Power of the purse, use it or lose it

Two weeks ago (October 26), the House was reportedly facing a tough deadline to raise the debt limit given Treasury Secretary Jacob Lew’s warnings that his department might have to start delaying routine outlays around November 2. Democrats were demanding a “clean” debt limit increase, while “hardline conservatives” were angling for “some kind of add-on to make the politically toxic vote more palatable.” Republican leaders struggle to find votes to up debt limit, Andrew Taylor, Washington Post, 10/23/15.

Yet by Friday (October 30), the Bipartisan Budget Act of 2015 – which suspended the debt limit and addressed a slew of other issues as well – had been unveiled, debated (after a fashion), and passed by both houses of Congress.
Thomas legislative (search for H.R. 1341).

When signing the budget deal on Monday (November 2), the president lauded this outcome and expressed his hope that a similar spirit of cooperation would prevail during ensuing work on spending (appropriation) bills. WhiteHouse.gov,

I very much appreciate the work that the Democratic and Republican leaders did to get this to my desk. I think it is a signal of how Washington should work. And my hope is now that they build on this agreement with spending bills that also invest in America’s priorities without getting sidetracked by a whole bunch of ideological issues that have nothing to do with our budget.

Really? In our view, (1) Republicans underplayed their hand, (2) the deal agreed on was fiscally irresponsible, and (3) conservatives might as well resign themselves to operating in damage control mode for the rest of this session of Congress. Discussion follows.

1. Strategy – There was lots of talk after the 2014 elections about how different things would be with Republicans in control of the Senate as well as the House. The gist was that the GOP could pass legislation to approve the Keystone pipeline, improve the Affordable Care Act (GovCare), countermand the administration’s executive amnesty policy, block ill-advised environmental regulations like the Clean Power Plan, etc. Sure, the president could veto such legislation and veto overrides would be tough, but if he resorted to the veto pen too often the public would realize who was really responsible for the gridlock in Washington. And so the new, GOP-controlled Congress begins, 1/12/15.

A bill to approve the Keystone pipeline was passed, but the president vetoed it. Most of the other bills on the wish list were filibustered in the Senate, making clear that a 3/5 supermajority (60 senators) would be required to take up almost any further legislation with a conservative thrust. SAFE noted this problem early on and suggested several times that Republicans should abolish the filibuster if they were serious about winning legislative battles. Something’s got to give in the US Senate,
2/23/15; DC update – three big battles in September, 8/31/15.

The filibuster was not abolished, despite our advice, but an incremental change in the rule may be made in 2016. Senate Republicans open door to weakening the filibuster, Alexander Bolton, The Hill,
10/12/15. The Senate might work a bit more efficiently as a result of such a change, but we continue to believe that Republicans would have done well to move faster and more decisively.

Another way to exert legislative influence is by exercising the proverbial “power of the purse” – do what we ask or we won’t authorize the funding that you want. This can be accomplished by (1) cutting budgets of uncooperative agencies (e.g., the IRS), or (2) inserting policy riders in appropriation bills (e.g., no money may be used to shut down the Guantanamo Bay detention center).

Budget cuts are a blunt instrument, however, and the success of such efforts is by no means assured. An uncooperative agency may fail to take the hint and start cooperating with congressional committees; policy riders may fail if the agency is able to move funds around within its overall budget.

Also, spending bills may be filibustered or vetoed if the other side doesn’t expect to be held responsible for a resulting “shutdown” of government activities. Republicans have generally been blamed for shutdowns in recent years, whether they truly caused them or not, and both sides know it.

After Senate Democrats began filibustering appropriation bills because their party wanted to eliminate the budget caps that had been put in place earlier, Republicans failed to vigorously protest the logjam and demand that it be broken. Another budget showdown looms,
8/17/15. Furthermore, Republican leaders periodically stated that there would be no government shutdown, thereby signaling that when push came to show they would accede to Democratic demands.

Conservative Republicans could complain all they wanted as the supposed deadline (November 2) for action on the debt limit neared, but the fix was in and the budget deal (BD) would pass with lightning speed despite their votes against it.

The BD was unveiled in the House at a closed-door meeting on Monday evening (October 26). It was subsequently discussed on the House floor. Outgoing House Speaker John Boehner said the BD was “a good deal” under the circumstances. Rep. Paul Ryan (soon to be elected as Boehner’s successor) said he hadn’t read the BD and “the process stinks” but acknowledged that a critical deadline was involved (and would subsequently vote for the bill). John Boehner is the best friend Paul Ryan could hope for. Except that he’s resigning Friday, Chris Cillizza, Washington Post,

The House passed the BD on Wednesday without going through the committee process and despite the opposition of about 2/3 of the Republican caucus. Divided House passes two-year budget deal to avoid fiscal breach, raise spending, Deirdre Shesgreen, USA Today, 10/28/15.

