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Bill Brown

A complicated man.

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Initially, there were no such animals as budgets in American legislatures. The various appropriations committees simply spent money. When they ran out of money—and they seldom did—they just stopped spending. Government was then a mere shell of what it is today and therein lies the rationale behind the complex budgetary and spending processes of modern legislatures. Because spending has passed the trillion dollar mark, budgets have become colossal undertakings requiring both branches involved to devote hundreds of staff full-time to their creation.

The reason for the complexity of the budget process stems from the nature of twentieth-century government itself. After the First World War, government's reach began extending. No longer was government simply responsible for maintaining the military and ensuring order, it was responsible for one's livelihood as well as failure avoidance. Programs multiplied and special interests were created. Since there is so much involved in passing a budget and every line item is potentially contentious, special rules and procedures were enacted to streamline the process—so that Congress is not occupied solely with devising a budget.

There is, though, another reason for the budgetary processes of today—the deficit. The deficit is the difference between how much the government extracts from the private sector in tax revenues and how much it spends. Deficits during the latter half of the twentieth century have soared to hundreds of billions of dollars. Deficits are very unpopular with constituents, but so is reduced spending. Therefore, special rules and processes were implemented to reduce deficits in the face of great reluctance to do so on the part of individual Congressmen.

The focus of this essay is on these very same special processes. First, I will examine the various House and Senate budget procedures. Then, I will show their evolution over time. Finally, I will discuss their effectiveness at reducing the deficit. In so doing, I will elucidate the reasons such processes are needed.

The basic framework of the budget enaction process was enumerated in the Congressional Budget and Impoundment Control Act of 1974—hereinafter the Budget Act. It required that a nonbinding budget resolution be passed by both houses in May setting forth targets for expenditures and revenues and the consequent deficit or surplus. Then the various appropriations committees would pass the appropriations bills for all of the federal programs. Sometime in September, the houses would pass another budget resolution that defined specific spending ceilings. The various appropriations committees would then 'reconcile' their spending bills with the finalized spending amounts of the second budget resolution. It also set the deadline for reconciliation at October 1st.

In addition to the budget deadlines, the Budget Act also created a few entities. It established a House and Senate Budget Committee. These committees were responsible for writing the budget resolutions to be presented to Congress and for packaging all the different reconciliation bills of the various committees into the final reconciliation bill. It also created the Congressional Budget Office (CBO) which was charged with providing Congress with budget analysis and economic forecasting to compare with the executive branch's Office of Management and Budget.

Finally, the Budget Act laid out restrictions on floor procedure. The Act barred nongermane amendments in the Senate, set a time limit on debate of twenty hours for floor debate, and, consequently, obviated the threat of filibuster or amendment-packing. The House simply had a time restriction on floor debate and a limitation on the number of amendments to be offered, since House rules already prohibited nongermane amendments. All these provisions form the basic budget process. That said, there have been many important modifications and evolutions since 1974.

The first major modification occurred a mere six years after the Budget Act. Then President Carter needed to implement policy changes that included unpopular budget cuts. The normal process for enacting these changes would have been untenable, since serious changes would have resulted during committee markup and passage was uncertain due to the innumerable special interests affected by the changes. In order to circumvent these obstacles, Carter and the Congressional party leadership included reconciliation instructions in the first budget resolution. This gave the appropriations committees an absolute spending level from the word go. The second budget resolution, required in the Budget Act, became irrelevant and was totally discontinued. In the end, Carter got his programs through and the deficit was reduced.

Carter's success at policy implementation through budgetary means was not lost on future Presidents and party leaders. President Reagan used it to increase military spending and decrease spending in a number of other areas for 1982. President Clinton used it extensively in the year after his election, 1993. Even though he had a Democratic Congress, he faced an uphill battle enacting his campaign promises because many of the provisions were unpopular even with Democrats. Conventional means of getting his program adopted were out of the question since Republicans would filibuster in the Senate and amend in the House.

So, he followed the leads of Carter and Reagan and got his program installed in the budget resolution/reconciliation instructions package that came from the party-leadership-dominated Budget Committees. This program included always unpopular tax increases as well as some controversial spending, or "investment," programs. As Sinclair put it, "[it] would require Congress to pass a budget resolution with instructions to the substantive committees to bring law in their areas of jurisdiction into conformity with the budget resolution and then enact a massive reconciliation bill incorporating all those changes." (Sinclair, 153) The resolution rolled through the Budget Committees on straight party-line votes and was enacted by both houses of Congress along party lines as well. Postcommittee adjustments during reconciliation enabled the Democrats to form a coalition necessary for passage of the reconciliation bill.

