GAO Report Examines Overuse of Supplemental Spending

In a recently released report, the Government Accountability Office (GAO) examined ten years of supplemental spending (FY 1997-FY 2006) and found not only a five-fold increase in the amount of expenditures funded through the supplemental process, but also that procedures that enable legislative deliberation are bypassed when Congress funds government operations through supplemental spending. Supplemental spending has become an alternative funding process, parallel to the normal annual appropriations process. This allows certain expenditures to elide close congressional and public scrutiny and allows Congress to escape debate over federal funding priorities.

"Emergency" and "Supplemental": A Fine Practical Distinction
Although the terms "supplemental" and "emergency" are often used to describe discretionary spending authorized outside of the annual appropriations process, there is a difference between the two. Emergency spending, when designated as such by the president, is not subject to the budgetary constraints established in the congressional budget resolution. Supplemental spending, on the other hand, is spending that is simply authorized outside of the twelve annual appropriations bills that fund the operations of the federal government, be it "emergency" or not. So, emergency funding may be included in any of the twelve appropriations bills, and supplemental spending may not necessarily be classified as "emergency." But, more often than not, emergency spending is enacted in supplemental spending bills.

While supplemental spending is technically subject to budgetary constraints, the mechanism to enforce such restraint is primarily toothless. Prior to FY 2003, spending that exceeded the congressionally established budget caps was sequestered — a process by which discretionary spending was reduced across the board automatically in order to push it below those budgetary limits. Since the expiration of those procedures, however, a point of order — a parliamentary hurdle — may be raised to prevent excess spending. Despite having the tool, members of Congress rarely raise points of order, and when they are raised, they are often waived. This lack of discipline in Congress effectively renders budgetary excesses without repercussion.

A Five-Fold Increase in Supplemental Spending
The GAO report, which examined supplemental spending only (i.e., ignoring emergency spending funded through the regular appropriations process), notes:

The regular budget and appropriations process provides for greater legislative deliberation, procedural hurdles, and funding trade-offs which may be bypassed through the use of supplementals.

While this bypassing of budgetary controls is troubling in any context, the recent increase in supplemental spending makes these problems acute. Compared to the previous ten-year window (FY 1987-FY 1996), supplemental spending has increased five-fold. GAO indicates the $48.6 billion in emergency funding approved in 1991 for the first Gulf War is an outlier in the flat-line pattern of 1981 to 2001, in which supplemental spending averaged less than $20 billion annually. Since 2001, however, supplemental spending has been on a rapid ascent, leveling out at well over $100 billion annually after peaking in 2005 at $160 billion.

Non-Emergency and Regular Funding Evade Attention
The prevalent use of emergency supplemental funding is problematic, in part, because these legislative bills often attract unrelated or unnecessary spending items. And because emergency funding measures are often fast-tracked through Congress, such bills receive less consideration and debate. GAO found eight of the 25 emergency supplemental appropriations bills passed by Congress in the past ten years contained additional non-emergency spending provisions, totaling over $11 billion. Furthermore, GAO also found there were certain budgetary accounts that were regularly funded through the supplemental spending process.

In at least six of the past 10 years, 35 federal budget accounts received supplemental spending. At $375 billion, this recurring account funding represents 61 percent of the gross supplemental budget authority in the past ten years. The majority of these accounts were within the Department of Defense, but the Federal Emergency Management Agency and the Department of the Interior's Wildland Fire Management accounts also saw recurrent supplemental spending. That programs receive regular funding through supplemental appropriations should concern policy makers for a number of reasons, most notably because:

For activities that regularly receive emergency-designated supplemental appropriations, there can be an incentive to provide funding in a supplemental rather than in the regular appropriations process where these activities would have to compete with others for limited resources in trade-off decisions.

The GAO report also notes other troubling trends in supplemental spending — relaxed standards as to what constitutes an emergency and combining emergency with non-emergency funding on individual supplemental spending bills. The emergency supplemental bills examined for the report contained $12.7 billion in spending provisions designated as "emergency" that appeared to be unrelated to the situation that originally prompted the need for the bill.

For example, the "Kosovo and Other National Security Matters" law in 2000 contained $110 million for a Great Lakes Icebreaker replacement as part of a $578 million appropriation for the Coast Guard, and the "Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006" bill contained $9 million for drought relief. The report also shows that funding designated as emergency does not always conform to the definition of "emergency" as promulgated by OMB, defined thusly:

  • a necessary expenditure (an essential or vital expenditure, not one that is merely useful or beneficial)
  • sudden (coming into being quickly, not building up over time)
  • urgent (a pressing and compelling need requiring immediate action)
  • unforeseen (not predictable or seen beforehand as a coming need although an emergency that is part of an overall level of anticipated emergencies, particularly when estimated in advance, would not be "unforeseen")
  • not permanent (the need is temporary in nature)

More than $31 billion, or 5 percent, of spending designated as "emergency" in the funding bills studied by GAO were inconsistent with OMB's definition. In fact, some 26 provisions totaling over $6 billion "stood out as being clearly incongruent with the emergency-designation criteria of 'sudden' and 'unforeseen'," while nearly $25 billion in funding lacked sufficient detail for the GAO to determine the appropriateness of the "emergency" designation. Although the wars in Iraq and Afghanistan are now in their sixth year, and many experts would argue fail to meet the emergency spending criteria, the GAO did not find that this spending, totaling more than $500 billion, was misclassified as "emergency." Despite this, GAO did conclude that regardless of whether these funds were classified as emergency or not, "continuing to fund GWOT [Global War on Terrorism] through supplementals reduces transparency and avoids the necessary reexamination and discussion of defense commitments and funding tradeoffs."

Reining in Extra-Budgeting Spending
Until key changes are made in the spending process, it is doubtful the trend will reverse itself. Concluding the report is a discussion of several options that budget experts consulted by GAO suggested would restore tighter budgeting controls. The experts suggested that, among other practices, funding must meet an established set of criteria to be designated "emergency." Additionally, supplemental bills should not be used when the regular appropriations process can meet the needs of the program, but a balance must be struck between flexibility and oversight with respect to availability of additional funds.

Sen. George Voinovich (R-OH) requested the GAO study on supplemental appropriations. As he had done during last year's budget resolution floor debate, Voinovich once again offered an amendment to the FY 2009 budget resolution that would made the supplemental appropriations process more fiscally responsible and restored integrity to the federal budgeting process. The amendment provided that a point of order may be made against any supplemental appropriations legislation requesting over $15 billion for domestic purposes or $65 billion for overseas purposes in a given fiscal year.

The Voinovich proposal would have provided a stronger tool for senators to control supplemental spending excesses than current budget mechanisms because the point of order could not be waived. This change would have gone some distance toward bringing greater accountability to the budget-making process and promoting fiscal responsibility while still maintaining the flexibility Congress needs to respond to true emergencies. Unfortunately, the amendment never came up for a floor vote and was not adopted by unanimous consent as it was in 2007 (the 2007 amendment was later dropped in a conference committee).

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