10 ways to fix the broken congressional budget process

“The congressional budget process is broken and needs drastic reconstruction.” This sentiment, shared by many Americans in the wake of recent government shutdown crises, frames a
new report by Brookings Economics Studies Senior Fellow Alice Rivlin and former Senator Pete V. Domenici (R-NM).

In new research for the Bipartisan Policy Center, Rivlin and Domenici write: “We belong to different political parties, but we share a commitment to orderly budget process and fiscal responsibility. We are saddened by the demise of the process from its original goals.”

As the authors note, the process outlined in the Congressional Budget Act of 1974, intended to streamline the process and ensure that the government is fully funded and functional, has rarely been followed. Rather, increased polarization has resulted in a series of manufactured crises over the continued funding of government.

Together, the authors have over forty years of federal budget experience, including Rivlin’s tenure as President Clinton’s director of the Office of Management and Budget and as founding director of the Congressional Budget Office.

Here are Rivlin and Domenici’s 10 ways to effectively reconstruct the federal budget process:

1: The budget resolution should set caps on discretionary spending, as it does now.

Program expenditures currently defined as outside the discretionary caps (60 percent of spending) should be subject to intense review and, as appropriate, placed under the discretionary spending caps. Adjustments for emergencies, disasters, and national security risks should continue, but Congress and the administration should review federal disaster-mitigation programs to reduce federal and private-sector exposure to disaster risks.

2: Enact explicit long-term budgets for Medicare, Medicaid, and Social Security as well as other mandatory programs that have not been put under the discretionary caps.

Over the next decade, these three major direct-spending programs will expend nearly $23 trillion and represent 80 percent of all expected mandatory spending over this period. For each of these programs, Congress should set limits on automatic spending growth. Reductions in other mandatory spending or increases in revenue would be required to pay for any expansions or extensions of mandatory spending or tax revenue provisions.

3: Establish a periodic review of federal tax expenditures.

This could be done in one of two ways: either (a) by creating a baseline projection of tax expenditures and an automatic review of all tax expenditures when baseline projections are exceeded, or (b) by requiring all tax expenditures to sunset and be subject to an independent review on an eight-year rotating cycle.

4: In combination with the first three recommendations, establish in law a specified “debt-held-by-the-public” goal to be achieved by a fixed date to guide policy decisions.

Over the next decade, debt is estimated to grow faster than the economy. Further, by maintaining current revenue and spending paths, CBO estimates this level of debt to exceed 106 percent of GDP by 2039. As this occurs, investors may question the government’s willingness to honor its obligations without receiving a higher rate of return on their investments. To service higher-interest expenses, policymakers would need to increase revenues or reduce spending, or a combination of the two, in order to avoid the spiraling of debt into the future.

5: Enact legislation to establish a biennial budgeting cycle that would ensure that Congress adopts a budget and all appropriation bills in the first session (odd-numbered years) and frees up time in the second session for authorization.

This widely supported bipartisan proposal has been advanced over the years, allowing Congress to prioritize its work, to devote more time to program oversight and reauthorizations, to establish more certainty in the budget and appropriation process, and to increase the performance of the federal government.

6: The debt ceiling should automatically be increased when a budget resolution, which accurately reflects the estimated debt limit, is approved by Congress and goes to the president for signature.

A suspension of the Gephardt Rule in 1995 means an approval of a budget resolution by the House no longer includes a “deemed to be passed” increase in the debt ceiling. In recent years, some members of Congress have leveraged that fact to bring the country to near default. The authors propose that upon the adoption of a budget blueprint, the statutory debt ceiling be automatically adjusted to be consistent with the budget numbers. 

7: Planned congressional recesses should be canceled if Congress fails to adopt a conference agreement on a biennial budget resolution by April 15.

In the private sector, parties that don’t fulfill the agreements of a contract don’t get paid. A failure by Congress to adopt a budget similarly breaks a contract with the American public. The American taxpayer has the right to demand that their elected officials perform the duties to which they are elected and to require them to remain on their jobs until completed.

8: Government programs and agencies should be automatically funded at the previous year’s level if Congress fails to adopt a biennial appropriation bill (one or all) before the beginning of the first session of the biennial budget cycle.

This recommendation would avoid the threat of government shutdowns for failure to adopt biennial appropriation bills by the beginning of the first fiscal year, or the threat of a presidential veto of a biennial appropriation bill at the beginning of the fiscal year. It would establish an automatic funding of all programs at the lower of the previous year’s appropriated level or at the annualized level provided in the most recent automatic continuing resolution if the regular bill did not become law.

9: The budget process should go through organizational restructuring and streamlining, including for budget committees, the Congressional Budget Office, the Joint Committee on Taxation, and budget resolution consideration.

The authors propose a number of organizational changes, including modifying membership of budget committees, adjusting term limits on the House Budget Committee to allow longer tenure on the committee, and eliminating “vote-a-rama” (where senators could continue to offer amendments by establishing a cloture-like filing deadline for amendments).

10: Establish a presidential/congressional commission on budget concepts, which will report to the Office of Management and Budget and to Congress on recommended accounting and budget concepts changes.

The authors highlight several areas of research for the commission, including but not limited to: federal credit program accounting adjustments (e.g., fair-value, expected-returns), a review of current distinctions between on- and off-budget entities (e.g., Postal Service and Social Security), macroeconomic scoring of tax and investment policies (e.g., “dynamic scoring”), and many more.

To learn more, download the full paper (PDF) »

Nicholas Buchta contributed to this post