A fresh coat of paint for congressional budget process

In 1974, Consumer Guide magazine heralded the Ford Pinto as the best car for the money that year. Listed for just under $2,300 brand new, the subcompact became a hot seller in an era of high inflation and burgeoning gasoline prices. That same year, Congress enacted the Congressional Budget and Impoundment Control Act, (Budget Act), the law establishing most of the current budget process lawmakers still use today.  

But not long after receiving consumer accolades, the Pinto hit a pothole. Reports that a “design flaw” caused the gas tank to explode if the car was rear-ended became a major legal and public relations headache for the company. And while the troubled vehicle ultimately faced extinction, Congress still uses large parts of the Budget Act to analyze spending and revenues. Given that it’s over 40 years old, it’s time for legislators to address some “design flaws” in the budget law.

{mosads}No doubt the Budget Act accomplished some transformational and enduring reforms, strengthening the role of Congress in relation to the president in fiscal policy debates. It created the House and Senate Budget Committees. It established the Congressional Budget Office (CBO). And, it stopped the White House from unilaterally overturning appropriations decisions by impounding funds.

Despite these achievements, other parts of the 1974 law are outdated and need modernization. The fact that it took Congress into the beginning of fiscal year 2018 to even pass a blueprint for the year is just one piece of evidence. But there is more.

First, the Budget Act has not adjusted to the changing nature of federal spending. Over the last four decades, the mix of outlays has been turned on its head. According to the Peterson Foundation, in 1970, not long before the new law passed, over 60 percent of spending was discretionary (controlled by the annual appropriations process) and about 30 percent was mandatory (entitlements like Social Security and Medicare). Fast-forward to today and the numbers have flipped. Over 60 percent of today’s budget is mandatory spending, while only about 30 percent is discretionary. 

Despite these shifts, the Budget Act appears designed to control discretionary spending more than mandatory spending. For example, the congressional budget resolution creates what amount to caps on discretionary spending – the so-called 302(a) allocations. The Appropriations Committee cannot exceed that limit for the fiscal year.

On the mandatory side, budget resolutions also set spending goals or propose cuts, but if Congress fails to act, nothing happens. That may have been less of a problem 40 years ago. But today, with mandatory spending accounting for well over 60 percent of the budget — and growing — lawmakers need better tools to control this burgeoning part of the fiscal ledger.

Congress came close to fixing this problem in 2011 when it passed the Budget Control Act (BCA). That measure created a special committee (aka Super Committee) and charged it with finding $1.5 trillion in savings over 10 years for deficit reduction. The BCA, however, also included a tough enforcement mechanism should the Super Committee fail – across the board cuts in mandatory and discretionary spending – called a “sequester” –to achieve roughly the same amount of savings.

But even the sequester still focuses too much on the discretionary side. The BCA exempted a number of mandatory programs like Medicaid from cuts. This meant the bulk of the budget knife fell on to the smaller, discretionary side of the budget.

Second, the timetable for congressional action on the budget is also unrealistic given the workload and polarization of the modern House and Senate. The current congressional schedule is predicated on waiting to see the president’s budget and sets a deadline for completing action on budget resolution of April 15. Given that the congressional budget often bears no resemblance to the president’s budget, that deadline should be pushed forward by at least two months, to Feb. 15. Work on the budget could also begin in November and December of the year before. Congress should hit the ground running the first week in January and finish its budget resolution by the middle of February. This would provide more runway for lawmakers to finish the appropriations process and maybe even legislation to limit mandatory spending before the beginning of the fiscal year on Oct. 1.

Providing better tools to control the mandatory side of the ledger and adjusting the timetable for more realistic congressional action may not propel the process into the age of driverless cars, but it will address some of the budgetary design flaws and move Congress out of the Ford Pinto era.

Gary Andres was the Majority Staff Director for the House Energy and Commerce Committee from 2011-2017. He also worked in the Office of Legislative Affairs for Presidents George H.W. Bush and George W. Bush. He is currently the Senior Executive Vice President for Public Affairs at the Biotechnology Innovation Association. The views expressed are his own.