September 10, 1973
Page 29038
CONGRESSIONAL BUDGET REFORM: AN ALTERNATIVE
Mr. MUSKIE. Mr. President, in a perceptive article in Sunday's Washington Post, Doctors Alice M. Rivlin and Charles L. Schultze of the Brookings Institution persuasively argued that present congressional procedures for considering the Federal budget are "incredible" and work directly against any kind of comprehensive, informed overview of national priorities. In the article, "Shaping the Budget: A Way Out of Chaos," these two distinguished former Government officials offer several thought-provoking proposals, including a 3-year budget, a procedure for Congress finally to reconcile its separate spending and revenue actions, and actions to combine the authorization and appropriations committees into single, program-oriented committees.
The authors also criticize the budget bills currently pending before Congress as measures which "would likely further discourage debate on national priorities. They would create excessively powerful budget committees that would dictate detailed spending ceilings early in each congressional session, thereby tying the hands of the other committees. Moreover, they would do nothing to remove the biggest obstacle to intelligent deliberation: the present inability of Congress to plan ahead."
Mr. President, I share many of these same reservations about the budget bill, S. 1541, currently pending before the Government Operations Committee. Other Senators on the Subcommittee on Budgeting, Management, and Expenditures, including Senators BROCK and SAXBE, had similar reservations and joined with me in offering substantive amendments which we felt would insure a meaningful debate on budget priorities early in each session of Congress at the same time that they would give individual Members of Congress and congressional committees maximum flexibility to determine firm spending controls. Although our amendments were defeated in the subcommittee, we intend to press for them when the full Government Operations Committee begins consideration of this critical legislation.
Mr. President, I ask unanimous consent that the article, "Shaping the Budget: A Way out of Chaos," and a summary and explanation of the proposed Muskie-Brock-Saxbe amendments to S. 1541 be printed in the RECORD.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
SHAPING THE BUDGET: A WAY OUT OF CHAOS
(By Alice M. Rivlin and Charles L. Schultze)
The incredible way that Congress deals with the federal budget – never deciding whether one program is more important than another, never looking much beyond the immediate, never considering whether a budget surplus or deficit is needed, never co-ordinating anything in this blueprint for the nation – has long been noted. But not until recently did it seem that this preposterous system might change.
Now both houses of Congress are considering budget bills intended to let the left hand know what the right is doing. While this is certainly a move in the right direction, the measures being considered were drafted with great haste amid growing animosity between Congress and the executive, and they seem likely to do more harm than good.
Indeed, rather than encouraging informed decision-making by Congress, the bills would likely further discourage debate on national priorities. They would create excessively powerful budget committees that would dictate detailed spending ceilings early in each congressional session, thereby tying the hands of other committees. Moreover, they would do nothing to remove the biggest obstacle to intelligent deliberation: the present inability of Congress to plan ahead.
What is badly needed instead is fundamental reform that would let Congress deal with a multi-year budget – the only way it will be able to work its will on priorities. This would still require the creation of budget committees, though not of the all-powerful kind currently envisioned. It would also require the streamlining of Congress by combining authorizing and appropriating functions.
LIBERAL SUSPICIONS
It will doubtless be argued that such steps would be politically difficult to accomplish. That is certainly true. But the fact is that any attempt to reform the shaping of the nation's budget, including those changes currently contemplated, will encounter serious political obstacles.
One can already find suspicions among liberals, for example, about major budget reform moves.
Until a few years ago, after all, the piecemeal strategy appeared to favor liberal legislation. Major new programs – social security, Medicare, Great Society programs – could be enacted because they had small initial costs and it was not necessary to worry about how they would be financed in the future. Deep down, many liberals appeared to believe that if the problem of choosing among programs is explicitly faced, and if new social spending is seen to depend on cuts in other programs or on tax reform the status quo will win. They are afraid that the only way to get social progress is to bring it in surreptitiously.
It would be a serious mistake, however, for them to oppose budget reform. Many voters may indeed have come to distrust social programs that concentrate on the needs of minorities and the welfare population. But there are common problems shared by the poor, the black, the blue-collar family and the suburbanite. Health insurance, fairness in taxation, pollution control, urban congestion and decay and a fair chance at higher education are but a few. Unless budget procedures are reformed, the chances of shifting priorities to provide money for this and other legislation over the next three to five years is virtually zero.
The situation today, it must be remembered, is far different from earlier periods of peacetime economic growth, when federal revenues grew more rapidly than the cost of maintaining programs already on the books. In those days the resulting "fiscal dividend" provided the funds to finance new programs or expand old ones. Hard choices did not have to be made; taxes did not have to be increased or older programs reduced to find room for new initiatives.
This is certainly not the prospect for the years ahead. The administration's defense policies call for a substantial increase in military spending. Domestic programs are larger than they used to be, and simply maintaining them will absorb more of the growth in revenues than previously. And the tax cuts of the past decade have reduced the revenues to be expected from economic growth.
