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Six ways to overhaul the mess that is the federal budget

6 ways to overhaul the mess that is the federal budget

Federal budgeting is a mess.

Deficits, debt, bloat, duplication, waste, fraud, and brinkmanship keep getting worse.

Too many members of Congress are excluded from crafting policy.

Bad process drives bad outcomes.

Members want change. House Budget Committee Chair Jodey Arrington and Ranking Member Brendan Boyle recently announced a bipartisan budget process reform effort.

Chairman Arrington said, in part,

The congressional budget process is fundamentally broken and will continue to yield bad results and incentivize bad behavior until we address the root causes.”

The following fixes deserve consideration as the House Budget Committee moves forward. We hope the Senate Budget Committee will join the conversation.

#1: A comprehensive budget

  • Problem: Only 27% of spending is in the annual appropriations bills. Everything else — direct (“mandatory”) spending and revenue — is not only on autopilot but is also absent from any comprehensive, regular review.
  • Solution: Build a comprehensive budget with all spending and revenue, including tax preferences, from pieces developed by committees of jurisdiction. Empowering members and committees to manage the entire budget on a regular schedule would help them refine proposals, develop coalitions, and make progress on our nation’s fiscal challenges every year.

#2: Well-designed statutory budget targets

  • Problem: Today’s federal budget targets cover appropriated spending for two years. Congress has tried this approach and others with disappointing results.
  • Solution: Practical, reasonable, and comprehensive budget targets that connect all program spending to revenue. A glide path to primary structural balance and subsequent offsets for emergencies, such as Senator Mike Braun and Representative Tom Emmer’s Responsible Budget Targets Act, is one appealing option. Another is medium-term debt-to-GDP targets.

#3: A non-annual-balance balanced budget amendment

  • Problem: Congress used to reduce debt burdens except during emergencies, but it no longer does so. Congress needs a constitutional balance rule. Most BBA proposals rely on annual balance, which would drive substantial, ill-time program disruptions, and most BBAs have other problems as well.
  • Solution: A BBA that allows or requires structural balance like Sen. Braun and Rep. Nathaniel Moran’s Principles-based BBA or Chairman Arrington’s Business Cycle BBA. A transition to structural balance — balance over the medium term — would provide policy stability in the near term and fiscal responsibility in the long run.

#4: Better automatic budget enforcement

  • Problem: Traditional automatic enforcement relies on across-the-board spending cuts. In practice, however, this simple concept is draconian and politically unsustainable.
  • Solution: Incremental enforcement — small, repeatable tweaks to program parameters — that achieve budget savings surgically. Congress would be less likely to reverse them, and that would promote responsible budget decisions up front. Separately, related automatic fiscal stabilizers could extend Social Security solvency.

#5: Prevent government shutdowns

  • Problem: Government shutdowns interrupt services for the American people. They also distort political decisions. They push congressional leaders to negotiate bloated omnibus funding legislation in secret and force members to vote with no chance to amend and little time to review it against the threat of a holiday shutdown. Many members merely prefer the new bill to a shutdown, not to current policy. Congress never meant for shutdowns to be possible.
  • Solution: Automatic continuing appropriations, like Senators James Lankford and Maggie Hassan’s Prevent Government Shutdowns Act, to drive ongoing improvements in and to support timely adoption of appropriations legislation. New policy would need to be better than old policy in the eyes of most members, and that means a more bottom-up process.

#6: Defuse the debt limit

  • Problem: The debt limit has become the only opportunity for members to address overall fiscal health. Even so, Congress must raise it to avoid economic disaster, so proponents of budget course corrections have little leverage.
  • Solution: Automatically but conditionally increase the debt limit each year using aspects of Rep. Boyle’s Debt Ceiling Reform Act and/or Chairman Arrington and Rep. Scott Peters’ Responsible Budgeting Act. An automatic suspension could apply as long as the budget meets budget targets (above), enabled by the degrees of freedom from a comprehensive budget. Only if it missed the targets would Congress have to affirmatively raise the debt limit.

For further information, please contact AFP’s Senior Fellow in Fiscal Policy Kurt Couchman at kcouchman@afphq.org.

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