House Republicans Propose New Budget Rules

Incoming House Republicans set to take control of the House of Representatives next month have proposed new rules for the 112th Congress. The House GOP Conference will vote on the rules on January 4 and may amend them. They will be formally approved by the House when it convenes on January 5.

Several proposed rules will have a significant impact on budget and fiscal matters.

  1. An elimination of the so-called "Gephardt Rule". This would remove the rule which allowed the House to automatically pass a debt limit increase upon adoption of a conference report on the budget. Now, in order to increase the debt limit, the House would have to vote for it specifically.
  2. A new rule dubbed "Cut-go" will require any new mandatory spending to be offset with spending cuts elsewhere. Unlike the "Pay-go" rule it will replace, increases in taxes will not be allowed to offset new spending and tax reductions will be exempt from this provision.
  3. In each appropriations bill a "spending reduction account" will be created. The intent is to create a "lockbox" in which any spending in the bill that is cut through the amendments process will go towards deficit reduction, and not to offset new spending elsewhere.
  4. In addition to the traditional 1, 5 and 10-year budget projections for legislation, projections will be required for four additional 10-year budget windows and any bill that increases mandatory spending by more than $5 billion within any of those windows cannot be considered.
  5. A bill to reduce the House of Representatives' operating costs will be brought to the floor on January 6th.

Eliminating the Gephardt Rule shortcut and forcing an on-the-record vote on increasing the debt limit will compel members of the House to be accountable for what will be a very contentious vote when the time comes next year. Hopefully, this will motivate lawmakers to agree on a fiscal plan in advance of that point in order to make the vote more palatable.

The Cut-go rule is really a weakening of Pay-go. Taxes should absolutely not be left out of the equation, an omission that encourages the use of tax expenditures and the proliferation of back-door spending through manipulation of the tax code. We would be better off with a two-sided Pay-go that does not contain the enormous loopholes in the present version, and treats spending and revenues more symmetrically. History has shown that Pay-go coupled with discretionary spending caps is very effective in promoting fiscal discipline.

CRFB supports requiring longer-term projections of the budgetary impact of legislation. While it may be difficult to estimate 40-year costs with anything close to complete accuracy, it will prevent legislation with huge costs in later years from slipping through without the long-term costs being accounted for.

Finally, reducing operations costs in Congress is a good symbolic step. While it won't make much of a dent in the deficit, it will show Americans that Washington is willing to put its money where its mouth is regarding fiscal responsibility.

In general, the focus on promoting fiscal discipline in House rules is welcome--though the backward step to Cut-go is problematic. However, no rule will be effective if not enforced. In the past, fiscal rules have been routinely waived when they conflicted with legislative expediency. Any new rules must come with a commitment from leadership to enforce them.

And while Congress is considering changes in how it does business, at the top of the list must be reforming the dysfunctional budget and appropriations process. The drama over stopgap funding measures and the complete lack of a budget or any spending bills this year underscores the need for fundamental change. CRFB urges a complete reform of the system and hopes that all policymakers consider the recommendations in the Peterson-Pew Commission's most recent report, Getting Back in the Black.