Committee for a Responsible Federal Budget

What's An Emergency?

Jun 22, 2010 | Budget Process

The statutory PAYGO law left a gaping hole for spending designated as an emergency. Since the designation has no formal definition, it can technically be used for anything; so far, it has mainly been used to exempt stimulus spending from PAYGO. But no more! Keith Hennessey has an answer on how to define emergencies:

There is a definition first created in 1991 by the Bush (41) Office of Management and Budget.  It’s a five-part test for whether a particular spending provision should be designated as an emergency.  This is an AND test, meaning a provision must meet all five criteria to earn an emergency designation.

According to this 1991 definition, to qualify as emergency spending, the provision must be:

  1. necessary; (essential or vital, not merely useful or beneficial)
  2. sudden; (coming into being quickly, not building up over time)
  3. urgent; (requiring immediate action)
  4. unforeseen; and
  5. not permanent.

Originally intended to be used in conjunction with the PAYGO law enacted in the 1990 Budget Enforcement Act, the OMB definition was never put in statute. The BEA PAYGO law expired in 2002. Now that we have a new PAYGO law, it's time once again to look at codifying the 1991 definition. It has been included in many congressional budget resolutions, but it has never been put in statute.

The big provisions that have been designated as an emergency, and are in the current extenders bill, are the unemployment benefits extension and the Medicaid matching extension. Let's go down the checklist to see if they would fit the definition. Necessary? Check. Sudden? Not for provisions enacted in February 2009. Urgent? Check. Unforeseen? Not at this point. Not permanent? Probably.

Both of these provisions would fail under this definition and Congress would have to pay for them. So far, Congress has exempted $25 billion under the "emergency requirement" tag, and it has all come from provisions like the two we just looked at, from other extenders bills. Instead of allowing for flexibility, the current emergency spending designation has only undermined the strength of statutory PAYGO.

Hennessey recommends codifying this definition of emergency spending and requiring 60 votes to waive a point of order against an emergency designation. Finally, he says that if the current extenders bill is so important to Congress, "they should prioritize and either cut other spending (my preference) or raise taxes." We agree.