Taking the budget process into the 21st Century: Re-thinking executive involvement

In 1974, the Congressional Budget and Impoundment Control Act (otherwise known as the CBA) was passed by a Congress trying to wrest power from President Richard Nixon and regain control over the national budget. Though the Constitution grants Congress authority over budgetary matters, its only comment on how exactly this budgetary power should be handled is the requirement that all tax bills must originate in the House. Thus, Congress itself must decide how it handles the complex process of raising and spending money. The CBA was the last major overhaul of the budget process, but 40 years later, the process is widely thought to be broken. Within just the past three years, for example, Congress has passed eight continuing resolutions due to an inability to complete appropriations bills on time.

Alice Rivlin, the first director of the Congressional Budget Office and Senior Fellow at Brookings, joined fellow former CBO directors Douglas Holtz-Eakin and Robert Reischauer on February 29 to discuss what a better budget process might look like. Rivlin began the discussion by introducing her Proposal for Improving the Congressional Budget Process, co-authored with former Senator Pete Domenici for the Bipartisan Policy Center. They outline three major themes to drive budget reform:

1. The budget process should include all federal spending and revenues.
2. The process should be transparent and completed on time.
3. The budget should have buy-in from the president and the leadership of both houses of Congress.

Specific recommendations included a shift to biennial rather than annual budgeting, a review of all mandatory spending with the goal of moving as much as possible to discretionary status, a moratorium on Congressional recesses after April 15^th if a conference agreement on the budget resolution has not been adopted, and an automatic continuing resolution to keep the government funded in the absence of a budget resolution.

Though all three panelists agreed that reform is needed, they differed somewhat in their opinions about the effectiveness of process-based solutions alone. Reischauer, quoting another former CBO director Rudolph Penner, reminded the audience that, as with previous debates over budget reform, “the process [isn’t] the problem, the problem [is] the problem.” Pointing to increasing polarization and the lack of incentive to compromise—both within Congress and between Congress and the Executive–Reischauer highlighted that a better process wouldn’t do much good in a political environment that doesn’t reward efforts to work together towards improvement.

Holtz-Eakin reinforced the importance of distinguishing between process and practicality, stipulating that, “If good policy was good politics, we wouldn’t have to have this [discussion].” In addition to supporting increased executive branch buy-in throughout the budget process and incorporating mandatory spending into the process, he highlighted the need for symmetry in the budgetary treatment of spending programs and taxes.

In the remaining discussion, a few points of particular interest emerged. When asked how to compel Congress to stick with these reforms despite the fact that they may be unpleasant, panelists suggested a long-term budget target to be drafted by Congress and signed by the President. Once enacted, any deviations from that target would require further compromise within Congress and between the two branches. Panelists also emphasized repeatedly that of executive buy-in is necessary to real and lasting budget process reform. Although agreeing on a budget target would not account for unexpected circumstances such as recessions or national security crises, the simple process of building a coalition around a shared goal could increase opportunities and pressures toward compromise.

Four decades after Congress re-wrote the budget process to limit executive influence, it now appears that increased presidential involvement may be a key component of any future reforms. Holtz-Eakin discussed the importance of legacy in political decision-making, and optimistically concluded that, eventually, good budget policy must be good politics. If political leaders do nothing, the national debt and budget deficit will continue to worsen. No self-interested politician would want to leave a behind a legacy of fiscal disaster, and therefore, it is in each politician’s own best interest to push for reform that makes the budget process more efficient and effective.