. I think it is very important that all these issues be considered, not just biennial budgeting apart from all the others.
On the other hand, I would be very concerned about what the chairman referred to as the controversial budget proposals that could be added into a bill. Biennial budgeting has many, many benefits, but if attached to it are provisions that would either relieve the pressures of the current PAYGO system or make it easier to take what I would describe as a path away from fiscal discipline, I think it does more harm than good. So I think the challenge has to be to design a workable biennial budgeting proposal, keep it clean of dangerous proposals, and hopefully expand the discussion to include what we think are very positive budget reforms beyond biennial budgeting.
Let me close, if I may, on a positive note. I think that my experience as OMB Director has only reinforced my belief that what we do on the management side is every bit as important as what we do on the budget side. The frustration that I have is that the budget process takes up so much of my time, so much of the time of the people that we deal with in Congress that we don't have as much of the year as I would like to devote to make the programs work better.
I think biennial budgeting, if it is properly designed, could very much help alleviate these pressures. I think that beyond design we have to take very seriously and take a look at our own practices as both executive branch and legislative branch representatives and ask ourselves, can we make it work even if the rules are written right.
I believe we can. I think we should try to and I applaud the committee for taking the step it has taken to advance the debate on this issue
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The Chairman. Thank you very much, Mr. Lew. That is very helpful testimony, and you, of course, raised that important issue of flexibility which is one of the concerns that the opponents have addressed.
You touched on something that I would like you to expand on just a little, and you said a new supplemental structure, and I wondered what you envisage as a structure. Because again, opponents said what you are going to do is have a load of additional supplemental appropriation bills; and you said, obviously we don't want to have 13 appropriations bills in that second year when we want to focus on oversight. But clearly that question is before us.
Mr. Lew. I think that the supplemental process is one that, if properly managed, doesn't have to become the equivalent of 13 appropriation bills. I think just yesterday we saw the Appropriations Committee take action in the House on a very substantial supplemental appropriation bill where there has been an effort between the branches to work on resolving issues that couldn't have possibly been addressed last October.
The notion that in the second year of a biennium we will look back and say that all of the decisions that we made at the beginning of the biennium are 100 percent correct, given changing needs, changing priorities, I don't believe is realistic. I think the executive branch needs to take a review and make proposals.
I think what I would emphasize is that putting together changes is a very different undertaking than putting together separate requests for 100 percent of the funding of each department. When I look at a supplemental appropriation, it takes days of analysis. When I look at an agency appropriation for each agency of government it takes weeks and months of work. It is a very different magnitude if you are looking at the 5, 10 percent that you are changing, than if you are looking at absolutely everything from the ground up, oftentimes repeating the things that you have done very recently, but you have to go through if you are going to go through every line it. The discipline of looking at what has changed and doesn't warrant new action narrows very much the scope of what you are addressing.
I think the administration should propose changes. I think Congress should have an orderly procedure to review changes, and I think that the danger of not having an orderly process is that it kind of dissolves into a year-round process where there are always changes being proposed and always changes being acted on. I think that would end up taking a lot of time and that would not be a good use of either the executive branch's or the legislative branch's time.
So the desire to say that a 2-year budget doesn't require another look, I don't think is realistic. The challenge is to design that second look so it is efficient.
The Chairman. So this is what you describe in your prepared text as sort of a midcycle review process?
Mr. Lew. Correct.
The Chairman. As has been pointed out by all of my colleagues here, we spend a great deal of time on this, on the budget process. You talked about the fact that you spend so much time on it, other than getting into these other things.
As far as the other agencies of the government are concerned, what would you say the amount of time they spend on the budget process itself is?
Mr. Lew. I think it is hard to answer a question like that statistically. You answer it kind of impressionistically.
The budget year never ends. If you look at where we are when Congress finishes its work on the appropriations bills, it is supposed to be September 30th, but in our recent experience, it has more likely been November 30th or October 30th. Our budget process is well under way at the point we usually start our OMB reviews, so that means the agencies have made their submissions to us already, around Columbus Day.
We make our recommendations to the President before Thanksgiving, and we make our recommendations to the agencies by Thanksgiving. From Thanksgiving until the end of the year, we work through with the agencies the process of resolving appeals of OMB decisions on budget levels and ultimately take to the President issues that can't be resolved short of that.
Then the process from January till the budget is sent up in February is a production process where we put together the many volumes that have to support the budget. The agencies are very involved in that; we are very involved in that. That is a less time-consuming process for the policy officials at the agency, but it is a very time-consuming process for the budget officials.
The period of time from January until March used to be the time when Congress shifted to the focus on budget matters, and the administration was relatively less involved. I would say that the extensive hearing process, which I am not criticizing, which I think is a very worthwhile process, takes a very substantial amount of time for not just OMB, but agency heads for most of February and March.
I know I talked to my colleagues who are very, very much involved in preparing for their testimony. They take very seriously the need to come prepared and to have good sessions, and that involves senior management as well as budget officers.
At the point after, you know, March, the Appropriations Committee begins working on its appropriation bills. The committees are very much in contact with the departments, with OMB. That process goes pretty much until the end when the cycle begins all over again. So there is really not much of a break.
Now, I am not saying it takes 100 percent of the time of policy officials, but there is virtually no part of the year that isn't very much affected by work on the budget process.
I think if you had a biennial budget system in place, you would have a real chance of creating a 6-month window when budget matters took a much lower share of senior policy officials' time which would allow more time to be spent on management, and then as that filters down through the layers of government even more so. So I think there is definitely a benefit to be had from trying to stretch the process out.
The Chairman. Let me ask just one final question. You said that since 1993 the administration has been a proponent -- and I know the President; I talked to the President about this. He has been a strong supporter of it. Was this something that you have always supported or have you come to this position after your years of experience working for Mr. Moakley, among others?
Mr. Lew. I must say, personally I take process changes with a little bit of a grain of salt because if they are not backed up by the commitment to make them work, they can't work. You can write a perfect process, but it is not the process that make decisions. It is the people working in the process that make decisions.
I have always thought that the appropriations process took up more of the year than it should. I remember 20 years ago seeing this diagram that looked like a worm, that described the budget cycle where there is an 18-month period where parts of the process are always overlapping each other. I must say my biggest concern is whether workable procedures would be backed up by the participants in the process to make it work, and it does take comity between the branches. It takes a willingness to allow for some executive decision, to allow for some congressional oversight, to work in a collaborative way.
We have been better at that at some times than we have at others. I think that that is a challenge that can't be written on paper. It is something that people have to commit themselves to, and if we are committed to put that in, I think it is a very good idea, and it is one that I very much support.
The Chairman. So you have always been a proponent of the biennial budget process, then, I guess?
Mr. Lew. Since I have had a firm opinion on the matter, the answer is yes.
The Chairman. Mr. Goss.
Mr. Goss. Thank you, Mr. Chairman.
You make a good case for wanting to have some time to do your job as a manager, senior management, let your senior managers do things other than punch numbers. I think that is very reasonable and refreshing and probably welcome news to the American public.
The same I think applies to the dual role we have here, which is legislation and oversight. I think that one of the reasons we are looking at this from the point of view is, can we have a little more time for oversight of the way you have managed; and I think that is one of the good things about our system, that it provides a series of checks and balances, and I think this is part of it. And I do think the budget cycle as it is presently constituted does tend to take away, certainly, our time; and it has become such a workload for all of us that it probably has a negative impact on our oversight in total. I won't say from point to point, but I would say, in total, I think we can do better in oversight. That may not be welcome news to you, but I think it is welcome news to Americans. At least that is the way we have set up.
I wanted to ask, you talked about the process and other parts of the process, other reform, and I wanted to go into one of those areas which I think might be considered other, and it is something that has struck me as chairman of the Intelligence Committee. We have, I am told by CBO, something like 130 programs, worth about $120 billion, which don't get authorized, but nevertheless get appropriated through the magic of the Rules Committee or some other system that we have created for ourselves here. In the Intelligence Committee we have a mandatory requirement for authorization. If the authorizing committee doesn't do its work, theoretically no funds get appropriated.
Now there are lots of ways to deal with that theoretically, but by and large, I think that gives us an extra incentive to do our authorization work timely and go through the budget properly.
And I am wondering, since that only applies to the Intelligence Committee and one or two other discrete programs that I can think of, if you have a view on whether or not we ought to be a little bit more attentive to following the process of authorization and then appropriation? Does that give us a salutary gain in our process?
Mr. Lew. I think that the authorization process is a very important one, and if you look over the last 15, 20 years, it probably has not worked the way it was intended to work, to put it mildly. Part of it has to do with the calendar which doesn't permit authorization legislation to get time on the floor. If it doesn't get the time on the floor, the incentive to produce it in committee goes down; it just kind of flows through the system. I think freeing up floor time and having a calendar where authorizations were expected to be considered would be a real gain.
I think that the notion of appropriating with and without authorizations is something that is divided in several categories. Authorizations that have expired, where there is an authorization that has been in place, is a very different circumstance from programs that have never been authorized at all; and I don't find it to be as troubling for appropriators to take the liberty of appropriating in areas where there is a last authorization, but there is a clear policy that has been written. I think it would be a kind of artificial constraint, given our ability to process all of the authorizations to have programs just go away because the authorization date has passed.
I think that there is a lot of activity in the appropriations process that is either on the line or across the line in terms of creating new authorizations, and I think one has to take those matters on a case-by-case basis. I think the rigid rule that says never appropriate without authorization, no waivers, would leave us unable to address changing circumstances in a timely manner.
I think if you go too far, it does a lot to diminish the ability of the Congress to have the kind of serious, detailed review of policy that should go in to putting initiatives together, and I think one has to find the right balance.
Mr. Goss. I appreciate that. I think I am probably about the same place. I know that there is no such thing as a permanent fixed in cement solution for anything around here, but I am leaning towards trying to find incentives so that there are rewards for authorization as opposed to, particularly, new authorization. I agree with your distinction, and I think that is a useful comment, and I appreciate your help
The Chairman. Thank you very much.
Mr. Moakley.
Mr. Moakley. Jack, welcome back. I hear that you are in favor, but it sounds like you are very cautious about it. I find that the fight doesn't come from so much the budget process as it does the policy decisions. I think the process isn't bad. We just can't get people together to agree on what should be in the budget and how much, and that is where the fight takes place, wouldn't you say?
