StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Don't Believe Phony Promises To Create Economic Garden Of Eden

11 Oct 2011
Posted by Stan Collender

There is a growing movement on Capital Hill and elsewhere to make substantial changes to the congressional budget process. Why you might ask (and you should)? Because yet again the process is being blamed for everything that's wrong with the federal budget.  Fix the process, we're told, and all our fiscal maladies will go away and the world once again will be an economic garden of Eden.

As I explain in my weekly column in today's Roll Call, calling "BS" on this claim is almost too easy.  (FYI..."BS" is a technical term in federal budgeting.)

Budget Process Revisions Won’t Solve the Problem

By Stan Collender
Roll Call Contributing Writer
Oct. 11, 2011, Midnight

This is not a defense of the Congressional budget process.

How could it be? With annual budget resolutions and appropriations now among the hardest things on the planet to pass, with deficit reduction effort after deficit reduction effort failing each year like the Chicago Cubs, and with Congress completely unable to make budget decisions in an economic rather than a political context, it’s impossible to think of the Congressional budget process as anything but an abject failure.

And in case you think this condemnation is too mild, remember that it’s coming from someone who owes much of his career to the budget rules and procedures Congress is supposed to use. In fact, this may be the best case of someone biting the hand that feeds him that you’ve seen in a long time.

Condemning the current Congressional budget process and insisting that it be changed immediately are two very different things, however. This is especially true when you realize that any and all changes to the process are very likely to make it much worse rather than even marginally better.

I say this in the midst of what appears to be a resurgence of interest on Capitol Hill in making budget process changes. Just last week, for example, three committees held hearings that either had the stated purpose of discussing revisions to the way Congress budgets or slyly got around the jurisdictional issues by discussing budget process changes while calling it something else. (Full disclosure: I testified at one of these mistitled hearings.)

To a certain extent, the “change the budget process of fight” battle cry isn’t surprising. As any longtime federal budget watcher will tell you, when Congress can’t or won’t do something about the budget, it often tries to change the subject by instead doing something about the budget process. The implication is that it’s the process rather than the Representatives and Senators who implement it that is to blame for the bad or nonexistent decisions. Just change the process, they say, and it will stop me from spending more or cutting taxes again. Hallelujah, all our budget woes miraculously and immediately will disappear.

It’s not that budget process reforms shouldn’t be considered at some point; it’s that none of the revisions will accomplish much.

One reason they won’t make any difference is that most of these “new” proposals are retreads that have been floating around for so long they are starting to come back for the second or third time.

Some ideas such as zero-based budgeting (OMG!), which failed so completely when it was tried during the Jimmy Carter administration that three decades later it still makes budget wonks giggle and sneer at those who dare mention it. Others, such as biennial budgeting, repeatedly have been shown to have no appreciable effect on the bottom line in those states that have two-year budgets — rather than one-year budgets. In addition, two-year federal budgets will lead to less rather than more political responsibility and transparency than we have now.

And in keeping with the automatic across-the-board spending cut that the Budget Control Act mandates if the super committee fails to come up with a plan or if its plan isn’t enacted, there’s even renewed talk about making triggers such as this a permanent feature of the annual federal budget process.

What this talk conveniently forgets is that the last time the threat of a sequester was put in place in the 1980s by Gramm-Rudman-Hollings, Congress ended up spending at least as much time coming up with gimmicks and gaming the system so the cuts wouldn’t be triggered as it did complying with the GRH requirements so that a sequester wouldn’t actually be needed.

In fact, in the grand tradition of GRH, a great deal of time and energy in Washington is already being devoted to developing strategies that will mitigate or prevent the Budget Control Act across-the-board cut if it’s triggered.

All those who are now engaging in the inane talk about procedural changes being the new fiscal magic elixir have forgotten the most important thing about the Congressional budget process: It never works if it doesn’t reflect a strong political consensus on what actually needs to be done — as opposed to how it should be done — on the budget.

For example, the House and Senate adopted the Congressional Budget Act almost unanimously in 1974 because there was an overwhelming agreement that there needed to be a Congressional process. That consensus made it possible for Congressional leaders to push their Members to comply with the CBA when they started to balk at some of its restrictions and limits.

By contrast, there was no similar consensus about Gramm-Rudman-Hollings when it was adopted as an amendment to a debt ceiling increase in 1985. Without that, GRH started to fail almost immediately after it was enacted and was replaced two years later by a modified — and weaker — process.

I defy anyone to tell me what consensus exists today on any aspect of the federal budget. There’s not even an agreement that the deficit should be reduced; some Members clearly prefer that it not go lower if spending or revenue changes they favor are the way it would happen.

It’s this lack of any consensus rather than the process that makes the current budget debate so dysfunctional. It would work just fine if Democrats and Republicans could come to an agreement on what to do and how to do it. Then again, if they could agree on that, they wouldn’t need any budget process at all.

It's us, not the process.

No matter what the process, until Americans accept the idea that to deal with the budget deficits will require higher taxes (not just on millionaires, but even on people with household incomes well below the median -- so everyone has some fat in the fire), less gracious entitlement formulas, and lower spending on programs (both defense and domestic, nothing is going to happen. Far too many lines drawn in the sand to get progress and process won't fix that.

gracious entitlement formulas?

I agree with JLM about higher taxes on everyone, but "gracious entitlement formulas?" C'mon, our "safety net" is anything BUT gracious. The average Social Security benefit is a pretty darn small amount for instance, nor are food stamp or unemployment benefits generally "gracious."

We need to tax and spend sufficiently to RAISE not lower Social Security pensions since so few people have other pensions any more and since 401Ks etc have NOT worked to provide widespread retirement security.

Definitely, we have to spend less money on Medicare and Medicaid somehow (hopefully in a rational way and not by pushing costs onto people who cannot afford them) as spiraling medical costs and paying for unneeded medical care are indeed killing the budget. But for every other entitlement, get outta here!

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