In the next several years there will be no automatic fiscal dividend available for painless financing of health insurance, day care, aid to higher education, pollution control, the search for new energy sources or other initiatives. To secure any of these programs it will be necessary to find room in a tight budget by raising or reforming taxes or slowing the growth in military or other spending. Present congressional budget procedures are not adequate to deal with these hard decisions.
BACKDOOR SPENDING
In fact, current congressional budget procedures are not adequate for dealing with any questions of priorities. When the President's budget proposal reaches Congress today, it is pulled apart and considered in fragments. Hearings are held by authorizing committees dealing with particular programs or agencies, and separate bills are reported to the floor and voted on in each house.
More hearings are held in appropriations subcommittees, and appropriations bills for particular agencies are reported and voted on at different times during the year. Revenue measures to
finance these outlays are handled separately by different committees.
Even if they wanted to, the appropriations committees could not act on the entire budget. More than half the domestic budget – money for highways, social security, veterans' pensions, pollution control and a host of other programs is outside their purview, many of these "backdoor" spending decisions are not even reviewed every year. The social security program, for example, simply continues in the absence of a congressional decision to change it, with the amount spent determined by such uncontrollable factors as the number of eligible people who apply for benefits. Tax concessions to particular groups, such as oil depletion allowances, also continue in the absence of some explicit effort to change them.
At no point does Congress put these separate actions and non-actions together to see whether they make sense as a whole. A congressman or senator votes "aye" or "nay" on defense appropriations and again on housing, but gets no chance to compare the two and propose moving funds from one to the other. Spending bills are passed without questioning whether revenues will be adequate to finance them; taxes are cut without considering which expenditures will have to be sacrificed as a consequence. If appropriations appear to be exceeding revenues by more than the President regards as desirable, he vetoes the appropriations he likes least.
This situation would not be improved if Congress simply voted a ceiling on total spending that was lower than the sum of the individual appropriations. By itself, such a ceiling would hand the President authority to cut wherever he wanted and make a mockery of congressional authority over the budget. If the Congress is to impose its own priorities, it must consider the budget as a whole and make its own decisions about which expenditures are most important.
A FEELING OF POWERLESSNESS
Not only are budget decisions fragmented but they relate to one year only, and that year is frequently half over before the decisions are made. This lateness creates tremendous uncertainties, both for federal agencies forced to operate on continuing resolutions until their funds are appropriated and for recipients of federal funds. A school district, for example, usually does not know how much federal money it will receive until after the school year has started. Rational planning for the use of the money is impossible, and hasty, ineffective programs are the frequent result.
Even more important, preoccupation with the current year makes it almost impossible to make significant changes in federal priorities. Once a highway network or a nuclear carrier has been started there is tremendous pressure to finish it. Services to people – day care, mental health, manpower training – cannot be abruptly terminated or even altered without enormous disruptions in people's lives. Indeed, so many of the expenditures in the coming year have been determined by past decisions that Congress feels powerless to make major changes. This powerlessness would be greatly relieved by looking at major budgetary choices for the next three years. It would then be possible to contemplate phasing out some existing programs and using the released revenues, plus the additional funds made available by economic growth, to make major changes in what the federal government does.
The tax cuts enacted by Congress in 1969 and 1971 are good examples of the double failure of the congressional budget process: Failure to consider revenues and expenditures at the same time and failure to look ahead. The excess of projected expenditures over revenues that forced President Nixon to make such drastic slashes in his proposed budget for this fiscal year are the direct result of those earlier tax cuts. If Congressmen and senators had been forced to consider the impact of revenue reductions or future expenditures they might have shown less enthusiasm for cutting taxes.
COMPOUNDING THE PROBLEMS
These problems would not be solved by the two major bills currently being weighed. Rather, the measures – one stemming from the Joint Study Committee on Budget Control set up last year, the other from a Senate government operations subcommittee – would tend to weaken Congress' ability to make informed decisions.
Under both bills, for example, budget committees would submit for approval to each house, early in the session, overall spending ceilings for the coming fiscal year, subdivided into ceilings for each major spending category. Federal revenues and debt limit would also be fixed. Once approved by Congress in an omnibus resolution, the ceilings would be binding, subject to breach only by a two-thirds vote of Congress. The appropriations and other committees could work their will only within the initially set limits. Near the end of each session, the budget committees would submit a second omnibus resolution which could adjust the earlier ceilings on total spending or any of its components.
Setting such rigid and detailed spending ceilings early in the session clearly would let the budget committees lock priority decisions in place before the work of Congress had even begun. How could the budget committees set intelligent ceilings on particular areas in a short time and before any hearings had taken place? Most likely they would have to rubber-stamp the previous year's priorities.
The two current bills also would let members of the Appropriations, Ways and Means, the Senate Finance committees dominate the new budget committees. The Joint Study committee measure provides that two-thirds of the membership be selected from these committees; the Senate subcommittee bill would draw 40 per cent of the members from these panels.