Mr. Lew. I think the process today creates more friction because of the calendar than it needs to. When the budget resolution is up in the air until the spring and the Appropriations Committee can't begin its work seriously until late spring, then we get into the summer and we are seeing September, October on the horizon, it becomes more difficult to work through the policy differences. One of the benefits of biennial budgeting is that it would give the appropriators more advance notice of what their targets are and give the appropriators time to work through a lot of the policy differences.
I don't disagree with your basic notion there is policy in the process. I mean, it wasn't a process issue that caused the appropriations process to go until November, but it was a calendar issue that forced those issues to come to ripen after Labor Day when we had a September 30th deadline ahead of us.
Mr. Moakley. Is it realistic, Jack, for an incoming President in his first 4 months to come out with a 2-year budget?
Mr. Lew. I think that is one of the biggest practical considerations, the transition issue. I think there is a one-time transition that has to be thought through very carefully. I went back and looked at what our schedule was when Leon took over OMB in 1993, and he sent a short document up in February on time and the longer documents for a 1-year budget up in April.
I think realistically -- you know, that was an OMB Director, who had vast experience in Federal budgeting. No one is going to do it much faster than that, and the notion that you can do a 2-year budget by February, March is just unrealistic. I think April is a stretch.
I think that what it says to me is that for the first 2 years of a new system there really needs to be very careful consideration given to the practical realities of the transition. I think that it ought to be fully in effect at the beginning of a Congress. I think it would be ideal for it to be in the middle of a presidential term so that you didn't have everything changing all at once, and there are ways that one could design the transition so that you could have the process put in place where, on a technical basis, OMB is going to redo how the computer systems are run, how the agency guidance is put out, what the agencies give us to work the kinks out when the time pressure to absolutely comply is not as great, and to have the idea be that after a 2-year transition you are fully in the new system.
I think that to wait and say, let's start in 2 years creates the same problem again 2 years from now. At any point it is going to be difficult, but it is particularly difficult at the beginning of a new administration where everything is new.
Mr. Moakley. Does it also mean the biennial budget process really creates an avalanche of supplemental budgets in the off year?
Mr. Lew. I don't think it is an avalanche exactly. I think one ought to expect there would be a substantial need for supplementals.
We have seen in the last number of years that we have substantial needs for supplementals with annual budgeting, in part because we can't predict where it is going to flood and where hurricanes will hit, in part because changing international situations require new commitments that we couldn't possibly foresee. I think those things will continue to come up, only a little more so, because they are normal changes from year to year.
If you look at the Federal budget, I don't have an exact percentage, but an awful lot of it doesn't change from year to year. We spend a lot of our time making the same decisions over and over again. A lot of activity is in the last 10 percent, which is where the change really is. In the second year, if we focused on that 10 percent and we had an orderly process, I don't think it would be anywhere near as time-consuming as putting a full budget together or in terms of Congress processing 13 full appropriations bills.
I do think there is a risk, as I noted in my formal remarks and opening remark, that it could kind of dissolve into 13 ad hoc appropriation bills. Then I think you end up worse off than when you started. So it is going to take discipline and the structure, the process can help provide that discipline and the people working in it have to make it work. I think it is worth the effort.
I think the challenge of managing the current process is probably one that future administrations and future Congresses will share the frustrations that I and my predecessors have noted. I think that the changes have to be well designed, and that is why I have tried today to focus on what the issues that have to be carefully dealt with are.
Mr. Moakley. Thank you.
Thank you, Jack.
The Chairman. Mr. Linder.
Mr. Linder. Would a 2-year cycle create less incentive for getting an agreement at the end of the first year? Because it seems to me that the longer we drag this out, the more we are getting pressured into our next-year cycle.
Mr. Lew. There is certainly a risk. The end of the fiscal year is an action-forcing event. The notion of being in a continuing resolution doesn't strike anyone as a particularly good idea. It is not good from the agency's perspective; it is not good from the Congress' perspective. I think it diminishes public regard for government because it makes it clear we are having difficulty making the basic decisions that we are expected to make.
I think the notion of slipping months into a fiscal year is not attractive under the current system. It would not be attractive with biennial budgeting. I think the same pressures that drive you to reach a conclusion now would drive you to reach a conclusion later.
I do think the challenge of reaching a 2-year agreement would be slightly larger, significantly larger than the challenge of reaching a 1-year solution. I think that if we get into the habit of thinking in 2-year terms, it will get easier than it seems today. I think it will be harder the first year than it is 2 years later when it is done for the second time, but I think if you get well into a fiscal year and you haven't reached agreement, it is not just the 2-year budget you haven't reached agreement on, you haven't reached agreement on a 1-year budget, which means you are in the same situation you are in today, operating on continuing resolutions.
I think that there is another alternative, which I think would undermine the benefits of biennial budgeting, which is waiving points of order and doing a 1-year budget because you can't reach agreement on a 2-year budget. If you do that, then you end up back where you have started, and if it is done in a timely manner, arguably you are no worse off, but you haven't gotten the benefits because you are going to be right back the next year doing the same budget negotiations and you won't have created that window of opportunity for management and oversight.
Mr. Linder. In virtually every administration, the Congress and the administration have differences in their respective priorities and spending. They want to control spending in one area and add the spending in another, based on programmatic priorities.
Would our ability to get control of budget spending, get restraint in spending, be lost if you got opportunity for supplementals the following year?
Mr. Lew. I don't think it is supplementals per se that are the threat to the discipline on spending. It is the people who write and propose supplementals that we have to look towards. The supplemental is no different than any other spending measure in terms of how we use it. If I can go back to the current system, we made a real effort in this year's budget to set discretionary caps that would enable us to live within the caps and to maintain fiscal discipline.
I think if you mark up a budget resolution this year, you face the challenge that I think is really the answer to your question. Pretending that the caps can be put in an unrealistic level will force the kinds of machinations that get around caps, that I think has given budgeting a bad name in the last few years.
I think if you have realistic caps, the fact that you need a supplement doesn't make it worse. I think if you have unrealistic caps you are either underestimating what you are going to spend, because you are going to get around it, or you are implicitly signing on to policy that many of us find unacceptable because it would mean cuts that would not be tolerable, whether it is in education or other areas.
Mr. Linder. You have made several points on the need for the administration, and particularly your staff, to have time for oversight and management, to manage programs. What you call "management," we call "oversight." Do you consider the oversight process in the legislative branch to be a burden or can it be helpful to you?
Mr. Lew. Well, I don't know that that is a choice. It is certainly a burden. I can say that preparing for an oversight hearing, it does take time and effort.
Mr. Linder. Is it helpful?
Mr. Lew. I think it can be helpful. It is no more intrinsically helpful or unhelpful than our own internal review process. It depends how well it is done and whether it identifies issues in a useful way. The fact that it is a burden doesn't mean we shouldn't do it, but I think we have to understand it is a burden, and a lot of burdens are good burdens. So that is why I say it is not really a choice.
I think that the oversight function ought to be viewed not as an inquisitorial function, but more as "how do we make a program work better" function. There has been a trend towards using oversight as a way of sort of catching the wrongdoers. I think that the most useful function of oversight is to engage in management reviews as sort of "we have designed these programs together, how do we make them work well," and if you find something that is wrong, then you deal with it appropriately.
I don't want to paint anything with a single brush. There are very useful oversight hearings that go on in many committees, but when you ask for my reaction to oversight, it is very much how it is done.
Mr. Linder. We have had testimony before one of our subcommittees of this committee with respect to the ability to do oversight. We have had four or five chairmen before this panel say that it is very difficult to get information out of the administration to do their job, particularly with Justice. I don't know if you are familiar with those comments that we have had.
Mr. Lew. I know that we have had a lot of experience in recent years where the requests for information have been at a level of detail that is unprecedented, and I don't think it is a level that necessarily gets at the policy issues that are really at hand. The amount of time it takes to assemble some of the data crosses the line from a burden that is a constructive burden to a real time problem. There are issues of executive branch privilege where certain internal documents, internal decision-making processes, I don't think are fully appropriate for discussion at hearings. The President is entitled to have confidential discussions with the people around him.
I don't know that there is a partisan issue. I mean, I am sure we will come up with examples of Democrat committees and Republican committees that have done the same thing. I think that the tendency to try and identify a not terribly useful piece of information that is very difficult to produce and make the charge of material nondisclosure has gotten to be a little bit of a concern.
Mr. Linder. I can see that in some committees that were here testifying before us. I think the Resource Committee had a legitimate complaint on a simple request they were being stiffed on, but thank you for your help.
The Chairman. Mr. Sessions.
Mr. Sessions. Thank you, Mr. Chairman.
Director Lew, I would like to go back to some of your earlier comments with my colleague, Mr. Moakley, and by and large, he asked the question when, when should we do this, and I found your response very interesting; and by and large, you said, well, we could do it now, Leon Panetta, when he became the Director, did a remarkable job then because he had the experience and the background, but I am not sure that the next administration, whoever that is, would necessarily view that as an advantage.
Now, that is a summary of what I heard you say. Can you elaborate a little bit more, because we are talking about the advantages of this system, what it would provide; and then I heard you say, but maybe not in the hands of a new person.
Mr. Lew. That wasn't what I meant to be saying, Mr. Sessions. I think that what I meant to be saying was that budgeting for a single year, it wasn't until the middle of April that Leon was able to get a full year budget to the Congress. If it had been a 2-year budget, I suspect it would have been more like May or June. If it had been May or June, that would have closed the window for congressional action, I think unreasonably. I don't think Congress can wait until June to meet a September 30th deadline on appropriations.
I think that the first time biennial budgeting is put in place for anyone, ourselves included, it would have been a heroic effort to do it in the first year of a new administration. There are an awful lot of things that are different in the first year of an administration. First of all, the budget decisions are being made much later in the process. They are being made in late January and early February instead of November and December. I think when you switch for the first time to a biennial system, the bookkeeping all changes. You have real decisions for 2 years, and there are a lot of processes that have to be put in place that one could anticipate and do some of the groundwork early, but inevitably when that goes into effect for the first time it will require effort, substantial effort, to make it work.
I didn't mean to be suggesting that we could have done it but someone else couldn't. I think it is a generic transition issue.
