JSC proposals for budget system reform

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SAFE was none too happy with the Bipartisan Budget Act (BBA), which was drafted behind closed doors, announced at the proverbial last minute, and signed into law on February 9. More shutdown drama, mediocre results, 2/12/18.

Spending blowout, not just for the military but across the board – revival of scores of special interest tax breaks that had been left out of the Tax Cuts and Jobs Act (Dec. 2017) – one more setback for SAFE’s smaller, more focused, less costly government agenda.

Appointment of a Joint Select Committee on Budget and Appropriations Process Reform to recommend improvements to the government’s budget system provided a ray of hope, but we doubted that the 16-member JSC would accomplish much.

First, consider the failure of the Joint Select Committee on Deficit Reduction appointed in 2011 to propose $2+ trillion in deficit reductions to avert the imposition of across-the-board spending limits (the infamous sequester). A “Super Committee” is born,
8/15/11.

Republican members wanted to discuss spending cuts; Democratic members were after tax increases. Flattering and cajoling the Super Committee,
11/7/11. Ultimately, the co-chairs announced that the process had deadlocked and the JSC disbanded without accomplishing anything.

Second, the new goal of recommendations “that will significantly reform the budget and appropriations process” wouldn’t be achievable absent “a shared understanding of the problem” – and no such understanding existed (any more than it had in 2011).

Instead of studying the nuts and bolts of the budget process, SAFE suggested, Congress needed to focus on the objective. This should be to consistently produce a balanced budget, i.e., a budget in which revenues minus outlays equal zero (or perhaps a bit more to permit the gradual repayment of outstanding debt). And we went on to suggest three advantages of this approach over, say, a “sustainable deficit” approach. Let’s make the budget process work,
2/19/18.

(1) Reserve government borrowing capacity for true emergencies, e.g., a major war. (2) Control borrowing costs, which over time threaten to crowd out desired programs. Net interest expense, is currently running over $200 billion per year; it is projected to more than triple over the next 10 years. (3) Minimize the temptation for government leaders to make spending commitments now that will not be affordable later.

SAFE tracked this project and submitted comments to the JSC members and other congressional leaders. While seeking to strike a constructive tone, our letter (sent after reviewing videos of the JSC’s first three public sessions) urged the members to focus on budget outcomes versus process details. SAFE letter to JSC members,
6/25/18.

To build on what has been accomplished to date, we would like to offer three ideas and in each case suggest a witness whose testimony could prove helpful.

#Introduction of a “long-term perspective” in the normal budget process might divert attention from savings that are currently achievable. We would encourage you to hear from Tom Schatz, president of Citizens Against Government Waste, about the hundreds of billions of dollars in near-term deficit reduction that could be achieved by implementing the proposals identified in their Prime Cuts inventory.

#It’s true that the fiscal problem can’t be fully solved without doing something about Social Security, Medicare, Medicaid, etc., and the actions required transcend the confines of the normal budget process. To address this situation, one or more special commissions should be appointed to study the major entitlement programs and recommend reforms. Michael Tanner of Cato would be superbly qualified to offer suggestions for the path forward.

#It’s hard to imagine any major improvement in results of the budget process without presidential leadership. In effect, the issue is not fixing the congressional budget process; it is fixing the government’s budget process. We would therefore like to suggest that OMB Director Mick Mulvaney be invited to testify and in addition made an ex officio member of your committee.


A recent entry recapped the last two public sessions (which didn’t include testimony from any of the witnesses we had suggested). Over-generously, perhaps, we listed action on the JSC’s recommendations as one of a handful of issues the 115th Congress should seek to address before calling it quits. Suggested goals for the “lame duck” session,
11/12/18.

It’s not feasible to offer an opinion on the JSC recommendations before they become available for review, of course, but if the recommendations seem sensible we would suggest they be enacted – with whatever upgrades may be deemed appropriate - in December versus carried over to the next Congress.

The JSC proposals have now been published in draft form; they will be approved and formally submitted to both houses of Congress by November 30. Joint Select Committee [on Budget and Appropriations Process Reform] report & legislative text,
11/14/18.

Our take: it’s unclear how or why these proposals would contribute to solving the fiscal problem – in fact, they might make things worse. There’s no apparent point in implementing them, except perhaps to be able to say Congress attempted to “do something” about problems in the budget area. Discussion follows.

A. Forget Paul Ryan’s legacy – House Speaker Paul Ryan was reportedly the leading advocate for providing for a JSC review of the budget system in the BBA. As he explained it, this step reflected frustration with the erratic and contentious functioning of said system. Can the “Supercommittee II” fix Congress’ dysfunction? Susan Ferrechio, Washington Examiner, 2/12/18.

“I think this budget process is broken,” [Ryan] said. “Here we are with another CR, CR, CR, and an omnibus. That's why something we put in here that I feel very passionate about is having a budget process reform dialogue.”

Only later would Rep. Ryan announce his plan to leave Congress at the end of the 115th Congress, with prospects for considerably boosting his compensation in the private sector by joining corporate boards, etc. (as his predecessor, Rep. John Boehner, has done). Paul Ryan is poised to earn millions when he retires next year, Bloomberg (fortune.com),
4/12/18.

