August 30, 2014

House Republicans Propose Budget Process Legislation

Last week, House Budget Committee Chairman Paul Ryan and other committee Republicans introduced several bills proposing changes to the federal budget process.  The legislation includes measures to restrict spending and change the annual process, but does not significantly address revenues.    

The bills would make the budget resolution legally binding, establish limits on deficits and spending, convert to a biennial process, and establish an expedited process for Congress to review spending cuts proposed by the President.  Also included are proposals to prevent government shutdowns and require periodic reviews of all federal programs. The legislation would cap long-term spending, require Congress to periodically review long-term budget trends, and permit the reconciliation process to be used to reduce spending beyond the traditional 10-year budget window.
 
The Concord Coalition has long been concerned that the orderly budget process included in the Budget Act has been replaced by a chaotic process that frequently involves skipping a budget resolution and cobbling together a series of continuing resolutions and omnibus bills to fund federal agencies through the year. The fiscal challenges facing our nation require a more effective process and the specific revenue and spending policy choices to place us on a sustainable path.

The House Republican proposals include some examples of budget enforcement mechanisms that could potentially be used to restrain spending and may improve the budget process.  For example, The Concord Coalition has previously supported proposals to establish biennial budgeting, strengthen the rescission process and give the budget resolution the force of law.   It is also encouraging that the proposals would require Congress to regularly review federal programs and long-term spending trends.

However, some of the proposals are unlikely to be effective.  For example, the legislation would require the Congressional Budget Office to use “dynamic scoring” to take into account the macroeconomic effects of legislation.  But the uncertainties of “dynamic” analysis, as described by the CBO, make it inappropriate for the standardized scoring of legislation. If policymakers would like tax cuts to appear less expensive, they should focus on policy decisions such as eliminating tax breaks -- not on changing the scoring.

As is often the case with process proposals, the legislation lacks the specific policy decisions that will be needed to comply with the enforcement mechanisms.  It is also disappointing that the proposals focus almost entirely on spending and do not significantly address revenues.

In the past, process proposals without these details have had a mixed tracked record of success.  Budget process proposals are most effective when they consider the entire federal budget to be on the table  (spending and revenues), include realistic targets, and are accompanied by a bipartisan commitment both to enforce the targets and support the specific policies necessary to meet them.