The Senate debate took place on Thursday, in an evening session, including strong speeches against the BD by Senators (and presidential candidates) Ted Cruz & Rand Paul. There weren’t enough votes to block cloture, however, so the mini-filibuster was terminated in the early morning hours on Friday and the BD passed. Debt deal moves to Obama after 3 a.m. Senate Vote, Susan Ferrechio, Washington Examiner,

2. Assessment – The first and most obvious effect of the BD was to resolve the debt limit issue by suspending said limit through March 15, 2017. The government was freed to borrow as much as it wanted in the interim, so long as it didn’t run up its cash balance above normal operating levels. Whatever the debt amount was on March 15, 2017 would become the new limit.

As soon as the BD became law, the Treasury Department undid its “extraordinary measures” and total debt (which had been frozen for months) rose to a realistic level of $18.5 trillion. Debt ceiling lifted and the same day debt jumps $339B, Pete Kasperowicz, Washington Examiner,

Suspending the debt limit was OK from a policy standpoint as this limit is not a useful control for fiscal management purposes (debt increases are merely the end result of budget deficits). Still, we think it would have been better to abolish the debt limit, while focusing on the real issue - getting spending under control. Other observers have reached essentially the same conclusion. The best worst budget deal, Wall Street Journal,

The deal pushes the borrowing limit through March 2017, but if Republicans were shrewder they’d kill it. Since the United States is never going to default on its bonds and the debt ceiling will be raised one way or the other, disaster politics tends to help spenders more than fiscal conservatives.

More significantly, the BD lifts existing budget caps for fiscal years 2016 & 2017 totaling $80 billon, and makes numerous changes to specific programs. The net effect will be to increase spending in fiscal years 2016-18 (spending increases lag authorization increases) by some $85 billion, with partially offsetting spending reductions in later years (primarily 2025). Analysis of the Bipartisan Budget Act of 2015, Heritage Foundation,


Spending levels based on the congressional budget resolution (BR) were already on the high side; it was projected that nearly a decade (an eternity in politics) would be required to balance the budget. The budget process grinds on, 5/4/15.

To us, such a leisurely timetable for solving the fiscal problem seems unacceptable. We believe an appropriate goal would be to balance the federal budget in three years, primarily by cutting spending, and thereafter keep it that way. SAFE letter to members of Congress,

Some may consider our assessment misguided or politically naive, but in any case it’s hard to see why the BR spending levels (approved by both Houses of Congress, albeit on a party line vote basis) should be increased across the board without solid evidence that the increases are needed.

Several arguments have been made to justify the spending increases provided for by the BD; let’s take a look at them.

FIRST, it has been suggested that about half of the spending increases would go to the defense budget (which has been subjected to one round of budget cuts after another) – how could conservatives be against that?

This doesn’t justify increases in nondefense spending, however, and the BD won’t increase defense spending anyway. True, budget caps are lifted on defense spending as well as on nondefense spending in fiscal years 2016-17, but there are basically offsetting reductions in the Overseas Contingency Operations allowance. Heritage Foundation,

SECOND, current spending increases will be recovered in time via accompanying entitlement reforms. That would be great if it were true, but the claim seems greatly exaggerated.

The main area in which savings are claimed is Social Security disability. As matters stand, the Social Security Disability Insurance (DI) fund will be exhausted in 2016 (which would force a cut of about 20% in benefit payments for millions of Americans). It would take extensive reforms of the disability program to get benefit payments under control, and we have suggested that conservatives should demand ironclad assurances of such reforms before agreeing to a DI fund bailout (the typical solution of big government fans). Time to do something about Social Security disability program,

The BD does provides for some Social Security disability reforms, but they are considerably less sweeping than our proposals – basically providing the appearance of reform without much substance. Once funds have been transferred to the DI fund from the Old Age and Survivors Insurance (OASI) fund, moreover, the need for bigger changes will likely be forgotten until the DI fund once again runs low. Budget deal pushes disability reform to backburner, Joseph Lawler, Washington Examiner,

. . . the deal included small-scale money-savers, such as cracking down on fraud, requiring medical information for all disability applications and closing a loophole that allowed married retirees to boost their benefits. It also would reauthorize the Social Security Administration's ability to conduct demonstration projects that allow beneficiaries to return to work without losing benefits.

There is a flurry of changes re pensions guaranteed by the Pension Benefit Guaranty Corporation, some of which would generate additional revenue. According to the Heritage Foundation analysis, however, said revenue would basically be used to cover new spending.

