Judd Gregg: Fixing the budget

The primary reason that the Congressional budget process is not functioning is that it requires difficult decisions. This is not something Congress is good at.

Negotiations over the budget are structured to guarantee significant confrontations rooted in partisanship and “turf wars.”

{mosads}The existing rules that govern the process would lead to an effective budget procedure, and end product, if the above factors were not in play. But they are, so the whole thing falls apart.

Thus, the country often does not have a federal budget. Even when it has had some semblance of a budget in place over the last decade or so, this has had little practical impact on disciplining federal spending or reforming tax policy.

To fix this problem and actually have the Congress produce budgets that are meaningful and effective, there needs to be fundamental change. 

Adjustments must address the causes of the breakdown in the present budget process. These causes are:

1. The hyperpartisan nature of the way the budget is developed. The budget is the only major legislation that is intentionally produced along clear partisan lines. The majority party has to write and pass a budget with essentially only its members supporting it. This guarantees significant systemic opposition to any budget by the minority.

2. The fact that other panels see the Budget Committee’s product — i.e. the budget itself — as a threat to their jurisdiction and areas of responsibility. This is particularly true of both the Senate Finance Committee and the Senate Appropriations Committee. Thus, the budget is often undermined by the desire of other committees to protect their “turf.”

3. The actual form that the budget takes does not relate to the core problems that a budget should address. It is too appropriations-centric. It does not address the size of the debt in a formal way. Only rarely does it grapple with the two-thirds of the spending of the government that involves entitlements or revenues. It is not set up to separate out capital spending, federal personnel policies or unused funds. It has no comprehensive way to address major federal expenditure areas such as healthcare that cut across multiple committees and involve both discretionary and entitlement spending. It is simply dysfunctional in its structure.

In order to address these issues, there needs to be a major rethink of the approach to developing a federal budget.

Firstly, the Budget Committee itself should be reconstituted. 

It should be made up in large part of the senior members of the committees most affected by the end product. This would create a greater likelihood of buy-in from those powerful committees and dilute the forces that are naturally at odds with the effort.

One-third of the Budget Committee should be from Appropriations, one-third from Finance and one-third from the general membership of the Senate. The respective party leaders should choose the chairman and ranking member from the general membership.

The Budget Committee should be a bipartisan committee. It should have its membership divided fifty-fifty between the parties, with the chairman being from the majority party. This would mean that both parties would have to take responsibility for producing a budget — or take the blame for the failure to do so.

This would also increase the chances of reaching the kind of consensus necessary to make progress on difficult issues such as healthcare reform and tax reform.

The budget goals should be set in terms of the debt-to-GDP ratio. If possible, the same type of approach should be used to set limits on spending and tax policy.

No appropriation bills should be allowed to move to the floor in the absence of a budget including an omnibus bill. Spending on discretionary accounts and on major entitlements should be reduced by five percent from the prior year and revenues from the FICA and HI taxes should be increased by five percent if no budget is passed. This would put extreme pressure on the bipartisan committee and the Congress to produce and pass the budget.

The three largest areas of federal entitlement spending — Social Security, Medicare and Medicaid — should be broken out as a separate item. They could be reviewed to ensure certain goals would be reached pertaining to the debt-to-GDP ratio. This would be done via a process that would cross committee lines of jurisdiction, instead engaging all the affected committees in a single process of review.

A capital budget process should be added that also coordinates all the committees of jurisdiction.

A budget organized according to these concepts would dramatically increase the likelihood that the largest government in the world — a government that is spending almost $4 trillion a year — would actually have a functioning budget. It would mean a disciplined approached to spending and tax policy. And it would mean that the American people’s confidence in their government and the Congress would increase significantly.

Such an event would border on revolutionary — and it would also be a nice way to govern.