Fixing the Federal budget: Three problems and three solutions

Oct 9, 2024 by AFP

A couple of weeks ago, the federal government was on the verge of shutdown for the second time in a year, as Congress didn’t agree on funding for the next fiscal year. Washington was barely able to stave off the crisis by doing what it does best: kicking the can down the road for a few months.

In December, Congress is expected to restart the fight all over again as funding expires (again) and politicians rush to get a deal and prevent a government shutdown.

This frustrating political dance is not news for anyone remotely familiar with Washington’s ins and outs. For decades, lawmakers have failed to pass appropriations on time. In other words, Washington is failing to do its most basic job.

This bickering is not harmless.

Washington’s fiscal mismanagement has ballooned the national debt to more than $35 trillion. This problem will haunt Americans for decades, as we will pay for Washington’s spending with higher taxes and more inflation.

If managing our taxpayer dollars is Washington’s most important job, why are they so bad at it?

The answer: The dysfunctional federal budget process makes it almost impossible for lawmakers to complete appropriations on time, even if they want to, and that’s just one-fourth of spending and no revenue.

Here are three reasons today’s budget is not working — and three ways to fix it.

The federal government does not have an actual budget

This might sound surprising, but Washington does not pass a proper budget. It never has.

A budget estimates how much an organization will spend and how to pay for it. Our current process does neither of those two things.

Spending

Every year, Congress fights (and fails) to pass 12 appropriation bills to fund government agencies. However, these bills do not include every dollar the federal government will spend for the fiscal year — far from it.

These 12 bills called “discretionary” spending — fund only around 27% of the government’s annual expenditures. The other 73% goes to “mandatory” programs such as Social Security, Medicare, Medicaid, and interest payments on the national debt.

This money is automatically spent unless Congress explicitly says otherwise. As a result, they are not included in the yearly appropriations debates.

Revenue

When debating and negotiating the yearly budget, lawmakers do not have access nor the ability to adjust, pass, or reform ways to collect the money needed to pay the whole thing.

The result?

Congress passes spending bills for a quarter of federal spending — but it doesn’t regularly review the means to pay for it.

This partial and disparate budget process makes it difficult for Congress to tackle drivers of the massive $35.3 trillion national debt, endangering our future prosperity.

A broken budget system leads to less representation and less oversight

As Congress is unlikely to pass all appropriation bills on time, the final decisions usually end up in the hands of a few lawmakers in positions of power, who negotiate and get a deal done at the last minute.

Once they do that, they force an up or down vote on the floor, with little room for deliberation, debate, and oversight.

Lawmakers are often sent huge spending bills, which are thousands of pages long, a few days or even hours before the vote, making it physically impossible to get a full picture of what they are voting for.

These expansive bills, however, usually get passed because the threat of a government shutdown compels lawmakers to get them through.

Shutdowns are a glitch in the system, not something Congress wanted

Government shutdowns were not a thing for most of America’s history. If Congress failed to pass a budget, agencies kept operating at the same levels until Congress approved new expenditures. It was only in 1980 that Jimmy Carter’s Attorney General issued a memo prohibiting agencies from spending money if Congress had not reached an agreement on the budget.

Shutdowns are bad for America’s fiscal health and democracy.

Members vote for bloated spending bills not because they agree with them, but because they want to avoid a damaging government shutdown. Counterintuitively, shutdowns increase government spending in the medium to long run because leaders buy votes and interest group support with bloat.

There is a way forward: End shutdowns and have an actual budget

Thankfully, there are solutions Congress can take to simplify and improve our confusing budgeting system: get a comprehensive budget and end shutdowns.

Here’s how we can end Washington’s dysfunction— and how you can help:

  • Comprehensive Congressional Budget Act: This bipartisan bill would consolidate all government spending and revenue into one annual bill, allowing Congress to debate all spending and revenue coherently. It will also democratize the budgeting process by including all relevant committees. Here’s a deep dive into how this bill would work.
  • Prevent Government Shutdowns Act: This bipartisan bill would eliminate this glitch in the system by keeping spending at the same level until Congress approves new expenditures. Lawmakers would have more time and incentives to pass better budgets by lifting the threat of a shutdown.
  • Get involved: You can make a difference by getting involved and raising your voice. Sign this pledge for spending reform and let your representative know you have had enough of Washington’s dysfunction.

Washington does not have the right tools to do their job properly, and Americans are paying their dysfunction dearly.

A comprehensive budget would empower Congress to review and update everything so it can finally address America’s needs.

It’s time for Congress to get their house in order—and updating the budget process will do just that.

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