The BD will mitigate a big Medicare premium increase for well-heeled participants in 2016 under previously existing law. 15 million seniors facing 52% increase in Medicare premiums for 2016, Dave Jolly, godfatherpolitics.com,
9/7/15. Although this “fix” seems justifiable, it will nevertheless increase the deficit.

Numerous other healthcare adjustments have been made (Title VI), and the net effect of all the changes appears to be about a wash. CBO scoring analysis,
10/28/15 (download PDF).

The BD impacts many other areas, including federal crop insurance premiums, the use of automated calls to cell phones by federal debt collectors, sales of oil from the strategic petroleum reserve, and the auctioning of unused wireless spectrum (which should result in proceeds around 2025). In relation to the near-term spending increases that the BD enables, the fiscal effects are comparatively minor.

THIRD, the BD may enable Republicans to shed a reputation of being heartless budget cutters who are willing to shut down the government just to get their way. GOP hopes to shed “shutdown” label with budget deal, Susan Ferrechio, Washington Examiner,

Even Republicans who didn't vote for the agreement acknowledged Boehner's deal, written with Democrats, makes it harder for Democrats and Obama to try to inflict political damage on the GOP every time a spending deadline nears.

By that standard, Republicans should never stand on principle for anything. Never mind that an always surrender strategy would leave the GOP with nothing distinctive to offer as a party and no effective defense (the power of the purse) against executive branch overreach. Budget deal passes, 7 observations, Daniel Horowitz, National Review,

The most under-reported aspect of this deal is that it completely “clears the decks” of any budget bill for the remainder of Obama’s presidency, thereby taking the power of the purse off the table. As bad as the increased spending is for our fiscal solvency, the Obama policies are worse. There will be no budget to leverage against Obama’s growing amnesty, EPA overreach, foreign policy disasters, prison break, and dangerous clemencies.

In the wake of fast track passage of the BD, House Speaker Paul Ryan has promised House Republicans that they will be allowed to help shape the spending bill(s) that are due to be enacted by December 11. Ryan giving all Republicans a say on spending bills, Susan Ferrechio, Washington Examiner,

“Because we want to reopen the appropriations process and we want to bring back the power of the purse, I wanted to lay out options in front of the conference," Ryan said Thursday after polling the rank-and-file. *** "We are going to make this an open process and members are going to have a say on how we move forward."

3. Path forward – It is apparently planned to abandon the original plan of separate appropriation bills for 12 government sectors in favor of an omnibus spending bill for all sectors. A similar arrangement was used in December 2014. House passes $1.1 trillion CR-omnibus bill to partially fund federal government, fsrn.org, 12/12/14.

Although overall spending levels are now set, conservatives still hope to use the power of the purse to achieve some of their legislative goals. A variety of policy riders have been discussed, which could be inserted in the spending bill. Conservatives vow to “not back down” in spending fight, Josh Siegel, dailysignal.com,

Potential riders besides the provision to end taxpayer funding for Planned Parenthood could include measures to implement sanctions on Iran; punish sanctuary cities, where local law enforcement officials don’t cooperate with federal immigration authorities; and prohibit the Obama administration from implementing new greenhouse gas regulations on power plants.

The Democratic reaction to such riders is predictable; indeed they typify the “ideological issues that have nothing to do with our budget” that the president mentioned when he was signing the BD. Unless Republicans are up for a shutdown scenario, which seems unlikely as they have given up essentially all of the leverage that they initially had, any such provisions in the spending bill passed by the House will be stripped out of said bill before it is passed by the Senate.

What about the ban on using funds to close down the Guantanamo Bay detention center? Most likely the Senate will go along with this provision, and it seems unlikely that the president would veto the spending bill as a result (although he did veto a defense policy bill containing said provision earlier). We would think it more likely that the president will seek to close Gitmo by executive order and essentially dare Congress to do something about it. Pentagon to release Guantanamo detainee relocation plan, as Obama pressed ahead with closure, foxnews.com,

[To take such a tack,] Obama would likely have to argue that the restrictions imposed by Congress are unconstitutional, though he has abided by them for years. The dispute could set off a late-term legal battle with Republicans in Congress over executive power, potentially in the height of a presidential campaign.

Is our prediction a bit paranoid? Maybe, but consider the many instances of executive branch overreach over the past 7 years.
Lawless; The Obama Administration’s Unprecedented Assault on the Constitution and the Rule of Law, David E. Bernstein (a George Mason law school professor), 2015.

For all the problems this country faces, it’s hard to see much forward progress being made in DC before 2017. The main challenge for conservatives will be doing what they can to prevent further damage and preparing for the 2016 elections.

© 2020 Secure America’s Future Economy • All rights reserved • www.S-A-F-E.org