More on the Proposed Budget Process Reforms

As we reported on The Bottom Line the other day, Republican members of the House released a set of 10 pieces of legislation they argue would improve the budget process. One of the bills, “The Expedited Line-Item Veto and Rescissions Act,” has bipartisan sponsorship from Rep. Chris Van Hollen. It is exciting to see lawmakers taking such a comprehensive approach to try to reform the country's broken budget process, an effort we've been engaged with for some time through the Peterson-Pew Commission on Budget Reform.

Some of the bills are similar to proposals supported by the Peterson Pew-Commission, and can be found in some form in one of the Commission’s two reports: rescission authority and moving to fair value accounting for government liabilities. Further, CRFB President Maya MacGuineas has also recently testified before both the House and Senate Budget Committees on budget process reform – including on biennial budgeting. You can read the list of changes here, but we will briefly get into some of the meat of the package in this blog.

One measure would change the annual Congressional budget resolution from a concurrent to a joint resolution, meaning that it would now need the signature of the President, and thus would have the force of law. This change would get the President more involved in the budget process, however, it would not force Congress to actually enact a resolution, a problem we've been experiencing in the past two years given all the CR's and possible government shutdowns.

A few other changes fall under the designated category of "Spending Control." These include a bipartisan proposal to give the President enhanced rescission authority (a cousin of the line-item veto), which PPC endorsed in its Getting Back in the Black report. Rescission authority is a good tool for the President to keep Congress honest, although it will not come close to solving our budget problems. Another "spending control" piece is legislation that would limit spending to the rate of inflation, backed up by a sequester (automatic spending cut) of up to four percent of a program's spending.

Other pieces of legislation fall under the category of increasing oversight. Rep. Jason Chaffetz's (R-UT) "Review Every Dollar Act" is one example. The bill requires reauthorization of all federal programs, but it's unclear if tax expenditures are included, move all Pell Grant spending to the discretionary category, require Congressional funding of regulations that require new spending, and require revenue transfers to the Highway Trust Fund to be offset. Because so much of the budget is on "autopilot" -- which leads to significantly less discussion over the merits of certain programs, how to improve them, and what funding levels are necessary -- this bill could create a smarter budget.

Finally, a series of proposals fall into the category of increasing transparency. There are three bills that fall into this category. The first by Rep. Mulvaney (R-SC) would among other things, extend the 10-year budget estimate window for CBO and OMB, and would require OMB and GAO to submit annual reports on "unfunded liabilities." Rep. Garrett (R-NJ) would put GSEs "on-budget" to better show their budgetary impact, bring the US Postal system into balance, and require the use "fair value" accounting principles. The last bill, by Rep. Price (R-GA), would require CBO to produce macro-economic estimates of the impact of "major legislation."

Overall, budget process reform is a needed part of any fiscal reform -- the current system is not working, nor does it serve the public well. However, budget process reform will not fix our fiscal imbalance by itself. For that, lawmakers have to enact changes to federal revenues and spending. That being said, incorporating many of these reforms would certainly help our budget process and may even aid the goal of fixing our looming fiscal problems.