A must-have for spending negotiations: proposed spending cuts

Word has it that the Biden administration will not deliver the president’s budget until March 9. That is a month later than the legal deadline of “the first Monday in February,” which was yesterday. A newly-arrived president usually submits his first budget late — but that is not the case here. Team Biden has been in power for two years and can use last year’s belated budget as the basis for this year’s budget.

The hold-up is not a catastrophe. For much of the past three decades, Congress has paid little heed to the budgets sent to them by presidents. The law setting the nation’s budget process does not require Congress to vote on the president’s budget submission or to even formally incorporate it in the congressional budget resolution that sets spending levels for the year. Mostly, legislators look at the president’s budget as a position statement expressing the president’s fiscal and policy preferences. Call it an opening bid in the bargaining between the two branches overspending. 

Certainly, delivering the budget late makes it more difficult for the two chambers to understand the president’s position, which may delay negotiations. 

But a less appreciated downside is that delay in submitting the budget means the administration delayed an opportunity to deescalate the debate over federal spending and the nation’s colossal deficits and debt. Republicans are refusing to raise the debt limit unless Democrats commit to spending cuts. President Biden has insisted the debt limit be raised without any conditions.

President Biden and Speaker Kevin McCarthy (R-Calif.) met last week to discuss the issue. To nobody’s surprise, the meeting produced nothing of substance. The two sides have staked out sharply divergent positions, and neither man can afford to show any sign of compromise this early. The nation will not default on its obligations until this summer.

The trick in such negotiations, as always, is to strike a bargain that allows each side to plausibly claim victory. There are various ways this could happen, but one possibility worth throwing into the mix is for the president to send the House a list of programs to zero out. Often, such a list can be found in, yes, the president’s budget submission.

Biden’s friend and former boss, Barack Obama, offered up a cuts list. His 2014 budget submission had a chapter titled, “terminations, reductions and savings to discretionary spending.” It identified 130 cuts that would save $17 billion annually. Nearly every federal agency had something on the block. Health and Human Services’ $50 million a year Access to Recovery initiative would be axed. Spending on the Defense Department’s troubled ground combat vehicle program was to be halved. Some 250 Department of Agriculture facilities were proposed for closure. Most of the proposed chops were uncontroversial; in some instances they involved creating savings on paper — officially zeroing out programs that exist but already had been shuttered. Other cuts were programs that were shown to be ineffective. Unfortunately, neither President Obama nor Congress embraced the win-win opportunity.

Surely, the wonks beavering at the president’s Office of Management and Budget and Democratic leaders in both chambers could identify some places to snip. Biden then could send this terminations list to Congress and share it with the American public as a whole. As part of a larger debt limit deal, Biden could insist the House (and preferably the Senate) vote up or down on these cuts, as has been done with military base closure legislation. (Years ago, I argued this should be an annual exercise, but that is a matter for another column.) 

Certainly, such small snips to the federal budget would not rectify the structural budget problems. Most federal spending goes to the various federal entitlement programs, such as Medicare and Social Security. Neither party is showing much stomach to curb benefits or increase taxes to address those deficit drivers.

This means if the two parties are going to avoid going over a fiscal cliff, then they need to look at discretionary spending cuts that both sides can stomach. Again, both sides need to be able to claim victory, and the president can grease the skids toward such a bigger deal by finding cuts within our nearly $7 trillion budget. 

Kevin R. Kosar (@kevinrkosar) is a senior fellow at the American Enterprise Institute. He is the co-editor of “Congress Overwhelmed: Congressional Capacity and Prospects for Reform” (University of Chicago Press, 2020). He hosts the Understanding Congress podcast.