Mr. Sessions. So let us go back to Mr. Moakley's question, and the question that I am posing. When? When should we do this?
Mr. Lew. I think in any problem that you try to solve, where there are transition issues, you can say, oh, let us not do it because it is going to be hard; or you can say, let us get started and provide for a reasonable transition so we can be there as soon as possible. We have supported biennial budgeting. We continue to support biennial budgeting, and think that the time for action is sooner, not later. What I was suggesting is that enacting it doesn't mean saying that on February 15th or whatever the date is next year there should be submitted to Congress a biennial budget. I don't think that is realistic.
I think April is a stretch. I think if you make the deadline June, it gives Congress very little time to work. I think that one of the things that we would want to work through with the Congress in developing a schedule is going through a lot of the nitty-gritty, practical considerations and reaching sort of a mutual conclusion as to what is realistic to do in the first year and the second year; and then in the third year, where you go to the full implementation of biennial budgeting, have it be a 100 percent in place. I don't have a schedule in mind today, but that is kind of notionally what I think would need to happen.
Mr. Sessions. So you believe that if this committee did move forward, if this House and the Senate moved forward, that it could be wise to do that now and then?
Mr. Lew. Absolutely.
Mr. Sessions. So you believe that now is the time and that the transition then and the understanding should be flexible, we should understand that the time frame might change a little bit, but that it would be a workable thing for the next administration, whoever it is would have the advantage of this biennial budgeting?
Mr. Lew. With the understanding that, in the first year, I don't think it would be true biennial budgeting; it would be the beginning of a transition.
Mr. Sessions. Certainly we would make provisions, to where we were giving next year's budget early on.
Mr. Lew. I will just throw an idea out. You might want to have a later deadline for the biennial budget than you do for the first one, so that there is a little bit more --
Mr. Sessions. To transition?
Mr. Lew. You may want to have a notional second year budget that is not binding for the first year.
There are a lot of different ways to do it. I think the challenge is to get the processes up and running, to have the decision-making process start to work in 2 years rather than 1-year terms, to change some of the cultural parts of the budget process that are slow to change. It is not just writing it down on paper. It is changing the way a lot of people in a lot of places do their work.
Mr. Sessions. Good. And now is the time?
Mr. Lew. It will just take longer if you wait.
Mr. Sessions. The second part is, we focused a lot -- and you have in your testimony -- on the process that Congress goes through.
Can you give us a little bit of insight about the office that you hold as Director of managing the money, managing the agencies and their performance, what would be an efficiency that would be gained directly that you see within agencies?
Mr. Lew. Within agencies?
Mr. Sessions. Sure, which is your job.
Mr. Lew. I think that from an OMB perspective, we don't have a separate management process. It is an integrated budget and management process. When we do our budget reviews, we discuss the management issues simultaneously with the budget issues, and we have in our budget 24 priority management objectives which are very closely tied to our budget objectives, something I am very proud we have been able to accomplish in the last few years, to not have sort of abstract management principles, but real, tangible goals that are tied to the budgetary priorities that we have; and we have made progress on a good many of them.
I think that if we had more time, we would be able to work at a senior level on more issues like that with the departments. I think that we have real benefits when we have senior-level attention to those kinds of issues, whether it is our experience with the INS who are working together from the senior levels on down -- I mean the Attorney General and myself right down through the budget offices.
We made a lot of progress clearing up the backlog of people who are waiting to become naturalized Americans. It involved coming up with a management plan. It involved coming up with a personnel plan. It involved having the money behind it. It wouldn't have happened if it had not been involving the senior officials in both departments.
There are only so many of those things you can do when most of your year is spent on the process of working through, either internally within the administration or in negotiations with Congress, the budget funding levels, and I think that the notion of expanding those kinds of opportunities for each one you do, it is a major problem that you have a good chance of solving.
Mr. Sessions. I thank you for being here today, and I will tell you that I believe President Clinton is well served by your duty to our country; and I appreciate your being here.
The Chairman. Mr. Goss has one more.
Mr. Goss. Thank you, Mr. Chairman. I wanted to follow up, if I might, on just the point you made responding to Mr. Linder's question about oversight.
We have a lot of reason to believe that oversight can be viewed by different perspectives, where you are in governance, and you said that you are a little concerned that our focus on catching wrongdoers was misplaced; and I would say that it is misplaced if it is involving partisan politics, if the oversight is being done strictly for partisan political reasons. I would agree and I share, I think, what is a universal concern that we not contaminate the substance of government with too much partisanship.
But I am concerned that anybody would use the allegation that it is partisan, when we are trying to make a substantial oversight review of a matter and we have found time and time again that we do a very high percentage of our business on the Hill in public session, open door, and the executive branch does a very low percentage of its business necessarily in public session, usually behind closed doors, that creates clearly a job. And quite often when we do the job well, using the tools, the GAO or the various organizations we have here, to pursue these matters of oversight, we find we get information; and then if we can't get the follow-up information from the executive side of government, we become frustrated, usually by that time the media has got it, because we do a high percentage of our business in public.
So the question then is, what do you do next? One of the reasons I am for biennial budgeting is, I would like to have the time to consider what do we do next when we get in that consideration? I wonder if you have an observation on that relative to the response you made to Mr. Linder.
Mr. Lew. Well, I guess my response -- I personally have a very low tolerance for wrongdoing. I don't mean to be suggesting that you or we shouldn't be concerned about it. What I meant to be suggesting is that most management issues that we need to work through don't involve people who are trying to do bad things or who even did things that were wrong. It is just problems that are not "front page of the newspaper" problems that you need to spend time working through to make things work better.
I think that the question of what you do when you find out things are wrong, whether it is because a process doesn't work or some people did something they shouldn't have done, is the hardest part. At some point, obviously, if it is a question of real wrongdoing, it becomes a legal question, but from a perspective of management and program oversight, it is a question of what in the structure of a program needs to change to create a higher likelihood that the job will get done.
I think there has been a very useful increase in focus on performance measures. I would just note this is kind of similar to my reaction to Mr. Linder's question. I am very concerned that as we focus on performance that we not make it a club we use to say to agencies, you failed to meet your standards, we are going to take your money away.
Having performance measures work requires having people make an honest appraisal and assessing realistically what they could have done better with the opportunity to fix it, and I think the management and oversight process has to be aimed at how you get things fixed, not how you take people's money away or you find somebody that did something wrong.
If people did something wrong, the law should be used to take the appropriate steps. In order to make programs work, you have to have a window where you identify a problem and you try and fix it. I don't mean to suggest that it is all partisan. It is something about the high-pressure environment in which we govern is focused more on finding the problem than providing a window to solve it.
Mr. Goss. I think that is a good answer. I think we spend an awful lot of time, way too much time, in this what I will call standoff between the circle the wagons mentality and the gotcha mentality, and I think that is the mentality of this town, and I think that there is such waste of time in that effort as not. On the other hand, there are very legitimate questions. Somehow, somewhere somebody has to lead us out of this, and maybe if we get into biennial budgeting, we can have the time to figure out how to do this rather than responding to what is in the newspaper today.
Mr. Moakley. Would the gentleman yield?
Mr. Goss. Of course.
Mr. Moakley. I think it gets down to what I said. I think most of the problems are the policy differences instead of a process. What do you do in a situation, we should do this or that. That is where the fighting takes place, and I think that is where the slowdown comes, the way that the Congress handles some of these things based on policy differences and not the budget process.
Mr. Goss. I cannot reclaim my time because the microphone is not working.
I would agree that there is some of it that is policy difference, and I think we all benefit from having an airing of policy debate. That is what we all come together to do, and that is wonderful.
I am talking more about process, however, and it does happen this way. I will give you a case in point. There is an alleged activity going on called Echelon. Echelon involves something that is near and dear to all Americans. It has to do with his Big Brother eavesdropping on Americans, and the answer is in my view no. But nevertheless, the perception is that the answer might not be no. In order to satisfy properly the people who are asking those questions, you really have to get down pretty far into the detail of this and respond to case by case of whatever allegations may be.
My view is if you are blocked from doing that, it creates a suspicion. That is a process problem, not a policy problem. You have to be able to get through that process, and you have to have ultimate candor in the oversight committees. When that candor breaks down, you have a breakdown in process, and I called it circle the wagons, gotcha, either way. I am hoping that we are going to buy some time through the Chairman's leadership on this biennial budgeting so we can get out of that mentality and do something a little more constructive.
The Chairman. Mr. Linder.
Mr. Linder. I just want to follow up on comments on the Results Act because my subcommittee will be having hearings on the 22nd of this month, I believe it is. Each of the authorizing committees tends to look at the Results Act in three different prisms. We would like to formalize in some way to say what was your mission when you asked for this money, how many people were you trying to serve or how much were you going to spend, and when they come back, did you do it. Not an angry argument about we are going to take your money away, but formalized for the agencies who, because we haven't had the time or been as perspicacious on oversight as we should have been, and some agencies take this more lightly than others do, and if he can take some formal way so that all agency heads would respond in the same way, and all authorizing committees look at it in the same light, I think we could have a legitimate discussion of was it a program worth the money spent.
There are going to be changes from time to time in these programs and the needs of the programs, but the Results Act was a good idea which has not come to fruition yet.
Mr. Lew. We worked on the development of the GPRA, and we believe in the goals of it.
I would make a couple of observations. First, the challenge of measuring performance, measuring results is different for every agency and every program. We have tried to work with each of the agencies to develop meaningful measures, and I would say in some cases it is very hard, legitimately very hard, because the tangible outcomes -- you take a scientific area, is your measure breaking through with Nobel-quality research? Is your standard having well-managed research projects with or without breakthrough results? It is very difficult.
I think that having kind of a mechanical approach, which I don't suggest that you have taken, you have taken a very much different approach, but to have a mechanical approach that you set a standard and you don't meet it, there are consequences, kind of blurs the fact that there are hundreds of different ways that results can be measured. And if you want agencies to do it right, and you want agencies to not circle the wagons as Mr. Goss said, you have to create kind of a safe zone to discuss what you do with your own measurement of your results, give you some freedom to fine-tune your measurement if you designed your measure wrong, not just have immediate dire consequences because you failed to meet what turned out to be a badly defined measure.
