Hearing Recap: Fixing a Broken Budget and Spending Process – Perspectives of Two Former Chairmen
The Senate Budget Committee began a series of hearings on reforming the budget process on May 15. The first hearing, “Fixing a Broken Budget and Spending Process: Perspectives of Two Former Chairmen,” featured former Senator Kent Conrad (D-ND), Committee for a Responsible Federal Budget board member, and former Senator Judd Gregg (R-NH), Campaign to Fix the Debt co-chair. Gregg chaired the Senate Budget Committee during the 109th Congress, and Conrad chaired it during the 110th, 111th, and 112th Congresses.
Watch the hearing below or on C-SPAN. You can also find a list of Senator Conrad's and Senator Gregg's budget reform proposals from their written testimonies at the bottom of this post.
Chairman Mike Enzi (R-WY) began the hearing by pointing out that the current budget process puts emphasis on discretionary appropriations, which are just one-third of the budget, while mandatory spending goes largely ignored. He expressed further dismay over the lack of budgeting for emergencies as well as how the current system usually results in overly partisan documents that are meaningless.
In opening remarks for the minority, Senator Chris Van Hollen (D-MD) expressed openness to ideas for a better budget process. He also noted that political will is the most important element and the importance of having senators whose priority is fiscal discipline on both sides of the budget.
In his opening statement and written testimony, Gregg advocated for a complete overhaul of both the budget committees and the budget process itself to make it less partisan and more comprehensive. He recommended moving to a biennial budget, creating a separate budget for capital expenditures, and instituting enforcement mechanisms to force action on the budget resolution, among other options. Gregg warned that the United States is fast approaching the debt levels of countries that have gone bankrupt, and the first step in getting our debt under control is fixing the budget process.
Conrad’s written testimony and opening statement recounted his experience on the budget committee, reflecting on the ability to work across the aisle in a bipartisan way. He also cautioned against ignoring the growing national debt, pointing to other countries throughout history that have ignored debt to their own peril. He recommended a series of reforms, with the central idea that any senator should be able to bring a budget to the floor if leadership fails to bring a committee-reported budget to the floor.
After making their opening statements, the former chairs answered questions from committee members. Enzi asked about their experiences with the National Commission on Fiscal Responsibility and Reform (Simpson-Bowles). Gregg and Conrad highlighted the commission’s truly bipartisan nature and how all involved shared the common goal of putting the nation on a sustainable long-term fiscal path. While the commission put forward a solid proposal that would have stabilized the national debt, the former chairs cited a lack of will by congressional leadership as the ultimate reason why its recommendations were not enacted.
Van Hollen expressed reservations that a renewed effort to fix the federal budget process would succeed where Simpson-Bowles had failed. He cited the 2015 repeal of the “Conrad Rule” – which prohibited budget reconciliation legislation from increasing deficits – to illustrate how Congress often ignores or even violates its own budget rules. Conrad, who created and championed the rule during his tenure as chair of the Senate Budget Committee, shared Van Hollen’s skepticism that small-scale changes or tweaks like the Conrad Rule would be sufficient to fix the budget process at this point. He and Gregg said they expect that wholesale changes to the budget process and significant policy reforms will likely not occur until they are forced by an impending fiscal crisis. Van Hollen shared Conrad's frustration but hoped that someone could come up with a workable solution before a crisis occurs.
Senator David Perdue (R-GA) recounted the bipartisan progress made on the Joint Select Committee on Budget and Appropriations Process Reform. He then asked the witnesses to describe potential enforcement mechanisms that could generate the political will needed to pass a budget each year. Conrad reiterated his recommendation that any senator be allowed to bring a budget resolution to the floor, while Gregg recommended thinking outside the box and suggested establishing relatively severe cuts to spending and increases to revenues that would happen automatically if Congress did not pass a budget.
Senator Tim Kaine (D-VA) drew on his experiences as mayor of Richmond and governor of Virginia, noting how the Virginia General Assembly sets long-term targets for debt and interest payments as percentages of Gross Domestic Product (GDP) and outlays, respectively. He asked whether a similar debt-to-GDP target could work for the federal government. Conrad and Gregg said that not only is such a target desirable, it is absolutely essential for a responsible approach to the federal budget. They also noted that a federal debt-to-GDP target was one of the proposals put forward by the Simpson-Bowles commission.