Practices in Japan aren’t necessarily comparable, but we’re reminded of the Japanese expression for government officials changing employers in mid-career – Amakudari (meaning descent from heaven). Once wide-spread, this practice has come to be viewed with disfavor and rules have been instituted to discourage it. Re-employment scandal arises at Education ministry, Yokota Yumiko, nippon.com,
5/22/17.

After his now imminent retirement, Speaker Ryan (a one-time deficit hawk, whose fiscal conservatism became less apparent as he rose in the congressional pecking order) will be able to cite the JSC review as evidence of his concern about chronic deficits and soaring debt without being accountable for the results – if any – of the JSC proposals.

Fine, but the JSC proposals should be addressed based on merit, with no obligation being felt to validate Rep. Ryan’s judgment in this matter.

B. Never mind that proposals are bipartisan – The membership of the JSC was equally divided in several respects (Republicans vs. Democrats, House vs. Senate, appropriators versus budgeters). Videos of its public sessions show they were conducted in a collegial manner without personal attacks, disruption or incivility.

While there were differences of opinion on many points, the positions taken didn’t seem to be obviously correlated with party affiliation. And in a column published shortly before the mid-term elections, Co-Chair Steve Womack (R-AR) stressed that the JSC had focused on areas of common agreement. [JSC] shows bipartisanship can still work in Congress, Rep. Steve Womack, thehill.com,
11/1/18.

Although comprised of a diversity of political thought, the members of the Joint Select Committee have clearly shared a common goal since being given our charge: producing recommendations that meaningfully improve the congressional budget and appropriations process rather than offering prescriptions for specific budgetary outcomes that benefit one party. *** [The JSC recommendations] will reflect the areas in which eight Republicans and eight Democrats from both sides of the Capitol found consensus to move the ball forward. That, in my mind, is a win.

It’s not hard to think of areas in which members of Congress and their respective political supporters have clashed bitterly on disputed issues, often trying to drown out the other side or bolster their own position by dishonest rhetoric and abusive tactics. Too bad – shouldn’t happen – needs to be stopped – but how? A disturbing political climate,
7/2/18.

Politics is about power, there’s a lot at stake, and people often get emotional about the outcomes. If public passions spiral out of control, and there have been signs of this happening, don’t hope for rational debate of substantive problems (e.g., fixing the government’s healthcare programs or balancing the budget).

If our political leaders find it hard to have a reasonable debate on substantive issues like balancing the budget, perhaps they can make progress by focusing on systems that keep churning out poor results. As the saying goes, “you must crawl before you can walk.”

If most of the JSC members join in proposing changes for the budget system, as they apparently have decided to do, wouldn’t it make sense to reward their good behavior by implementing the changes they recommend?

There are some traps in this line of reasoning, however, starting with the point that real progress may require resolution of issues on which people differ sharply as opposed to issues that are relatively noncontroversial. Did the JSC look into the tough issues or sweep them under the rug?

Consensus-style decisions tend to work best, moreover, when the “best answer” lies somewhere in the middle. If one side or the other is right or if neither side is thinking straight, a compromise answer may be manifestly unsuitable. Groupthink, psychologytoday.com, accessed
11/21/18.

Groupthink occurs when a group of well-intentioned people make irrational or non-optimal decisions that are spurred by the urge to conform or the discouragement of dissent. This problematic or premature consensus may be fueled by a particular agenda or simply because group members value harmony and coherence above rational thinking.

All things considered, it would be foolish to accept and implement the JSC proposals simply because they were developed on a bipartisan basis. Far better to review them critically and ensure they make sense.

C. Begin with the end in mind – This admonition may seem rather obvious; indeed, it’s one of the key principles in Steven Covey’s best seller (7 Habits of Highly Effective People), 1989.

Superficially, the JSC observed the end in mind principle. Thus the goal of its review is identified as “Considering and recommending legislative language that will ‘significantly reform the budget and appropriations process.’” (The “significantly reform” language comes from the BBA.) Joint Select Committee report & legislative text,
11/14/18 (download PDF).

But how can one meaningfully assess whether the proposed process changes will improve the budget system without first establishing what the deficiencies in the budget system are perceived to be? On this score the JSC report is very sketchy, as shown by the following recap (with side comments in blue font) of the relevant text.

• Beyond identifying “concern over persistent budget deficits” as one of the issues Congress attempted to address by passing the Budget Control Act of 1974, the JSC report basically ignores the need for greater fiscal responsibility.

Did the BCA foster improved fiscal discipline? David Obey, a long-time House appropriator, testified (public session on 7/12/18) that the fiscal process worked better before 1974 than it is working currently. Midterm issues: deficits and debt, 9/24/18.

In a similar vein, see Republicans have reformed taxes – will they fix 1970s budget rules next? Michael Barone, Washington Examiner, 12/21/17.