I have been trying through our internal executive branch efforts to try and, with each agency, make this part of the culture that they do their budgeting and run their programs. I think we have made tremendous strides. You can have a conversation that is a results-oriented conversation in virtually any agency, which you couldn't do 6 years ago.
I think to say we are far down the road towards having crisp mechanisms that you can use for budgeting is an exaggeration, but I think it is an important tool that needs to be given time to work properly, and I would look forward to working with you and others to do it in a balanced way.
I react to the suggestion that others have made, if they don't perform, we should take their money away. The circle the wagons mentality will kill any effort for success if that is the approach we take. As a practical matter, I think you need to have a much more balanced approach than that.
Mr. Linder. Thank you very much.
Mr. Moakley. Mr. Chairman.
The Chairman. Mr. Moakley.
Mr. Moakley. I agree on the problem of not getting all of the information, but I don't see how the biennial budget can fix that. That is between the branches. I don't see how this takes any more time away from you. You still have the oversight to do it.
Mr. Goss. I would say if you have more time, which I hope the biennial budget will give us, to set up the safe harbor process that Mr. Lew is talking about, you will get a good reward from it. I will say, the committee I chair, which is probably as nonpartisan a committee as you can find in Congress, and for good cause --
The Chairman. Next to this committee.
Mr. Goss. Yes, of course. Yes, next to this committee. In fact, the comparison is wonderful. We do have a safe harbor and good oversight and working trust, and it is that way because we have been able to spend the time together and work out the processes, and I think that is the highest priority. But not all of the committees are as small and select and compact and have that capability. I wish other committees could replicate the things we use. I would like to provide them the time allowance and say create your safe harbors and create a trust and working confidence so that you can do your oversight job in a fair way without being blocked with the wagons or having the people who are testifying think, oh, oh, they are going to figure out a way to get me and hang me. That is all I am looking for.
The Chairman. Mr. Moakley.
Mr. Moakley. I think you have created that safe harbor using annual authorizations.
Mr. Goss. Remember, however, that we have a clear mandate to get our authorizations done so we work at a little tighter pace on our authorizations. We are the only committee that has that requirement. I only have one job as a chairman, and that is get the darn thing done, and that means I have to create the atmosphere to do it, and the way I do it is creating this safe harbor. That takes time and constant management. You cannot just simply set up a system and expect it to work, because the personalities will kill it if you don't work at it. It is a little like a marriage, it really is. I don't want to marry the executive branch, but a pleasant courtship would be all right.
Mr. Moakley. You would like to be there on the honeymoon.
Mr. Goss. Probably, not necessarily.
The Chairman. Let me make just a couple of comments and throw a couple of questions to you.
First of all, on the issue of setting a date for the first year of an administration, there are a number of pieces of legislation for biennial budgeting that have been proposed that do address that. The question that is out there, what is that date going to be, and that is why from your initial remarks about the issue of flexibility, it seems to me that we need to spend some time and effort thinking about what that date would be.
Mr. Lew. I think there is a window because the proposals that I have seen have April. Later than April raises real questions about the workability of the congressional timetable. You are constrained on both sides.
The Chairman. That is right.
The other issue that I would like to raise is what you would see -- how the government performance review timetables, how those would fit within the biennial budget.
Mr. Lew. I think you would clearly have an opportunity to try to alternate the emphasis in terms of performance reviews and budget reviews. I don't think that you would ever want to separate them. I think if you ended up having performance reviews be totally independent of budgetary considerations, it would be a step backwards. The challenge is how to switch the emphasis in terms of how much time you have to do both at the same time. And right now we have to try and fight to get the performance issues into the budget schedule. If we had a year when the budget schedule was less intense, we would have more time. But you have to do both simultaneously.
The Chairman. This has been a very interesting and helpful exchange that we have had. There are a number of members of the committee who are obviously not here, and we would like you to take some written questions which may come from them. I would also like to make a request that members of your technical staff work with us as we fashion this package. We want to address Mr. Moakley's concerns and some of the other concerns which have been raised by our colleagues as we proceed with what is obviously uncharted waters here.
Mr. Lew. We will try to be responsive.
The Chairman. Thank you for being here.
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The Chairman. Our next witness is the Director of the Congressional Budget Office, our friend Mr. Crippen, who, unlike Mr. Lew, has many times testified before the Rules Committee on a wide range of budgeting matters, often on Friday mornings.
STATEMENT OF DAN L. CRIPPEN, DIRECTOR, CONGRESSIONAL BUDGET OFFICE
Mr. Crippen. Good morning. We have a statement, which has been submitted.
The Chairman. Without objection, that will appear in the record.
Mr. Crippen. Thank you. It is a good statement that will be seen as more succinct than what I am about to say.
I recall in 1981, Mr. Chairman, as Mr. Moakley and Mr. Lew were talking, I was a newly minted Ph.D. starting to work for Howard Baker, and there were a number of my classmates and I who had established a tradition in December of going sailing. Not long after I started for the Senator, I asked whether it would be possible to go sailing in December. He said, of course, we are going to be out of session by Thanksgiving. So I made plans accordingly.
To make a long story short, by the time we came for me to go, the Congress was still in session. President Reagan had vetoed a number of appropriation bills. He was about to veto a continuing resolution, and I went back to the Senator and said, time has come for me to go. He said, of course. We are almost done, and there are just a couple of CRs to do. I turned to walk away, and he said, you just made one mistake. I thought this is the end of my short career in the Senate. He said, like a damned fool, you believed me when I said that we were going to be out by Thanksgiving.
I tell that story for two reasons. One, the situation we find ourselves in is not new. These end-of-the-year appropriations conflicts will take place under any circumstances. Second, Reagan, used the veto and the year-end train wreck to reduce spending. Those we have been engaged in the last years arguably have been to at least change or increase spending.
I would say in this little example as well, those who assert biennial budgeting, would accede power to the executive, I think ignore the impact on the Chief Executive. That is why President Clinton and others have resisted things like an automatic continuing resolution because it does have the ability to empower, but, again, it depends on who is in power where and whether that is desirable.
In my discussions with Members, I think I have discerned at least three reasons behind the discontent with the current budget process. One is the annual end-of-the-year mess. Second is lack of oversight, which we have talked about a great deal this morning. And third, the comment often made that we spend our entire legislation lives doing budget things, and that, too, must be addressed. I would like to make a few comments on each of these, Mr. Chairman, and am open for whatever questions you may have.
Of course, the end-of-the-year train wreck issue is not new. The last time we had 13 appropriations bills finished on time has been almost a decade ago. The automatic CR is one way to prevent the end of year. There are other techniques, process reforms, that would help that as well.
On oversight, we have, I think, over the last few years had less and less oversight. It wasn't always so, although that is not to say that we have not always had sufficient oversight, and maybe there is not such a thing, but it is hard work, and I think the amount of oversight has been declining. In that sense the prospect of the 2-year budget might be quite useful and encouraging.
I would also note that, as you discussed in the last moments with Director Lew, the Performance and Results Act, the first year is really this year for full reporting. At the end of the month is when reports are due. It would attest ti the ability of the executive branch to critique itself. Are these reports meaningful, are they open, are the wagons circled or not? Second is Congress's ability to respond to them. Will there be oversight hearings based on these reports, and will the reports be used as a useful management tool? So we have a real live experiment starting in a few weeks on both of those issues. Looking at oversight issues, I would encourage you to look at how the reports are received and utilized.
Third, on the constant complaint all we do is budget stuff, that has been around since the Budget Act 25 years ago. I first encountered it in 1981, but it was not new then. I would suggest perhaps it is the constraints of the budget process, not the time involved, that is the real rub. People don't like the budget process because it defeats or deters or makes it harder to do things that they would otherwise like to do. So the constraint may not be the core time or the time involved, but rather the resource allocation questions and the policy issues.
However, I would say, in conclusion, Mr. Chairman, we are in a new world, and we have these ongoing surpluses and rapid economic developments which we can't keep up with on our own forecasts on spending and growth in the economy. We have the impending retirement of the baby boomers and the need to reform Social Security and Medicare. So if biennial budgeting reduces the number of train wrecks and promotes more oversight and allows more time for nonbudget issues, then it is worth a try at least temporarily.
We should remember the reason why all 13 appropriation bills were completed on time in 1988 was because the Congress and the President struck a 2-year budget deal, so there is some suggestion at least that it worked in those circumstances, and it might again. But it is a process change to address what might be potentially political problems, and I don't mean partisan, but rather power and policy, as Mr. Moakley has said; that is, thin margins in both bodies, and a President of the other party, and the constraints inherent in creating and implementing a budget. We only know, however, if we try a different process that there will be unintended consequences, and so we need to be cautious how we proceed.
I will conclude with a second story from 1981. Howard Baker's first vote, and what turned out to be his last vote as Majority Leader, was on increasing the debt limit, something that was difficult to round up 51 Republicans in the Senate in 1981 to support. Ultimately he did, but it was a messy process, and he looked with much favor on the House process. I think it is called the Gephardt rule in which a budget resolution is deemed approved when the budget resolution is passed, and so the House as a regular matter does not vote on it.
So Baker sent me off to talk with Bob Dole to see if we couldn't implement the Gephardt rule in the Senate. After some backing and forthing, Dole looked at me and he said, you know, someday we are going to be back in the Minority, and we don't want to foreclose all these opportunities of legislating by other means. And so he was not only prescient, but resisted the change, and indeed the Senate still has the vote on debt limits. So all of that is to say that one needs to be cautious about making these changes.
Thank you, Mr. Chairman.
The Chairman. Thank you, Mr. Crippen. You continue to provide very helpful input to this committee and this entire process.
[The statement of Mr. Crippen follows:]
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The Chairman. I will say that I recall many discussions that I have had with Howard Baker in which he has long been an advocate of making this a part-time Congress.
I will tell you that it was in the first instance of your three that you outlined, which was the waning hours of the first session of the 106th Congress, that I successfully garnered 245 cosponsors calling for the biennial budgeting process.
Mr. Crippen. That was not an accident.
The Chairman. That was part of our timing process here.
You have very important responsibility at the CBO, and I am interested to know what impact the biennial budget process would have on your work as Director of the CBO.