Senator Mike Braun (R-IN) expressed concern that increasing taxes to get the budget to balance might slow economic growth. He also worried about declining faith in the U.S. dollar as the world’s reserve currency, noting that a shift to relying on another country’s currency could be harmful to the U.S. economy. Conrad responded by emphasizing the necessity of a balanced approach to deficit reduction that carefully combines spending cuts and revenue increases, citing the balanced budgets achieved under the Clinton Administration as proof that such a plan could be politically viable. Gregg again pointed to the Simpson-Bowles commission, in particular the tax proposals that were modeled on the revenue-neutral 1986 tax reform, as an example of pro-growth reform.
Enzi concluded the questions by asking about the proper role of the executive branch in the budget process, and the witnesses had different opinions. While Gregg thought that getting the President involved earlier would better facilitate smooth and timely budgeting and appropriations, Conrad expressed substantial reservations about Congress ceding any more authority to the President than it already has. Enzi observed that the Office of Management and Budget, the Senate Budget Committee, the Senate Appropriations Committee, and the Treasury all use completely different formats for the budget, which he thinks is intentional so no one can follow the money. His final question about the virtues and viability of a biennial budget process received support from both former chairs.
In his closing remarks, Enzi observed that the Senate Budget Committee and the Senate Appropriations Committee may be misnamed, considering the Appropriations Committee’s dominance over the budget process. He mused that the Appropriations Committee should take on the budget resolution, thereby becoming the “Budget and Appropriations Committee.” As for the Budget Committee, he suggested that it be transformed into the “Debt Control Committee” and tasked with long-term deficit reduction. Finally, Enzi expressed optimism that this is a good time to pursue budget process reforms, since neither party knows who will control the Congress or the White House after the upcoming presidential and congressional elections.
For more information on possible budget process reforms, see:
Former Senator Conrad’s Recommendations:
- Allow any Senator to bring a budget resolution to the floor for immediate consideration if the Budget Committee passes a budget resolution but does not bring it to the floor within ten days. Congressional leadership knows that if the Budget Committee takes action on a budget resolution, even if the budget never goes to the floor for a vote, it blocks any member from offering a resolution that would require consideration of the whole membership. Because leadership wants to shield members from tough votes, they don’t permit a budget resolution to be considered by the full Senate.
- Reform “vote-a-rama” by establishing a filing deadline and a limit on the number of amendments. “Vote-a-rama” is a series of floor votes on amendments, some with almost no time for Senators to review, to a Senate budget resolution. It is often hours-long, lasting late into the night, and it presents a significant hurdle to passing a budget because leadership wants to shield members from politically tough amendment votes. I agree with a proposal that Chairman Enzi has made previously to limit the total number of amendments, with an even split between majority and minority, and institute a filing deadline so Senators have proper time to review amendments before voting.
- Make the budget process more efficient by adjusting the federal fiscal year to match the calendar year, moving to biennial budget resolutions, and examine the tradeoffs from biennial appropriations. It is worth considering creating a process to lock in 302(a)s in law after House and Senate elections.
- Amend the debt ceiling to lessen the likelihood of default and couple it to revenue and spending levels in the budget resolution. Reducing the risk of default would contribute to curtailing the crisis atmosphere that overshadows the budget process. Yet, it would be imprudent to eliminate one of the remaining fiscal constraints in the process. Instead, lawmakers should have to vote for a debt ceiling increase at the time they vote for the spending or tax legislation that would increase the debt. This reform would lead to greater accountability. A failsafe option would be to give the President the ability to lift the debt ceiling if Congress does not act. This change can be partnered with a requirement that the President submit a plan to set and meet fiscal benchmarks to reduce projected debt.
- Prevent or reduce the likelihood of government shutdowns by implementing automatic Continuing Resolutions (CRs) or a fast track process for limited duration CRs. Such CRs should provide funding at the level of the previous year without anomalies. This change could be paired with incentives for lawmakers to complete appropriations on time.
