Budget Process Stuck at Square One and In Danger of Irrelevance

From the outside, a great deal seems to be happening with the fiscal year (FY) 2012 budget process. The House debated a "clean" bill to raise the debt ceiling and is starting to vote on its yearly appropriations bills, and the Senate just voted on four budget proposals. But looks can be deceiving: despite these recent actions, the nation's budget process is teetering on the edge of irrelevance.

In the House, the appropriations process is moving along according to schedule. Unlike in 2010, when the House did not pass any appropriations bills until late July (and then only passed two bills out of twelve), the lower chamber is well on its way to passing at least two bills by the end of June. The House Appropriations Committee has already approved two bills, Homeland Security and Military Construction-Veterans Affairs, and both bills could be voted on in the full House in the coming days.

At the same time, the House voted on a bill to raise the debt ceiling, which the federal government is on track to hit in early August. Republicans in both houses have been calling for massive budget cuts in exchange for their votes on the debt ceiling, despite the fact that failing to raise the ceiling would result in a disastrous government default. However, the House vote was on a so-called "clean" bill, one without additional spending-related provisions; the legislation failed, 318-97.

In the Senate, debate continues to rage on the budget resolution. With the Senate Budget Committee waiting for the outcome of the bipartisan negotiations hosted by Vice President Joe Biden, the upper chamber is left without a budget blueprint for the coming fiscal year. To try to fill the gap, the Senate voted on four different budgets: the House budget passed in April, President Obama's budget, and separate budgets from Sens. Rand Paul (R-KY) and Pat Toomey (R-PA). All of the budget proposals were rejected.

However, all of these actions are mere distractions, since all of the votes are essentially meaningless. The House appropriations bills stand no chance of being approved in the Senate, since they are built on the House budget, which includes drastic cuts that are unacceptable to a Democratic Senate and president. The Senate budget vote on the House budget resolution was only held to put Republican senators on the record for supporting the effective dismantling of Medicare, with the other votes held for similar political purposes. Similarly, the House vote on the debt ceiling was meant to prove that a clean bill would not pass the House.

Senate Democrats are hoping to use the failed votes to argue against Republican budget cuts, and House Republicans are looking to do the opposite with the debt ceiling vote. In other words, these votes were meant to embarrass members on the other side of the aisle, not move legislation.

As a result of these theatrics, the budget process has not moved forward appreciably from square one. Instead, members of both parties are waiting for some kind of grand bargain to come from the Biden talks. These discussions, with four Democrats and two Republicans trying to hammer out a long-term budget plan, are many observers' last hope for a timely resolution to current fiscal debates. With Republicans unwilling to vote for a clean debt ceiling bill and Democrats reluctant to vote for any fiscal plan that does not involve at least some tax increases, the Biden talks could provide the compromise needed to raise the debt ceiling and move the FY 2012 budget process forward.

With everyone hoping for a grand bargain, however, the normal budget process is being left behind. Originally created in 1974, the current process introduces a form of checks and balances. One group of legislators (authorizing committees) approves programs, another (budget committees) sets the overall budget spending targets, and a third (appropriations committees) allocates money to approved programs. While the last group, the appropriators, is considered the most powerful, since they control the actual purse strings, all three groups have some power over each other.

The purpose of the annual budget process is to rationalize a subset of all federal spending. This subset, known as discretionary spending, accounts for about one third of all spending; the other two thirds is composed of mandatory spending (with most of that going to Social Security and Medicare) that is determined by other legislative vehicles. The annual budget process gives the relevant congressional committees a chance to assess the impact and value of the thousands of federal programs funded through discretionary spending. In this system, both the Budget Committees and the Appropriations Committees work to set the overall level of spending. And since the process has to be completed in both houses, there is double the number of spending decision points.

The budget process also allows for some measure of transparency and public participation. At every stage, committees hold hearings on their jurisdiction. The Budget Committee holds hearings on the budget blueprint, and the authorizing committees hold hearings on the programs under their jurisdiction. The hearings allow elected representatives, administration officials, and members of the public to critique or defend federal programs and proposed spending decisions.

What was created to control spending has now turned into a system with too many roadblocks. The Senate, which already gives an inordinate amount of power to individual senators thanks to the chamber's filibuster rules, is now paralyzed every step of the way, with neither appropriators nor budget-makers willing to follow the process. And while the House is passing appropriations bills, its efforts are simply resulting in starting positions for the budget negotiations to come, rather than a straightforward assessment of the budgetary resources necessary for federal programs to achieve their goals.

Indeed, the budget process currently in place has been effectively disregarded. FY 2012's budget "process" will likely be similar to last year's: upon failing to pass all twelve appropriations bills necessary to fund the federal government at the start of the fiscal year on Oct. 1, Congress will pass a series of stop-gap "continuing resolutions," likely followed by grandstanding for political gain, all to be resolved via a closed-door compromise solution after a series of budget crises like those seen earlier in 2011.

Breakdowns like this end up hindering transparency as well as frustrating attempts to honestly gauge the impact of federal programs and set spending levels accordingly. There is little to no public discussion about programs or funding levels. Any agreement coming from either the Biden talks or another, last-minute compromise will only involve top-line numbers, which will have been made without any consideration for specific programs. As a result, vital programs could be cut simply because they do not fit under arbitrary caps or other agreed-upon devices.

Image in teaser by flickr user inf3ktion, used under a Creative Commons license

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