Mr. Crippen. It would obviously depend a great deal on how you choose to implement the 2-year budget. We will do whatever Congress wants and needs in that process. I would hope and anticipate, whether it as a formal role in terms of another budget resolution or not, that there would be ample opportunities to update our annual reporting or semiannual reporting as we do now on baselines and economic changes and other things.
Things are changing at the moment quickly enough that a few months makes a lot of difference on a budget outlook even for the current. The revenues for this budget year, for example, are running higher than we anticipated even as late as December. That does not mean that they are going to be higher, but at the moment they are. What that portends for this year could be important, but it could be important for future years as well.
The point being that in a 2-year process, there would still be opportunities for the Congress to incorporate updated estimates for at least the first few years in which these things are changing quite rapidly. I don't anticipate, however, having said that, that there would be a great deal of change in overall workload. We put out three annual reports, and I would anticipate that we will continue to do that. There would be some midsession reporting that would go away, but I don't think that the workload would change dramatically.
The Chairman. In your work with the executive branch, do you have any recommendation as to what the time frame would be for the first year of a new administration as far as its submission?
Mr. Crippen. I had, frankly, not thought all that much about the implication of having a new President and a new budget process simultaneously. Clearly you could enact the law this year and have its first true effective biennial date be 2 or 3 years into the new President's administration, so 2003. Just as you did, the Congress did, back in 1974 and 1975 when they passed the original Budget Act, there was a 1 -year practice run for everybody in which the requirements were not binding, and everyone went through paces. Likewise it might make sense to pass -- to enact the law this year and make it effective officially, fully effective, the third year into his term.
The Chairman. With your tie to the first branch of government, I am wondering whether or what thoughts you have on the argument that opponents of biennial budgeting make that we are acceding authority to the executive branch?
Mr. Crippen. You have subsequent witnesses here who have that belief more than I do. Having worked on both ends of the avenue, with Congress and the President, I think that it is, frankly, the other way around, that the executive branch would lose a modicum of power if you make appropriation bills less recurrent, more combined, whether it is once every 2 years you have these end-of-the-year sessions or negotiation. But I think that is why the administration has resisted efforts by Congress to have continuing or permanent continuing resolutions or automatic continuing resolutions so that you have a crisis of sorts to create an atmosphere to reach conclusion of these issues. They well may find another forum.
The Chairman. What about the issue of their responsiveness?
Mr. Crippen. I find it hard to believe that any agency would stick its finger in an appropriator's eye just because it is going to be 18 months before they see them again. Most of the management is year-round, it is not just in oversight or before appropriations committees. There is ongoing work between the appropriations staff, some of your staff and agencies. I don't think that lengthening the leash -- I don't see that having an impact.
The Chairman. Thank you.
Mr. Goss.
Mr. Goss. Thank you. You probably are in as good a position as anybody to judge in terms of time and effort the people who have put together budgets, whether there would be tangible savings if we switch the system now. Do you think that there would be tangible savings?
Mr. Crippen. I suspect there will be some. We are reacting to budgets, not developing them. Whenever this system -- however it works, we will be in that same mode, presumably. But I have worked on budgets in the executive branch in putting them together, and indeed it is a very time-consuming process. It is not to say it is not a useful process, but I can't imagine that it would not save some time to not have to go through all of it every year.
Mr. Goss. I am certainly not wedded to change for change's sake. We are trying to see what the pluses and minuses are. I have assumed that there would be a time savings.
The other thing, you are in a very good position also to make any comment you would like on the authorization question that I asked Mr. Lew. I am a little puzzled sometimes about why we seem to have slipped away from the authorization process. I would be curious to know whether you think it has anything to do with the budgeting process.
Mr. Crippen. I am not sure that I know the cause. There are different classes and different reasons as to why these things happen. In some cases it is felt that it is not needed; that is, the program will go on, and therefore we should not break our backs reauthorizing. But it is an increasing problem if you measure it by the amount of money that is being appropriated that has not been authorized. That seems to be growing, just as I think -- and this is a casual observation -- I think oversight in general has declined in authorizing committees. I don't know the reason for that. Until you know the reason, it is hard to have a solution. If it is indeed time, and the authorizing committee chairmen are more than willing to do oversight, then a 2-year cycle might help that. I suspect there are lots of reasons why oversight has declined.
Mr. Goss. I think time is a factor. One of the aspects of oversight is accountability, and sometimes when there is no authorization, accountability gets a little blurred, too.
Mr. Crippen. Clearly these processes were meant to complement each other, the authorizers to do both oversight and the parameters of the policy, and the appropriators to set priorities among available dollars. So the processes were intended to be fully complementary, and I think when they work, they are, such as in your case with the intelligence authorization and appropriation.
Mr. Goss. I have no objection to an appropriation of an unauthorized amount subject to the authorization of that amount. That is not a handy way to do it, and probably not the smartest way to do it, because it leaves a lot of uncertainty down the road, and if you are moving numbers and dollars around, you don't want that uncertainty. But it seems to me even that would be an improvement over the nonauthorized approach; do you agree with that?
Mr. Crippen. Yes, I agree. I think what we are discussing in some ways are mechanisms by which we can produce not only better decisions, but more efficient decisions, but also recognize that we need to keep, as Senator Dole reminded me back in 1981, the ability to have conflict resolution. Is there a mechanism that will force you -- especially given the thin margins you now have and the differences in parties between the executive and the congressional, what mechanisms are there to force conclusions, to have policy or conflict resolution. It is not just that you can fully eliminate that. You may have better ways to do that, but it is not possible to fully eliminate those conflicts and the discussions that need to take place.
Mr. Goss. Thank you very much.
The Chairman. Mr. Moakley.
Mr. Moakley. No questions.
The Chairman. Thank you very much. We are going to have some written questions to submit to you.
Mr. Crippen. There are obviously some things that we have some notions about how it can work. Thank you.
[The information follows:]
******** COMMITTEE INSERT ********
The Chairman. We are going to bring our last two witnesses up together, Sue Irving, Associate Director of Budget Issues of the General Accounting Office, and Lou Fisher, senior specialist in separation of powers at the Congressional Research Service. We welcome both of you and thank you very much. You are certainly free to summarize your remarks as you see fit. Ms. Irving.
STATEMENT OF SUSAN J. IRVING, ASSOCIATE DIRECTOR, FEDERAL BUDGET ISSUES, ACCOUNTING AND INFORMATION MANAGEMENT DIVISION, UNITED STATES GENERAL ACCOUNTING OFFICE
Ms. Irving. Thank you, Mr. Chairman and Mr. Goss and Mr. Moakley. It is a pleasure to be back. As you all know, I actually like talking about the budget process, and I am delighted to come back and join another group. As you noted, I would like to have my whole statement put in the record.
I would like to stand back a minute and remind us that part of why the budget debate is always going to take a long time is because it is through the budget that we resolve the often conflicting demands and views about the role of government by the American people. You all live in this world, and you know your constituents want a smaller government as long as it fixes all of their problems. Someone that I worked for once said all of American political thought could be summed up in two sentences: Get the government off my back, and there ought to be a law.
I think in a very real way when you talk about your frustration about how long the debate takes, I think what you are really saying is that you feel that you debate either numbers without context or the same thing over and over again. I know Senator Domenici used to talk about having to fight about whether the space station should be continued first on the budget resolution and then on the authorization bill and then on the appropriations bill, and he would feel better if he could only have the argument twice.
I am not sure that your issue is that it takes too much time as much as you feel that it is not appropriately focused, and how can you think about restructuring it to do that.
The other thing that I would like to note is that in a very real sense, you stand at the threshold today. Having slain, at least for the time being, the deficit dragon, you have the ability to stand back and look at two other very important things. One is how do you think about the long-term costs of the commitment the government makes.
We know that the good news is my generation is getting older. The bad news is we are getting older, and that demographic tidal wave, absent policy changes, will overwhelm either the surplus or at a minimum the flexibility to do anything else in government. When you are fighting the annual deficit problem, you don't have time to look at that, and now you do.
You also -- and my predecessor at the table addressed this -- are just beginning to reap the benefits of some far-sighted laws you all enacted, giving them time to bear fruit, the CFO Act, the Government Performance and Results Act, and the Clinger-Cohen Act. These are just beginning to bring to you some performance and cost information that is being, I think it is fair to say, unevenly done and unevenly used because it takes time to adjust.
These issues confront you whether or not you change the cycle for the budget process, and I think whether you stay at an annual cycle or go to an biennial, you should think about how to use that information in cost-cutting ways, because I would argue that your current authorization and appropriations committees are quite well suited to do targeted oversight and program-by-program oversight.
When Director Lew talked about working very hard to prepare for hearings, I thought to myself, that sounds like oversight to me. But Congress and the executive branch have a harder time doing cost-cutting oversight. We have quite appropriately in this government assigned many agencies and used many tools to address the same problems. We use tax, we use spending and State grants, we use regulation, and we run them through different committees and different agencies to get at a number of things, everything from counterterrorism to health to -- I remember Mr. Mica trying to look at trade policy and figuring out there were 19 subcommittees involved in it.
It is not clear how you do that on either cycle at the moment, whether you stay with annual or move to biennial, and certainly Mr. Walker in testifying before the Senate Budget and House Budget Committees last month suggested that you all think about whether -- this means vis-a-vis oversight -- you are in a similar situation to what you were vis-a-vis budget before the Budget Act, whether you wanted to think about something like a performance resolution as an adjunct to the budget resolution, not with numerical rigid targets, you didn't feed this many people, we are going to cut your budget, but should the views and estimates process be modified to have agencies suggest targets for cost-cutting oversight.
I want to just put in that context to the extent that you look at biennial budgeting as an attempt to think about better or more systematic oversight, it won't happen by itself in any process. You have to think about how to structure it given the fact that there are disparate jurisdictions.
Your staff asked me in my focus on biennial today to talk about a couple of things in particular. One is I think to remind you or to remind all of us for the record that Congress is actually pretty good at giving multiyear money and different timing of money when it thinks it needs it so that the frequency of decisions is not the same thing as the periodicity of money. You know that, but there are people who write or talk about this as somehow the only way to give the agencies advance planning ability or flexibility in the use of their funds is to change the cycle. Indeed, all of these bills propose two 1 -year budgets. We are not going to 24-month fiscal years in any of these proposals.