Another example of policy changes snuck into the budget process occurred during the height of the "Republican Revolution" in 1995. To further complicate matters, the Republicans sought to implement their Contract with America within one hundred days of the opening of the session, thereby delaying the start of the budget process. The Republicans, through adroit manipulation and unorthodox lawmaking, were able to cut domestic spending by 9% from the previous year.(Sinclair, p. 215) They could not have accomplished this without the budget rules and restrictions. For example, the protection from filibuster in the Senate eliminated the almost-certain threat of one by Democrats. In the House, special rules limiting the number of amendments kept the budget package from unraveling with alternatives.

In both the 1993 Clinton budget and the 1995 Republican budget, one can discern the power of the budget. By packaging a lot of different programs and taxes into one massive bill—which must be passed en masse—big changes can be enacted even if, individually, they would not have succeeded. Moreover, the budgetary rules that limit debate and amendment serve this same end; they eliminate the weapons that Congressional opposition traditionally uses to defeat measures.

Another major change in the budget process has accompanied the overwhelming concern with deficits and deficit reduction. The two primary vehicles for deficit reduction in the eighties and nineties have been Gramm-Rudman-Hollings and the Budget Enforcement Act. Gramm-Rudman-Hollings—named for the three senators who initiated it—started out as an amendment to a debt ceiling bill in 1985 and later became the Balanced Budget and Emergency Deficit Control Act. It stipulated that the deficit would be reduced $36 billion a year until it reached zero in 1991. To enforce this frugality, it further stipulated that if the deficit target was not met (with a $10 billion leeway) an across-the-board spending cut would automatically ensue in order to bring the deficit down to the targeted amount. This process is called sequestration. It further barred amendments to budget resolutions and reconciliations that raise the projected deficit above the correct level. In the Senate, the act required a three-fifths majority to overrule the presiding officer's determination of germaneness of an amendment to a reconciliation bill, where only a simple majority was required previously. The deficit was not reduced to zero by 1991 through a series of overprojections and creative accounting. The Gramm-Rudman-Hollings process was started anew in 1987 to reduce the deficit to zero by 1993. A similar result occurred and the deficit was not reduced.

The other major deficit-reduction measure was the Budget Enforcement Act of 1990. The BEA divided spending into four categories—entitlements, defense, international, and domestic—and established spending ceilings for all except entitlements. If Congress appropriates over the spending limit, then sequestration occurs but only in that category. It also dictated that all tax and spending legislation be deficit neutral—neither raising or lowering the deficit. In other words, if spending is increased, either taxes must be raised or other programs' spending must be cut. This is known as PAYGO—or pay-as-you-go—and a point of order can be raised on any bill that is not deficit neutral. The passage of BEA indicated that the federal government had given up on Gramm-Rudman-Hollings, since the BEA could create deficits even if all spending limits were meticulously followed because the focus was on spending rather than deficit reduction.

Obviously, the BEA was enacted with the purpose of paying lip service to deficit reduction without actually making hard cuts. It is designed to keep spending in check without reference to revenue. To the average person, it would appear that deficit reduction would result and thus ease political pressure to produce a budget with deficit-reducing characteristics. Gramm-Rudman-Hollings, which requires integrity to work, is simply too politically embarrassing to account for. With its finality and certainty—deficit down to zero by 1993—it is far too obvious to the layman that chicanery is afoot when 1993 passes and the deficit is still soaring in the stratosphere.

By far the best plan to reduce the deficit is to reduce spending absolutely. Projecting the future tax revenues and spending based on that is akin to anticipating future pay raises and charging up your credit cards to the hilt in the hopes that you will actually get the pay raises and thus be able to pay it off. Spending must be reduced regardless of tax revenue; spending must be incrementally ratcheted down a certain amount each year until it reaches 50% or less of base year spending.1 That will eliminate the deficit and start making headway into the staggering national debt. It would mean the termination of many government programs and would definitely be very unpopular, but it would achieve the goal of deficit reduction. It is, however, impossible in today's political climate, given the conflicting nature of the people's desires, viz., pining for deficit reduction without the requisite spending and program cuts.

1 Even 50% of base year spending is too high to my way of thinking, but that is the subject of another whole essay.