Every two years the U.S. House of Representatives reconstitutes itself as a new legislative body and adopts a set of rules governing the Chamber’s actions for the new Congress. The rules package for the 117th Congress contains three budget-related provisions. Two are harmless but the third should raise concerns for advocates of fiscal responsibility.
The new House rules reaffirm FY 2021 levels of spending and revenues. Congress did not adopt a budget resolution for FY 2021, but without an agreement on topline levels of budget authority and outlays, the appropriations process could not begin. To remedy this, in May 2020 the House authorized the Budget Committee chairman to “deem” spending and revenue levels consistent with the CBO baseline for the 2021 fiscal year. Section 3(p) reaffirms those spending levels for the new 117th Congress which began on January 3, 2021. It is important to note that this language does not preclude the House from adopting a FY 2021 budget resolution later this year, if the leaders choose to do so.
The new House rules eliminate a one-sided restriction on reconciliation legislation but leave the PAYGO rule untouched. Under certain circumstances, the House and Senate may deploy a special budget process called reconciliation to expedite passage of legislation making changes to tax and mandatory spending programs. Originally designed to reduce the deficit, in recent years both political parties have used reconciliation to increase the deficit (within the 10-year budget window) by cutting taxes and increasing spending.
When Republicans controlled the House chamber, their rules included a point of order against reconciliation bills that increased net direct spending within the budget window – a largely symbolic gesture with the veneer of fiscal responsibility that cleverly hid the fact that under their rule reconciliation could still be used for deficit-increasing tax cuts (which Republicans subsequently did in 2017). Section (2)(v) of the House rules package eliminates the Republican-passed point of order but maintains the existing House PAYGO rule. This ensures that most legislation, including reconciliation bills, cannot increase net deficits over the 6- and 11-year budget windows.
NOTE: House PAYGO is enforced during consideration of a measure and is enforced with a point of order.
The new House rules permit special consideration for the budgetary effects of COVID-19 and climate change legislation. This change, in section 3(v), is the most controversial, largely because it is not entirely clear what the language does or how it will be used, but it includes trigger words that should concern any advocate of fiscal responsibility – phrases like “adjust an estimate” (how?) and “exempt the budgetary effects” (from what?). None of which sound reassuring:
Sec. 3(v) EXEMPTIONS.—The chair of the Committee on the Budget may adjust an estimate under clause 4 of rule XXIX to —
- exempt the budgetary effects of measures to prevent, prepare for, or respond to economic or public health consequences resulting from the COVID-19 pandemic; and
- exempt the budgetary effects of measures to prevent, prepare for, or respond to economic, environmental, or public health consequences resulting from climate change. [emphasis added]
The floor debate surrounding this last rule change suggests many members think it is an attempt to exempt COVID-19 and climate change legislation from the House pay-as-you-go rule (PAYGO), but the wording isn’t clear: “exempt the budgetary effects of measures” … from what? The House parliamentarian and the Congressional Budget Office will want clarification.
True, the House and Senate have already established a precedent of designating COVID-19 relief packages as emergencies which allows them to escape most budget enforcement. The Concord Coalition supports this approach as long as the relief provisions are targeted, timely, and temporary.
But expanding this exemption to climate change sets a dangerous and potentially fiscally irresponsible precedent. Climate change is easily broadly defined and could touch an overwhelming number of spending and revenue programs in the federal budget.
Climate change is real and must be addressed, but to provide blanket immunity from any obligation to offset the cost under House PAYGO rules would merely exacerbate the already unsustainable trajectory of federal deficits and debt. Indeed, the Blue Dog Coalition in the House has already issued a public letter warning against such a practice (see attached).
That said, there may be another rationale for the language. Section 3(v) of the House rules package permits the Budget chairman to “adjust an estimate.” Is this a potential loophole to allow dynamic scoring for enforcement purposes? Scorekeepers don’t know yet.
Some background: A dynamic score incorporates the first-order static costs of legislation (the upfront spending and revenue costs) as well as the second-order macroeconomic effects of the legislation on jobs, wages, and income tax collections. Most scores published by the Congressional Budget Office and the Joint Committee on Taxation are static scores.
The use of dynamic scoring - if that is the intention of this language - is controversial. The modelling techniques are new, and different models can yield vastly different results. In the Senate, members can request a dynamic score, but only for certain language and their results can be used for “informational purposes” only. In both chambers, static scores alone are - to date - the only permissible way to determine compliance of legislation within the contours of the budget resolution or for adjudicating Byrd rule violations in a reconciliation bill.
The inartful drafting of this section leaves many questions that will be answered in the coming weeks and months and the Chairman of the House Budget Committee decides how to wield his new authority.