The other thing that your staff asked me to look at was the experiences of some of the States. And I am happy to do that. We are currently looking in depth at three States. Let me add a couple of caveats, of course. State budgets play a very different role than the Federal budget, and State procedures and policies cannot be translated wholesale to the Federal Government, so I would not want to be heard to suggest that you could make your decisions based on the State experiences. Rather, that as you think about what it would take to implement this if you chose to do it, some of the mechanisms that they have used should either give you ideas or pause, because I think the one thing that Director Lew and I absolutely agree on is this: The devil will be in the details. How you decide to make it work will mean whether it transfers power, how it works, and what you get from it.
The three States of particular interest, I think, are Ohio, Arizona and Connecticut; Ohio because it is the only large State that has both an annual legislature and an annual budget process, and it always has; Arizona because it just last year moved its budget to an annual -- to a biennial cycle with the avowed intent and a structure for seeking cost-cutting oversight in the even-numbered year. Now, in Arizona they only appropriate half their money. Federal money flows directly to the agencies, as does any money created by voter referendum or any user fees.
In Connecticut because about a decade ago they went to the idea that biennial will increase oversight, and the Governor is supposed to propose a biennial budget every odd-numbered year, and they are supposed to do nonbudget substantive reviews in the even-numbered years, except in the last decade every even-numbered year the Governor has had a fairly significant number of policy proposals and budget revisions, so that this year in a $10 billion budget, the combination of gross technical changes and gross policy changes, that is both pluses and minuses, just adding all of those, has been more than $750 million. So at least based on our preliminary conversations, they have not, in fact, done oversight in the second year except in the context of the appropriations process where they were doing it before.
None of these States separate authorizations and appropriations. Most States have one omnibus appropriations bill or a few. In most States the Governor has a great deal more power than the Constitution envisions that you give the President.
In Ohio, which is the State which -- the only large State that does this, and a State quite satisfied with it, there is this thing called a controlling board, which is composed of six members of the legislature and the director of the Governor's Office of Management and Budget. This controlling board does not adjust the total number of general revenues. It moves money between years, it moves money between purposes within a single agency, and if you are fee-funded, it may approve an increase in your spending if your fees so indicate. The Governor, as you also know, has the power to cut spending unilaterally to achieve a balanced budget.
We have more preliminary details on the States, and we will share that with your staff.
I think at the Federal level, let me just shift to thoughts I had based on what the previous witnesses said in answer to some of your questions.
If you are thinking about the first year of a new President, and I heard a number of people talk about phasing, you might want to look both as a possible transition approach, but as a cautionary tale on how willing your colleagues are to do this at the Defense Committee. Under current law the Department of Defense is supposed to submit and supposed to receive a biennial authorization and a biennial appropriation, and you all know it does not. They do, however, prepare a biennial appropriation request, and the Department goes through the process of doing a biennial budget. The Department of Defense would say that they have more burden than they would under an annual process because they have to do the second year twice. But it means you have a department that is ready to go. You have a Congress that has been unwilling for whatever reason to do this.
Whether or not you get the benefits from a biennial budget process that you seek depends entirely, I think, on what provisions you design for the second year, how you compensate for the fact that you will no longer have a fixed period where the agency comes up with money, what the bias is about supplementals, whether you pull it off as a single technical revision, how you respond to things that are unexpected, think about emergencies today and that is in one -- a 1 -year.
So I think it is an open question whether you can make it work, and because of that, it may be an open question whether you want to do it, but if you do do it, I think it is going to take a lot of detailed planning. We are available to assist in any way, and I am happy to answer questions.
Mr. Linder. [Presiding.] Thank you for your testimony.
[The statement of Ms. Irving follows:]
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Mr. Linder. With respect to the States, do Ohio, Connecticut and Arizona meet every year?
Ms. Irving. Yes.
Mr. Linder. Texas does not.
Ms. Irving. That is correct.
Mr. Linder. From your knowledge of Texas, does the executive have broad, expansive powers in the off year?
Ms. Irving. Texas I do not know a lot of detail about since I have mostly been looking at the States with the idea of what they can offer Congress. I have only looked at the ones that do biennial. Texas is an interesting State because it is generally viewed as a weak Governor State despite having a biennial legislature. I can get you that information.
Mr. Linder. Twenty years ago I proposed that the Georgia Legislature ought to meet in the odd-numbered years and pass bills, and in the even-numbered years appeal them all.
Ms. Irving. I know too little about Georgia to comment.
Mr. Linder. There have been some comments from both Republican and Democrat people that the GAO was getting less and less valuable information in their studies, and I am sure that you have read some of the complaints. I am wondering if it is getting more difficult to get information.
Ms. Irving. Mr. Linder, I think the experience in getting information tends to vary widely. I mean, the kinds of studies I do, it is not a problem. Both OMB and CBO and the committees and the States have been cooperative.
I am not sure that I am in a position to make a general comment about that. I know that there have been some incidents. I think that most of them have been worked out. Mr. Walker is generally not the kind of person who takes no for an answer. I don't know that you should be overly worried about his ability to work these out.
Mr. Linder. He is from my county.
Ms. Irving. So you know what I mean.
Mr. Linder. Let me pass to Mr. Goss.
Mr. Goss. I don't have a lot of questions.
I agree with one of the points you made about the long review, and do you have a desire to share with us a mechanism that works for the long review process?
Ms. Irving. That is interesting. As you probably know, we have done some work on looking at how the current budget accounts for accrual, for insurance programs and long-term commitments, and the problem is the very long-term data is a little squirrelly. But we have proposed for a number of areas it would be a good idea to accompany in the budget some supplementary data and improve the quality of that information.
I would not propose going as far as we do with credit where we have shifted from cash budgeting to accrual budgeting because we are not ready yet for insurance and pension programs to do that, but we are ready to create the pressure to improve the data by requiring that it be included as supplementary information. Then you might think about whether you wanted to go to some sort of triggers within the process, whether disclosure or a range of the size of the commitment. I don't think you are ready to integrate it into scoring, but I think it is important to recognize that PBGC is not a profit center for the government, and on a cash basis it looks like one.
Mr. Goss. I think that is a good observation.
I have to go in a few moments, and so I am going to hold my questions because I would like to hear what the next witness has to say. Thank you.
Mr. Linder. Mr. Moakley.
Mr. Moakley. You referred to Ohio as a biennial State. Don't they have the operating budget one year and the capital budget the other year, and so is it really a biennial budget?
Ms. Irving. I take the State's definition, but I would say that Ohio comes closer to being on a staggered biennial cycle than some of the others who list themselves as mixed. Kansas is mixed, but what it means is that the regulatory boards like Cosmetology are on biennial, and all of the general fund is on annual. So Ohio is a split; one year they do capital, and one year they do operating.
Mr. Moakley. In the off year they do operating budgets, and they have this control board. Does that almost take the place of the legislature?
Ms. Irving. One thing that is consistent in States is that they give a great deal of power to the staff groups. In some of these States the equivalent of the Congressional Budget Office actually prepares the appropriation, and so they have a joint legislative budget office. And so what happens in Ohio, the Governor proposes a budget, their legislative budget office looks at it and analyzes it. Their appropriations committees pass the appropriations. They are all done pretty fast in the States.
During that period the controlling board may be making adjustments on some of the nonappropriated revenues. The controlling board has to approve all contracts over $25,000, so that is every time you want to change your cleaning company. But I don't think that I can say that they usurp the power of the appropriators in the odd-numbered years. But if you think --
Mr. Moakley. Don't they have the ability to take money out of one account and move to another account in emergencies?
Ms. Irving. They can move money between purposes within an agency, yes, sir.
Mr. Moakley. Would not that be the action of the legislature?
Ms. Irving. I thought you meant in creating the overall budget in the off year.
Mr. Moakley. No, I mean just administering the budget.
Ms. Irving. Yes, they basically run reprogramming transfer.
Mr. Moakley. By going to this biennial, sometimes you put bureaucrats and unelected officials to do the things that elected officials do today.
Ms. Irving. In Ohio it is really as if you picked six of your colleagues and gave it to them, because the controlling board is members of the legislature.
Mr. Moakley. That is a great board to be on. Thank you.
Mr. Linder. Actually we have a similar situation in Georgia, where a panel of legislators can move money, reprogram money within agencies.
Since the 16 or 17 States have changed their budget cycle, has there been a trend to which direction they go?
Ms. Irving. Until this decade, the trend was from biennial to annual, and the explanation was the difficulty in forecasting. In this decade the only shifts have been Arizona to biennial, Connecticut to biennial, those two in this decade.
Mr. Linder. If the difficulty in forecasting is more difficult under a 2-year budget cycle than a 1 -year budget cycle, what is the propensity to pad budget requests?
Ms. Irving. Of course "padding" is not a neutral term. I think if I were a good manager and I were trying to guess what I needed in the second year, I would be inclined to round up because I am certain needs are greater. I have no empirical evidence one way or the other. If you are going to retain fixed dollar caps, of course in the aggregate that can't happen. It becomes part of the argument between the executive branch agencies.
Mr. Linder. You mentioned the capital budgets that Ohio, I believe, has. And there has been some discussion for a decade about moving to biennial budget budgets and capitalizing major purchases. Are we at the point where we can do that?
Ms. Irving. It is a difficult switch, and conceptually very different for the Federal Government. In the States they define capital essentially as infrastructure, roads, buildings, and they fund them by floating bonds. Most -- an awful lot of what we would think of as investment at the Federal level we don't own. We give grants to the States to build roads. It is real hard to imagine depreciating something that you don't own.
The other thing is one of the really big issues is are you trying to use your budget to match costs to outputs or to show the amount of resources you have committed. And we just -- you know, accrual and capital budgeting help with matching costs in the economic sense with output, but they really hide how much resources you have committed. And in general, and we think appropriately, Congress has wanted to accurately show the amount of the resources produced in this country which they have committed, and so we have been fairly strong proponents of up-front budgeting for capital, because if you have actually committed for the whole building, you have committed future resources.
You can, below the aggregate level, improve your allocation of costs by using funds so that the agency getting the building -- you can use capital acquisition funds below the level to allocate the costs more equally, which, as you look more at the Results Act, you may want to do. But for the Federal Government at the aggregate level, capital budgeting raised a lot of problems.
The other thing, an awful lot of people only want to move the expenditures to the capital budget and not revenues.