The restrictions of the 1974 Budget Control Act and the cost estimates of the Congressional Budget Office it created were intended to provide clarity and restraints on presidents and Congresses. Ironically, we had mostly balanced budgets before 1974 and mostly budget deficits since.

Chronic deficits and soaring debt have been a major problem under the last three presidents, indeed the gross debt has quadrupled in less than 20 years. OMB historical tables, Table 8.1.

• Congress has reviewed the budget process periodically and amended the Budget Control Act on several occasions, e.g., in 1985 and 1990 [for unspecified reasons]. “More recently, concerns about delays and procedural breakdowns in the budget process triggered the creation of the [JSC] to assess the current congressional budget and appropriations processes and recommend reforms.”

•Continuing resolutions (CRs) have become the status quo for funding the Federal Government, demonstrating Congress’s failure to complete its work on time. The last time Congress met all of its budget deadlines was for fiscal year 1995. CRs create uncertainty for agencies and the American people, e.g., the specter of government shutdowns, and “shutdowns of various durations have actually occurred.”

Why has Congress failed to complete its work on time? Was this because the deadlines were unreasonable, or were some of the participants gaming the system for political advantage? Also, where was the bottleneck, e.g., in the House, the Senate, or both?

•Multiple JSC members “have expressed frustration regarding the lack of legislative tools available for Congress to address national needs or the national debt in a bipartisan manner.”

There seem to be plenty of legislative tools available, although the political will may not exist to use them in a responsible manner. Is it more important to proceed in a bipartisan manner or to achieve good results?

D. Explain how proposals would help meet the goal(s) – The principal JSC proposal is “biennial budgeting,” whereby the various appropriations committees in the House and the Senate would be assigned overall spending caps for their respective sectors in two-year increments versus annually. This, it is stated, “would free up time in the legislative calendar to enable Congress to not be mired down in annual budget resolution squabbles.”

Spending caps for the two ensuing fiscal years would supposedly be provided to the appropriations committees “at the beginning of Congress,” but such timing appears infeasible given the steps required and parties involved. Consider the following biennial budgeting schematic for the 117th Congress:



A suggestion for speeding up the process is to require a supplemental budget submission (as distinguished from the president’s policy proposals) in the preceding December. Thus, at the start of 2021, the president would already have submitted “prior year fiscal data, current year fiscal data, and credit re-estimates for the current year.” How these data would help the Congressional Budget Office “begin constructing its baseline for the upcoming fiscal year[s],” and why the CBO couldn’t simply contact the OMB and request the data, does not seem entirely clear. Also, is it desirable for the CBO to begin constructing its baseline before the president’s policy proposals have been formulated and made available?

Theoretically, biennial budgeting would provide “Congress additional time to conduct oversight on federal agencies and departments” in election years, thus mitigating the “protracted budget negotiation[s], delayed spending bills and continuing resolutions” that “nearly every executive agency and department” is said to have suffered under. A JSC proposal re “second session revision of the budget resolution for scoring purposes” might open the door, however, for supposedly fixed appropriations to be revisited. In any case, an increased volume in supplemental appropriation bills is readily foreseeable.

E. Assessment – One could argue that the JSC proposals would “significantly reform the budget and appropriations process,” but we’re not convinced of this.

Far from acknowledging that the Budget Control Act of 1974 may have been a big mistake, the JSC report seems to double down on it. Never mind that the fiscal problem is metastasizing, Congress wants to demonstrate its “ownership” of the budget process while treating the president’s “policy proposals” as basically irrelevant. It’s unclear whether anyone in DC will step up to the fiscal problem , but this surely won’t happen without presidential leadership because a 535-member board of directors housed in two independent legislative bodies isn’t up to the task.

As for process changes, the JSC seems to have avoided offering any recommendations that might upset folks in the congressional scheme of things. Three examples that come to mind (all of which were discussed at the JSC’s public sessions) are proposals to abolish or modify (a) the Senate filibuster rule, at least as it applies to appropriation bills; (b) the arcane reconciliation process, a Senate filibuster workaround that is initiated by passing budget resolutions; and (c) the debt limit, which serves no useful purpose – if it ever did – yet is scheduled to spring back to life in March 2019.

And withal, the details of the process changes that are proposed seem rather cryptic, as though the authors didn’t want readers to understand what they are talking about.

Here’s a critique from Heritage, which likewise concludes that the JSC has missed an opportunity to try and do something useful. Congress considers voting away its budget obligations, Paul Winfree et al., dailysignal.com,
11/14/18.

Instead of calling this proposal “The Bipartisan Budget and Appropriations Reform Act,” legislators would be more honest if they had called it “The Congressional Workload and Responsibility Reduction Act.”

Ouch, "the truth hurts."

SEE ALS0:
11/26/18 letter to DE members of Congress re this entry.

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#SAFE is like the mouse that roared in terms of influence on government spending and actions. The government is broke and headed toward terminal fiscal insolvency and the left can only welcome this as they can then "tax the rich" and bring prosperity to the polis. - SAFE director

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You are a cockeyed optimist.  I doubt Congress can wind a clock, much less fix the broken budget system. We are doomed. - SAFE director

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