Clive...The Deficit Is Not A Budget Process Problem

My friend Clive Crook says in his latest National Journal column that the federal budget process has to be changed to deal with the looming fiscal crisis in the U.S.  (He also says at the end of the column that revenues will have to increase, but I'll leave that issue for Bruce to address.)

There are two reasons why you'll get no argument from me that there should be a better budget process in Washington.  First, it's true.  Second, I've made a pretty good living over the years analyzing and explaining federal budget process changes -- including a requently assigned text book and hundreds of speeches and seminars.  A completely new system would be personally very beneficial.

But a budget process change by itself isn't going to correct our fiscal problems.  That fix will only come when a consensus develops that something needs to be done and, most importantly, what that something should be.

In fact, it's very clear from the history of federal budget process changes that they only have a positive impact when they reflect a political consensus that already exists.  As I testified to the House Rule Committee several years ago, they absolutely cannot be used to create that consenus, that is, you can't put a budget process change in place and then expect it will be followed.  There first has to be a political agreement to do what the process requires.

For example...

The Congressional Budget and Impoundment Control Act was put in place in 1974 only after a bipartisan consensus developed that Congress needed a more formal process for dealing with the budget and some way to deal with Richard Nixon's intransigence on impoundments.  That's why the act included the creation of the House and Senate Budget Committees, the Congressional Budget Office, reconciliation, a formal timetable for action on budget-related legislation, and a formal way to force a president to spend funds that had alreday been appropriated when he or she refuses to do so.

But the Congressional Budget Act didn't require that anything be done about the deficit.  There was no consensus about that back in the early 1970s so the process that was created was outcome-neutral, that is, it could be used both to increase or decrease spending and revenues as long as the timetable was followed.

Fourteen years after it was enacted, the Congressional Budget Act was amended by Gramm-Rudman-Hollings after a consensus finally emerged that the deficit had to be addressed.  GRH imposed a deficit reduction plan on top of the process that already existed.

in 1990, GRH itself was amended by the Budget Enforecement Act when a consensus emerged that the GRH deficit reduction plan wouldn't work.  And in 1997 BEA was replaced by the Balanced Budget Act when balancing the budget rather than just reducing the deficit was recognized as the goal.

The great irony about budget process changes is that they reflect a political consensus that already exists.  But if the consensus exists, a process to implement it isn't really needed because Congress and the White House already have all the power they need to do what the new budget process supposedly will achieve. They can reduce spending and increase revenues now however and whenever they want to do so.

Clive makes a very eloquent case for the need to deal with the deficit and national debt and my observations from working in and around the federal budget world are that he'll get few arguments from almost anyone that both need to be addressed.  In other words, there is indeed a consensus about doing that once the economy has recovered sufficiently.

But the consensus that doesn't yet exist is how to do these things.  Without that, we'll get a budget process change that does little more than declare the deficit to be bad and the national debt to be evil.  That won't help.

Once it emerges, drafting a new federall budget process to reflect a consensus on how to change spending and tax laws will take about 15 minutes.  But until then, we shouldn't spend any time on a new procedure that will promise much but won't deliver anything.