It was a $1.1 trillion budget, yet spending concerns were little more than an afterthought for many senators voting on the “cromnibus.” Most of the debate focused on including or eliminating certain policy changes addressed in the bill’s “riders.” Other budget reforms are necessary to control spending.
At nearly 1,700 pages, the omnibus spending bill funds all government agencies, save one, through the end of the fiscal year (Sept. 30, 2015). The Department of Homeland Security which houses U.S. Citizenship and Immigration Services, is the exception. It will operate under a temporary funding extension — continuing resolution (CR) — through February 2015.
{mosads}President Obama’s executive action on immigration is what provoked the CR plus omnibus approach. It allowed the old Congress to enact spending bills for most of the government while preserving an opportunity for the newly elected Congress to address immigration concerns next year.
The debate over the spending level in the bill actually took place long before. In December 2013, Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) established the overall funding cap at $1.014 trillion. Various budget cap loopholes, like the war spending account (OCO), the emergency designation which was used to fund Ebola virus policies and phantom savings from “changes in mandatory programs,” raised the overall spending level in this bill to more than $1.1 trillion. These gimmicks are so common by now that only budget geeks seem to care anymore.
Even so, this spending bill covers only about one-third of federal spending, the “discretionary” part. Most spending happens in Social Security, Medicare, Medicaid and other health programs. These and other so-called “mandatory” spending programs are not subject to annual congressional consideration. Rather, their funding is on autopilot.
The Budget Control Act of 2011, legislation that was adopted as part of the increase in the debt limit to control future spending, has returned discretionary spending to its pre-stimulus level. That’s the good news.
The bad news is that this spending reduction came about largely as the result of an indiscriminate mechanism — the sequester — which trimmed funding across the board. Congressional failure to prioritize investments in defense capabilities while eliminating duplicative and ineffective federal programs means that these spending cuts will be short-lived.
How can the new Congress instead rein in spending in meaningful and lasting ways?
Adopt a path to balance in the budget. The new Congress will encounter its first opportunity to exert spending control early next year when the House and Senate introduce their respective budgets. Unlike the cromnibus bill, congressional budgets cover all spending and taxes over the next decade. ObamaCare is sure to be at the center of those budget debates. With $1.8 trillion in new spending over the next 10 years, ObamaCare’s subsidies and Medicaid expansion are projected to drive 44 percent of the growth in entitlement spending. Furthermore, Congress should address growing spending in Medicare and Social Security, two programs whose trust funds are on the path to exhaustion as their burden on current and future workers grows.
Establish a BRAC-like spending commission. Special interest pressures, the demise of the federal budget process and a lack of congressional oversight keep duplicative and ineffective federal programs on the books. A Base Realignment and Closure (BRAC)-like spending commission could help to break through the status quo to consolidate duplicative programs and eliminate ineffective spending. The commission should be independent and bipartisan; it should review all domestic programs and agencies using clear and transparent criteria and its recommendations should be adopted via expedited legislative action. House Majority Leader Kevin McCarthy (R-Calif.) recently suggested that he was considering such a commission.
Cut spending before raising the debt limit. Congress’s debt limit suspension expires on March 15. The debt limit allows Congress to make vital course corrections when confronted with the results of unsustainable spending decisions. As such, the debt limit presents a decisive, action-forcing moment for Congress to take charge of the automatic spending increases in Medicare, Medicaid and Social Security that are driving the growth in spending. Congress should adopt budget reforms before raising the debt limit to a higher dollar-denominated level. It should not suspend the debt limit again.
While the cromnibus locks in discretionary spending through September 2015, the new Congress has several opportunities to take control of the budget. The new Congress should show that it can follow the budget process and adopt meaningful budget reforms. Budgeting truly is governing.
Boccia is the Grover M. Hermann Fellow in Federal Budgetary Affairs in the Roe Institute for Economic Policy Studies at the Heritage Foundation. For more charts and key budget trends, see her new report, “Federal Spending by the Numbers, 2014.”