Mr. Linder. Let me just pick up on one last point. You mentioned the Results Act. Do you think that a more uniform rule with respect to how it is viewed by agency heads and oversight committees, such as first a fairly carefully thought through mission statement, and then an examination and reauthorization, how well they approached their mission, are they still on the same mission, so we don't have mission creep, which many, many Federal agencies wind up doing something totally different than they started doing --
Ms. Irving. Of course they don't do that all by themselves.
Mr. Linder. That's correct.
Ms. Irving. I have trouble with abstract mission statements, because if you went to the Department of Agriculture and asked them what their mission is, they would talk about agriculture and rural America. And if you look at where they spend their money, they are in the income support business. So I am not sure -- their culture and clearly what they would describe, farmers and rural America, but that is not where their money is. Abstract mission statements have always made me a little uneasy.
Like Director Lew, I don't think that you want to go one size fits all, but you may want to go to one set of categories. You want all of them to get to what is the outcome that I am trying to seek in this program, which allows something like a science organization to say in the end what we are seeking to do is increase knowledge, and I will create the potential for breakthroughs. We are not going to measure ourselves on how many breakthroughs there are in any given year. What are the interim measures or goals, and how close are we able to link them. We are clear that increasing prenatal visits helps with low birth weight. We are less clear on how you make a scientific breakthrough.
I think the other thing -- cost accounting in the Federal Government is in an infancy stage. You have a long ways to go before you get a clear linking of resources to results in a mechanical way. I think Director Lew is to be credited with trying to make this work with the executive branch, and I think it is great that you guys are trying to see how to fit it into your process, because it offers you great potential.
Mr. Moakley. Thank you.
Mr. Linder. Thank you.
Mr. Linder. Mr. Fisher, we welcome you.
STATEMENT OF LOUIS FISHER, CONGRESSIONAL RESEARCH SERVICE
Mr. Fisher. Thank you.
Sue mentioned the study she has done on three of the States. One is Connecticut. I talked with a person in Connecticut this week who has done budgeting up there for 27 years, and he explained that Connecticut about 10 years ago switched from 1 -year budgeting to 2-year budgeting, and there are several reasons. The big reason was for Connecticut to be able to do performance budgeting, and he says it has never happened.
I think he underscored some of the points made here today by witnesses. You can adopt a new policy and process, and that doesn't mean that it is going to happen. It depends on what Members of Congress want to happen in the future. It is a political decision, not a process decision.
My statement looks at whether there will be a shift of power from Congress to the executive branch, how efficient this biennial budgeting will be for Congress and how efficient for the agencies, and whether there will be new and better oversight.
I think there will be a shift of power from Congress to the executive branch. Even proponents of biennial budgeting admit that. How much depends always on what good faith there is in the executive branch. You will be giving them greater discretion. Director Lew talked about under biennial budgeting, executive people will need more discretion so that they can use it wisely and prudently and in good faith or use it in bad faith.
One of the things which has concerned me in recent decades, probably the last three decades, is that the executive branch is getting more and more structured of having short-term political appointees and not as many long-term careerists who do have a stake in good faith relations with committees. We have all seen members of the executive branch having little interest in legal limits, or constitutional limits, or relations with Congress, or relations with committees. So if you are dealing with that, that is going to be a problem to catch up to make sure that abuses do not get out of hand.
Let me turn to efficiencies for Congress. First of all, as people have said here this morning, you are going to have a new administration, untrained, putting together a 2-year budget. How good will that be? That is one problem. Mr. Lew said that it would be a stretch even to complete that by April, so you are losing a couple of months. In addition to maybe a late budget for a new President, you have got the problem of how good that 2-year budget is. If the estimates are not good because they are not trained people, you are going to have particular problems 2 years out. Again, you will be finding yourself with estimates that are inaccurate and inappropriate, and you will be doing oversight, but not oversight which gets into programmatic concerns. You will be finding what adjustments you can make in the second year particularly because of the poor estimates.
Point two, let's say biennial budgeting were in place now, and there is a new Congress coming in in 2001. Under this system the authorization decision would have been made this year. 2001 would be set aside for funding. I don't think any process can prevent Congress from doing whatever it wants to in the first year. For example, if biennial budgeting had been in place in 1994 and the Republicans take control of Congress, they would be at liberty to do what they did, which is to pass as much of the Contract with America, which is supposed to be the budget year.
Point three, just as now, you have reprogramming within the account. You have money taken from one account to another. You have all of these adjustments. That problem with biennial budgeting will be more than twice as bad because of the poor estimates for the second year. You will be spending more time finding out what agencies are doing and misusing the discretion that they have with relatively poor estimates.
Point four, all of this assumes that the economy is going on in a fairly stable manner. If you have a downturn year 2, you will have to address that if you have a downturn. You will have to make political decisions as elected officials.
Point five, Director Lew suggested that under biennial budgeting, executive branch would want more discretion than they have now. It would be interesting to see what kind of new adjustments would be made. Maybe the executive branch would like discretion to move money from year 1 to year 2. That would be something to be debated. Another possibility is under reprogramming right now, some of the reprogramming requests come from agencies, and it is just for notification to committees, and other reprogramming requires prior approval. The Congress may decide under biennial budgeting that they want to move a lot of things and notification into prior approval.
The next point, if we have statutory caps, you have to live within limits, and if some programs because of poor estimates have gone beyond the limit, you have to find money somewhere else, and it may be the case that if the program is climbing, you can't find one account to take money from, you may have to take money from two or three accounts to replenish the account that is growing, so you will have a lot of shifting of money and changing of account levels.
We have mentioned a National Performance Review that criticized annual budgeting because there is padding. I think that with biennial budgeting you would expect more padding.
What are the choices for Congress? You could decide on biennial budgeting to fund agencies at a minimal level and for them to come back for supplementals. That would maximize congressional control. It will also maximize congressional work. The other choice, to give agencies ample funding to get through the 2 years. The downside on that is that you would be giving greater discretion and control and power to the executive branch.
We haven't talked about tax bills. I don't know, I guess those happen a lot in the first year when you are doing all your budgeting work, but if you wanted to do tax bills the second year, I think you would do it, just as you did this year with the marriage tax penalty bill. I don't think you can compartmentalize things year one, year two. You make political decisions, which is what you are supposed to do.
What about the possibility that the 2-year budget wouldn't pass the first year? We have a hard time now passing it. I think a 2-year budget would be more contentious, a lot more difficult to get a consensus.
When the new President comes in, instead of the budget coming up in early February, it would come up in early April. You have already lost 2 months there under this process, and I think there is a general agreement that the reason you finish your budget now in the first year, even if it goes into October, November, is that you know in the next early February you have got another budget coming.
How about if there is no budget coming the next year? Will you be losing the incentive to finish up? Will that debate on the 2-year budget in year one go into the next year?
Let me turn to efficiencies for agencies. I don't know, I don't think anyone would know what agencies are going to do under biennial budgeting. They know, from what I have just said, that you may have to take money from accounts because another account is climbing. Would they want to prematurely obligate money, to lock it up so you can't get at it? I don't know what the psychology is in agencies. I think there would be more uncertainty in agencies for 2-year budgeting because everyone knows that the estimates are off and money is going to be moving around. I don't know how agencies will behave.
There is a thought that there will be more long-term planning in agencies. Maybe there will. I don't think it will be that marked. Agencies will still have to come up every year when you do your oversight on year two. OMB will be watching agencies very, very carefully. I think any notion that there is going to be expansive planning down the road is probably not going to happen.
I mention the problem of short-term political appointees. They are in for 18 months, maybe in for 24 years. Many of them have not been in government before. They have no idea about your prerogatives in Congress. They really don't care about it. They do a fair amount of damage. They leave and go back to the private sector, and you have to clean up the mess.
I think we are losing agency careerists as part of the invention that happened in 1993. A lot of the long-term careerists are out of government. I don't see any move to put them back in. So you are depending more and more on short-term political appointees.
Last point under this, the National Performance Review criticized annual budgeting because it says you have to look out 2 years for obligations and 3 years for outlays. That is a problem. Biennial budgeting will make it a year worse. You will have lookout 3 years for BA and 4 years for outlays.
Congressional oversight. I think you will do more oversight. I don't know what the nature of it will be, whether it will be trying to bird-dog the agencies to see what they are doing with this discretion or whether it will be looking ground up at programs, deciding whether you want to keep them or radically change them.
What will be the change within Congress? Most of your authorization committees now do multiyear authorizations. Things won't change for them. That is what they have been doing for a long time. You have two committees that do annual authorization, the Intelligence Committees and the Armed Services Committees. There would be a savings there if you went to 2-year authorizations.
I think in the military area is probably the toughest area if you wanted to go to 2-year authorizations. It is the toughest area in terms of new military commitments and everything else. I look at the Armed Service and Intelligence Committees and say if you give them a score of 10 for their annual authorization year one and give them a score of 10 for annual authorization for year two and then go to biennial budgeting and give them a score of 10 for their 2-year authorization, would they get a 10 for the oversight they do the second year?
First of all, the second year is not must legislation. You heard Mr. Goss, how much pressure he is under to complete that. Oversight is going to be a little different the second year, and the second year is when Members are running for reelection. I don't know what the priorities will be. It will depend on party leaders, but I don't think you are guaranteed more oversight under this system in 2-year budgeting than you get at the present time.
It is also likely that under 2-year budgeting and year two where you are supposed to do oversight and year one where you are supposed to do your authorization bills, I think Armed Services and Intelligence Committees, they just would feel free in year two to pass whatever authorizations they thought were necessary, not the large authorizations they do in year one but some authorization to address emerging issues.
You would lose a little bit of oversight this way, the kind of oversight you get every year from the Appropriations Subcommittees, and that is oversight with a lot of teeth, with a lot of leverage, a lot of sanctions.
From all this, I can't tell you what is going to happen. I don't think anyone can tell you what has happened.
In 1994 or 1996, you passed the Line Item Veto Act, which was declared unconstitutional 2 years later. So we are back to the process we had. It didn't affect too many agencies. It didn't affect too many committees.
Biennial budgeting will affect everything. It will be a very dramatic change, very deep change. You may want to do it. You may want to decide to try it incrementally in some areas. If there is some program, some agency that has enough stability, you are comfortable with, learn a little bit from that, maybe get the Appropriations Committee, the CBO, GAO to make some suggestions where it might work best starting out on a pilot basis.