- Prohibit lawmakers from using reconciliation to increase the deficit within the ten-year budget window. When I was Chairman of the Senate Budget Committee, we enacted a Senate rule with this prohibition. Policymakers should take it one step further by passing this requirement in law.
- Curtail gimmicks by requiring all budget resolutions to use the CBO baseline and require all mandatory spending and revenue changes to be shown. If we’re going to measure the fiscal impact of potential legislation, it’s imperative that we all use the same measuring stick.
- Compel lawmakers to take a distinct floor vote to waive any Budget Act or PAYGO point of order. Simply put, lawmakers should be accountable to their constituents if they are going to suspend budget rules, and constituents ought to know when and how often their elected representatives willfully ignore their own rules intended to instill fiscal responsibility.
- Include tax expenditures and mandatory spending within the normal budget process, creating more parity with discretionary spending. Mandatory spending programs and tax expenditures ought to be reviewed on a regular basis. Ideally, policymakers would create multi-year budgets or limits for both. Budgeting is an exercise in tradeoffs, and all budgetary resources should be on the table.
- Create a requirement that presidential and congressional budgets include estimates of budgetary impacts for twenty years. Lawmakers and the public should have information about how revenue and spending changes would affect the budget beyond the current ten-year budget window because our budget challenges are not limited to ten years. Estimates for second-decade impacts need not be as detailed as the year-by-year figures provided for the first decade but should give a sense of the direction and magnitude of the change.
- For all estimates of legislation by CBO, require interest to be included in the cost. Unless it’s offset, every piece of legislation has an interest component to its cost. Choosing not to include that component in a cost estimate means choosing not to understand its full cost. This shift will guarantee the full fiscal impact of legislation is quantified for lawmakers and will better emphasize the benefit of paying for new legislation. Senator Daines (R-MT) has introduced legislation in the Senate to do this. At the very least, interest cost should be a memorandum line.
- Implement multi-year debt-to-GDP benchmarks to shrink debt relative to GDP. Through the Budget Committees, use expedited procedures that encourage meeting the debt targets with budgetary triggers if Congress fails to do so. This recommendation is based on the Peterson-Pew Commission on Budget Reform’s Getting Back in the Black report.
Former Senator Gregg’s Recommendations:
- Reconstitute the Budget Committee. Its membership should be made up of the senior members of the committees most affected by the budget. One-third should be from the Appropriations Committee, one-third from the Finance Committee and one-third from the general membership. The respective party leaders should choose the chairperson and ranking member from the general membership. This would create a greater likelihood of buy-in from these powerful committees and reduce the forces that are naturally at odds with the effort.
- Make the Budget Committee truly bipartisan. Its membership should be divided fifty-fifty between the parties with the chairperson being from the majority party. This would hold both parties accountable for passing, or not passing, a budget. It would also reduce partisan friction in the process.
- Set a long-term debt-to-GDP ratio target. If possible, the same sort of ratio should be used to set limits on spending and tax policy.
- Prohibit consideration of appropriations bills on the Senate floor until a budget has been passed and establish enforcement mechanisms. Spending on discretionary programs and major entitlements should be reduced by five percent from the prior year and revenues from payroll and Medicare taxes should be increased by five percent if no budget is passed. This would put extreme pressure on the bipartisan committee and the Congress to produce and pass the budget.
- Break out the largest entitlement programs as separate budget items. Congress should have the authority to direct its review to reach certain goals relative to spending in context of the debt-to-GDP ratio with a structure that crosses committee lines of jurisdiction and engages all the affected committees in a single process of review.
- Create a capital expenditure budget for the federal government. The process would coordinate all committees of jurisdiction and allow Congress to better understand how spending is allocated between investment and consumption.
- Increase the threshold for points of order to increase the deficit or exceed budgeted spending levels. The minimum required threshold should vary depending on the size of the tax cut or spending increase in question, up to a 67-vote threshold.
- Move to a biennial budget. It should include five and ten-year estimates and instructions for how to reach long-term targets for debt, deficits, spending, and revenues as percentages of GDP.