Concept_DC_Capitol Building

Budget Process Reform Options

Nov 28, 2016 | Budget Process

Update (3/27/2017): This blog has been updated to reflect the additional options in our paper: “Setting the Benchmark: Reforms to Budget Baseline Rules.”

Budget process reform discussions continue on Capitol Hill, with House Budget Committee Chairman Tom Price (R-GA) indicating that he will be releasing a comprehensive budget process reform bill by 2017. He is expected to discuss his proposals during his keynote at the "A Reform Agenda for the Federal Budget Process" event, co-hosted by the Committee for a Responsible Federal Budget and the Brookings Institution. In the Senate, Budget Committee Chairman Mike Enzi (R-WY) and Senator David Perdue (R-GA) are both engaged in efforts to reform the budget process. Our Better Budget Process Initiative has also been making recommendations to improve the budget process. Below we have consolidated all 44 recommendations across five papers released to date. Each option is linked to the relevant page of the corresponding paper where it is discussed.

Setting the Benchmark: Reforms to Budget Baseline Rules

  1. Treat temporary provisions consistently
  2. Assume enforcement of trust fund limitations in the baseline  
  3. Compare discretionary appropriations to the prior year’s levels
  4. Provide information on sources of growth in mandatory spending
  5. Remove emergency spending from the baseline
  6. Separate the budget enforcement baseline and budget projections

Strengthening the Budget Resolution

Change the process for adopting a budget resolution

  1. Make the Budget Committee a leadership committee
  2. Change to a joint budget signed by the President
  3. Divide the budget resolution in two parts: fiscal goals and an enforceable legislative framework
  4. Implement a biennial budget with off-year amendments
  5. Provide for more informed consideration of amendments to the budget resolution

Strengthen enforcement of the budget resolution

  1. Enforce deficit reduction assumptions in the budget resolution through reconciliation
  2. Make it harder to consider legislation violating spending or revenue levels in the budget resolution

Modify the contents of the budget resolution

  1. Include enforcement provisions in the text of the budget resolution
  2. Reinforce pay-as-you-go rules
  3. Link the debt limit to the budget resolution
  4. Include Social Security in the budget resolution
  5. Provide for long-term savings targets
  6. Limit the use of reserve funds
  7. Show all budgetary resources in budget functions and committee allocations

Strengthening Statutory Budget Enforcement


Strengthening enforcement of existing rules

  1. Establish a separate point of order against provisions to exclude costs from PAYGO
  2. Prohibit legislation blocking any sequester enforcing statutory PAYGO or discretionary caps

Restrict the use of phony offsets

  1. Prohibit the use of spending cuts with no real savings
  2. Restrict the use of timing gimmicks to claim savings within the budget window
  3. Prevent the use of artificially inflated baselines to claim savings
  4. Prohibit double-counting of increased revenues and spending cuts involving trust funds

Ensure all costs are subject are subject to budget discipline

  1. Limit the use of Overseas Contingency Operations as a slush fund
  2. Expand the deficit-neutrality requirement in PAYGO to apply to debt service

Improving the Debt Limit

Link changes in the debt limit to achieving responsible fiscal targets

  1. Presidential authority to suspend the debt limit if fiscal targets are met
  2. Presidential authority to increase the debt limit if accompanied by a plan to put debt on a declining path as a share of GDP
  3. Suspend the debt limit automatically if fiscal targets are met

Incorporate the debt limit into Congress’s fiscal targets

  1. Automatically increase the debt limit upon passage of budget resolution
  2. Require reconciliation instructions to increase the debt limit to accommodate debt levels in the budget resolution
  3. Require legislation with significant net costs to include an increase in the debt limit

Apply the debt limit to more economically meaningful measures

  1. Subject debt held by public instead of gross debt to the debt limit
  2. Index the debt limit to GDP growth, effectively capping debt-to-GDP

Replace the debt limit with limit on future obligations

  1. Apply the debt limit to future liabilities and unfunded obligations
  2. Replace the debt limit with a “debt cap”

Improving Focus on the Long Term

  1. Require long-term estimates for significant legislation
  2. Codify rules prohibiting legislation from increasing long-term deficits
  3. Allow long-term savings targets for reconciliation
  4. Establish a second-five-year test for PAYGO
  5. Require annual budget documents to include long-term information
  6. Expand the use of accrual accounting where appropriate