Those are comments. Thank you.
[The statement of Mr. Fisher follows:]
******** INSERT 3-1 ********
Mr. Linder. Mr. Fisher, you seem to have spent your career looking deeply into the inner workings of our government, deciding that it doesn't work.
Mr. Fisher. I am here for 30 years. I love it. This is the greatest job you could have.
Mr. Linder. Have you ever given the thought to whether we should get rid of either the authorizing or appropriating committees?
Mr. Fisher. I have given thought to it. I think authorizing committees, these are the committees that create programs. I don't know how you get rid of program committees like that.
Mr. Linder. They provide the authority for spending. Why don't they do spending?
Mr. Fisher. You could -- we have gone through periods where you have a committee that does both authorization and appropriation. We have gone back and forth over our history. The new one on the block, of course, is the Budget Committee. It is the third layer. To me you have to do authorization. You have to do appropriation. You could combine them.
There is a thought as to how much we need budget resolutions every year, particularly if it is interfering with the work of the Appropriation Committees in getting started, but we have three layers. I think there is good thought that could be on what can we could do to at least go to two layers.
Mr. Linder. I am interested in your comment about losing talent because of the reinventing government proposals. Specifically, what changes were made in policy that caused career professionals to decide it wasn't worth staying?
Mr. Fisher. I think the policy was to get rid of close to 300,000 employees.
Mr. Linder. Most of those were in the military.
Mr. Fisher. A lot were in the military.
One of the interesting changes is it is not as though government is smaller after losing 300,000 people. We simply contract out a lot of things that agencies used to do, and that is a concern to me, where you have people in the private sector doing things that agencies used to do with accountability to Congress.
Mr. Linder. You have two or three comments in your written statement about the short-term political appointees being less attentive to constitutional restraints than career professionals. Do you have any evidence to back it up?
Mr. Fisher. Oh, only a lot of anecdotal evidence, a lot of stories. I have written about it at times. It happens. I think it is natural that people coming in from the private sector, they just don't understand constitutional limits or even statutory limits or prerogatives of the committees, and their priority is to get something done for the President who put them in place.
Mr. Linder. I tend to agree with your assessment. I am just wondering if you have any empirical information on that.
Mr. Fisher. I have never really seen anything in a sophisticated, statistical way. We have a lot of problems of this nature. I think they have less problems with careerists who are here and they know they have to come back over a long period of time and deal in good faith with committees.
Mr. Linder. In your prepared statement you have talked about agency heads being very nervous about losing funding in the second year. Why is that any different than today?
Mr. Fisher. It is not any different. I think it is different probably because the second year the estimates aren't going to be as good and people don't know what is going to happen. If they don't do it both years, I think they would do it a little bit more the second year.
Mr. Linder. If tax bills are going to be introduced in any event in year two, I think the only Department that doesn't -- that thinks those tax bills are spending bills, it is a tax cut. How does this have an impact on our spending budget?
Mr. Fisher. Not on spending, but if you think the budget on -- I am not sure myself. I assume that anything of a revenue nature would be done the first year when you are trying to decide what your budget is.
Mr. Linder. Whether it is income or outgo?
Mr. Fisher. Yes. And I am thinking that even if you try to do it all in year one there will be occasion where Congress will decide they want to pass tax legislation in year two.
Mr. Linder. Have you looked at the performance budgeting of New Zealand over the last decade or so?
Mr. Fisher. I have not.
Mr. Linder. We are going to have some testimony from a gentleman who is in their parliament. I find it pretty interesting because his point is going to be they paid attention to the oversight, and it gave the control much more control to the legislative branch over the spending side of issues. It might be an interesting session.
Mr. Moakley.
Mr. Moakley. I just wish the whole committee were here to hear your side of the story. I agree with most all of it. I know that many people really think that by going bicentennial is going to cure all the budget problems. It is not. We are going to have problems that are going to be stretched out a little bit.
I am afraid that the executive gets too much power out of this, and I am afraid the bureaucrats will end up making decisions that Congress should make themselves. And I would think that, if anything, probably much more study should go into whether we go bicentennial. And I think you can't look at a State because it has gone bicentennial and figure, hey, they did it so we can do it. They don't have to raise money for the military. They don't have to do a lot of things we have to do. And, as Ms. Irving said, when they go into their capital budget, they float bonds. I mean, we pay our gas tax and something else from somewhere else.
I think the United States is probably unique in its budget, and I think to use lesser countries that have just such a small percentage of our overall budget, a small percent of our duties, would really just be an exercise in futility. I don't think it would solve anything.
So I welcome you any time, and I am very happy you are here, and as I said, I only wish that the rest of the committee were here to hear your views.
Mr. Fisher. I wish I knew more why Members of Congress are coming to the point of wanting biennial budgeting. I am not in their shoes. I don't know how awful it is to schedule things on the floor and get it through and what the end of the year looks like
Mr. Moakley. I think because somewhere in their mind they feel this is going to cure a lot of the problems. But a lot of the problems are policy differences and not budget differences. I think, especially when you have such a small minority and when you are split between minority and majority, many of those problems get exacerbated because they are only a few votes separating one side from the other and, therefore, the fights get heavier and probably more dramatic. But I just don't think there is a magic wand out there.
As far as oversight, I think much of the oversight -- some of the oversight is overlooked because it is not as sexy as going out and plowing new fields and bringing new programs on and finding other solutions to certain problems out there. Oversight is like going over the old stuff, and we have done it. We have been there, done that. So I just think that oversight doesn't necessarily get addressed when people have more time that they may save by having this bicentennial budget.
Just like you say, in Connecticut, they changed it for a purpose, and they never addressed the purpose. I think it probably could very well could happen here.
Mr. Linder. I think Mr. Moakley and I differ on one point, and that is I think the sense of those who are supportive of the biennial budgeting is that it consumes not only on the floor, but in our process it consumes an unbelievable amount of our time, and it is policy driven, and it flows over between House and Senate.
But there is a growing number of us who just believe we haven't had the time and taken the time to do the appropriate oversight, and I asked Mr. Lew if they viewed our oversight as helpful or hurtful. I would like to think that we could get involved in oversight activities that the administration would welcome and not just be digging up dirt on other things. We just haven't done that, and I think there is a sense that we would do more of it and more constructively if we had a biennial budget.
Mr. Fisher. What has happened in recent years to put us in the position of maybe wanting to go to biennial budgeting because for more than 2 centuries Congress every year has been able to do the budget work, and I would think that is about as important a function an elected official can have, budgeting. I don't think it is clear that what has happened that makes it difficult to do every year. Something has happened. It is not clear to me.
Mr. Linder. Number one, it has been around for some time, being kicked around. It is an old idea that has taken a lot of time for people to come around to.
Number two, I think Ms. Irving referred to the States having a different role in the Federal Government. Because when I was in the legislature, that was the job, was to pass the budget. That is virtually what we did. And I think there were one or two policy issues that were large that the governor was proposing that year that had to do with how the money was going to be spent anyway. But here we have many other things to be concerned about, in the military, HHS policy decisions, and we are not paying the kind of attention that we think we ought to be.
Ms. Irving. Oversight, not gotcha oversight but what you call constructive oversight, is really hard work, and it involves re-examining your base. I mean, at one point, you know, every year some universities put out a thing to their faculty saying the students entering today as freshman were born in X, they don't know what a record player is, they have never seen a dial telephone, they have always computers in their lives and AIDS in their lives. They don't know what beta is. They can't imagining anyone who didn't have a VHS. They go through all these list of things. They don't know who Ronald Reagan was, much less that he was shot.
The programs in existence, many were created not only before that child was born but before their parents were married. So you need to re-examine your base and think about what government is doing and how.
I guess the question really to ask you is, is what is stopping you, the annual budget fight? And what is it about a shift to biennial appropriations that will make it more likely or more successful to do that kind of oversight? How do you do cross-cutting oversight and is what is really stopping you the annual process or is it the fact that you fundamentally disagree and the American people disagree?
Mr. Linder. I will give you an example. Until 1995 we had a national helium reserve started in 1929 to make sure we would have helium for our next war. In 1993 and '94, the first 2 years I was here, that became a fight on an amendment on an appropriations bill, and the majority wanted to pass the bill, had to stand in lockstep against cutting this program for fear it would lose adherence.
All of these programs developed over constituencies, and rather than having that fight on an appropriations bill, it seems to me some honest public discussion of the issue could have brought the two sides together on it in some other policy environment than on the floor on an appropriations bill. Every one of these programs develops their own constituencies.
It was Ronald Reagan who said that the closest thing to perpetual life was to be on the program, and we have programs throughout that either Joe or I could cut if you gave us each a wand. They would be probably different, but if we sat down and talked about it we could realize together that some of these programs aren't serving a useful purpose anymore. But when it comes down to the debate on the program being an amendment on an appropriations bill, it doesn't get the same kind of attention it would in another setting.
Mr. Moakley. Mr. Chairman, may I at this time just make a statement? I really extended the budget term to bicentennial. I meant biennial when I said bicentennial.
Mr. Linder. At your age we will forgive anything.
Ms. Irving. I think one of the things Lou mentioned is something that is important. When the bill is biennial budgeting, assume you have to move everything. We are going to move the budget resolution; we are going to move authorizations; we are going to move the President's budget. You know I haven't looked at this really closely, but multiyear authorizations are the norm.
You could argue that, given that you have had multiyear fiscal policy agreements, that the difference, you could, if you could figure out a way to adjust for changing economics and revenue estimates, go to multiyear biennial budget resolutions and still keep, as Lou mentioned, still keep your annual appropriations cycle and do that in 1 year to the extent the appropriations process is delayed because of waiting for the budget resolution. You need an adjustment ability in there, especially given what has been happening to revenue estimates lately, but I guess I think it is that you don't have to do the same thing for everything, and that is the other way to think of phasing if you are trying to experiment, is to be whether you move some things but not everything.
Mr. Linder. Thank you, both. Would you each be willing to receive written requests for more information?
Mr. Fisher. Be glad to.
Mr. Moakley. Thank you very much. Thank you.
[Whereupon, at 11:50 a.m., the committee was adjourned.]
