The House's Fake Budget Process Changes

During the week of Jan. 30, the House began debating a slew of budget reform measures, part of a package of 10 bills proposed by the House Budget Committee that affect everything from budget resolutions to the president’s veto power. Of the 10 pieces of legislation, two have passed the House so far.

The two bills that passed the House last week involved changing how the Congressional Budget Office (CBO), an independent analyst of the cost of legislation, does its work. The CBO scores legislation for its budgetary impact and provides long-term budgetary guidance for members of Congress. The office’s reports are highly regarded, and CBO’s independence from the political fray is its strongest asset. But these two bills would change that.

The first bill, the Baseline Reform Act of 2012, would require the CBO to remove inflation from its discretionary budget baseline, which it produces every year. This baseline predicts what the budget will be in the future if Congress keeps current laws in place. Currently, the baseline calculation is adjusted for inflation.

This adjustment is designed to give Congress a true estimate of ongoing operating costs for programs: if inflation goes up, the cost of operating a program will rise as well, even without any changes in staff or services. Forcing CBO to exclude inflation and show expenditures in nominal dollars builds in a bias toward slowly reducing the real costs of all government programs over time.

The second bill, the Pro-Growth Budgeting Act of 2012, would require the CBO to include in its cost estimates the macroeconomic effects of legislation, specifically the "revenue feedback" a bill would generate. Such estimates are called "dynamic analyses," although the bill does not use this term. For any bill that would impact the economy by more than 0.25 percent, the CBO would be required to report on "major economic variables, including real gross domestic product, business investment, the capital stock, employment, and labor supply" and "the potential fiscal effects of the bill or resolution, including any estimates of revenue increases or decreases resulting from changes in gross domestic product."

The proponents of this method claim that lower taxes spur economic growth, which, in turn, results in increased tax receipts. If certain extreme assumptions are built into dynamic models, tax cuts appear to pay for themselves. Of course, this logic is what led to the large deficits that the George W. Bush administration left the Obama administration. And no serious analysis has ever determined that tax cuts pay for themselves.

The other eight bills in the House Budget Committee package are similarly ideological. (A list of all the House Budget Committee bills under consideration can be found here.) One bill would move Congress onto a biennial budget cycle, where Congress produces two-year budgets, instead of the current annual process, making it harder for the government to respond to crises. Two other bills seek to limit the size of government by instituting strict spending caps or limits on the size of the budget relative to the country’s Gross Domestic Product (GDP). Another would require that every federal program “sunset” after a period of time. Yet another proposed bill would give the president a line-item veto power, making it easier to cut certain programs.

The theme of these bills is clear: they are designed to bias the process toward cutting spending. But budget expert Stan Collender notes that Congress already has plenty of tools to cut spending – if the House and Senate can agree on what to cut.

It’s unfortunate that real budget process reform is not on the table. The current process has too many choke points, making it difficult for Congress to budget responsibly and pass all its yearly spending bills on time. Instead, the budget is typically rushed through Congress in the span of a few short weeks, with twelve spending bills often smashed into one, with little transparency or real debate on spending priorities.

In fact, Congress is already designed to make it hard to spend money, with a split between authorizing committees, which approve programs, and appropriating committees, which approve funding. And yet a third committee – the budget committee – oversees the process between the two.

To be approved and funded, a program must first pass through this legislative gauntlet. In all, a spending bill must be signed-off on by at least one authorization committee and one of its subcommittees, an appropriations committee and one of its subcommittees, and the Rules committees (twice) and the floor (twice), and it must do this in both houses. That's 16 decision points at which a program could face cuts or outright elimination.

At each step of the way are myriad opportunities to hold up the legislation. For instance, on the Senate floor, any member can stop almost any legislation using a filibuster, requiring a supermajority of his or her colleagues to break it.

All of these choke points make it easy to hold up spending. The Senate Budget Committee finds itself unable to report out a budget resolution because the Democrats on the committee cannot agree on the appropriate spending levels. The House Appropriations subcommittees load their bills full of poison-pill policy riders, holding the budget hostage to their ideological agendas.

To improve fiscal policy outcomes – i.e., to ensure outcomes that better reflect national priorities – the budget process needs an easier path, one with fewer obstacles and more opportunities for public participation. Simplifying the budget process should be something both parties can agree on, but they are currently too busy manipulating the process for their own political advantage.

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