This would greatly strengthen the hold these committees already have over Congress, concentrating power in the hands of those whose interests are with the financial and conservative aspects of the budget rather than with substantive issues of public policy. Moreover, how could these committee members, already swamped by their existing duties, do justice to the awesome responsibilities of the budget committees? Because budget committees would have great power, it is crucial that they reflect the views of the full House and Senate. The members should be picked from the Congress as a whole and serve staggered, rotating terms.
Finally, these bills would still leave the executive and the Congress with the impossible task of trying to shape priorities on the basis of a one-year budget, and they would add another layer of committees without eliminating the wasteful duality of authorizing and appropriating committees.
TWO BASIC CHANGES
There is no perfect way for 535 senators and congressmen to consider anything as complicated as the federal budget, but two basic changes must be made if Congress is to have any chance to make informed decisions.
First, it must deal with a multi-year budget. Specifically, it must require the administration to submit a three-year budget every year. Major debate and decisions should focus on the third year, although adjustments would have to be made in actions already taken for the two intervening years.
Second, Congress must have procedures for looking at all spending and revenue actions together and for making necessary adjustments to reconcile the separate pieces. Do revenues stand in an appropriate relationship to total spending? Do the cuts in some programs and the additions to others reflect the priorities of the nation as the Congress sees them?
These procedures do require the creation of a budget committee in each house to recommend to the full chamber ways of reconciling separate legislation with overall objectives. Such recommendations must be debated on the floor and be subject to amendment, but the debate must start with well-thought-out proposals, and there must be budget committees to make the proposals.
By itself, budget committees atop the already cumbersome congressional committee structure would be unfortunate. Instead, Congress should seize the opportunity to simplify the entire committee set-up. The dual system of authorizing committees and appropriations subcommittees should be replaced by a single set of "program committees" that would exercise both functions. This obviously would speed the decisions process by making it unnecessary for executive agencies to plead their case twice in each house. It would also eliminate the current farce under which authorizing committees dominated by liberals vote large authorizations which every
one knows will never be funded by conservative-dominated appropriations subcommittees.
THE 3-YEAR BUDGET
Under this plan, the President would be required to submit to Congress an updated three-year budget proposal every January. Last January, for example, he would have submitted proposed changes in the budgets already enacted for fiscal 1974 and 1975 and new proposals for fiscal 1976.
In each session the Congress would deal first with changes in the budget for the coming fiscal year. The basic decisions on this budget would have been made two years earlier, but reevaluation would be necessary, especially in the first year of a new administration. Even without a change in administration, reconsideration might be required by alterations in the economic outlook, natural disasters, or information that programs were not working as expected. The administration's proposed changes would be considered by the program committees and voted on by the Congress.
The budget committees would then review all of these changes and recommend any adjustments it thought were needed to reconcile them with fiscal and priority objectives. The committee proposal could be amended on the floor, but any amendments that added or subtracted funds would have to include compensatory changes in spending or an explicit change in the surplus or deficit. This process of amending the budget for the coming year, carried out on a tight schedule, would be over well before the end of June so that all agencies could start the fiscal year knowing exactly what appropriations they would have available.
Meantime, work would have started on more basic decisions about national priorities, those to be reflected in the budget three years hence. The main action would be in the program committees, which would hold hearings, listen to administration and opposition arguments, consider alternatives and report bills to be voted on by the full House and Senate. While the program committees would have both authorizing and appropriating functions, they would normally do their authorizing only every two or three years. In the intervening years they would consider the appropriation levels for programs they had authorized and use some time to find out how the programs were working.
The budget committees would play two roles in the process. At the beginning of the session they would provide estimates of revenues to be expected and probable costs of on-going programs and would propose a sense-of-the Congress resolution giving general guidance to the program committees in carrying out their work. This resolution would not tie the hands of the program committees, but would provide the occasion for a debate on priorities early in the session and an overall set of budgetary targets for that year's work. Time for this debate should be limited. Program committees would then act on the areas within their jurisdiction.
RECONCILING ACTIONS
At the end of the session the budget committees would play a crucial role in reconciling actions taken on the floor and reconsidering the priorities implied by these actions. Funds appropriated and revenues voted would be added up. All types of spending authority would be included – not only regular appropriations but various "backdoor" authority like social security and the highway trust fund.
The budget committees would consider the results and recommend changes in the totals or in the parts. They might recommend increasing income tax rates to bring revenues into line with fiscal needs or cutting appropriations proportionately to hold down spending. Or they might recommend cutting defense outlays to hold the tax line and still have room for new housing and education programs enacted earlier in the session.
These proposed changes would provide another opportunity for full-scale debate on major issues of priorities, a debate that would culminate in a vote on the budget three years ahead. A conference procedure would, of course, be needed to resolve differences between the House and the Senate.
Throughout the process both the budget and program committees would be aided by substantially increased staffs charged with analyzing administration budget proposals, developing alternatives, and commissioning studies to evaluate existing programs or develop new ones. These staffs, especially those attached to the budget committees, would provide analysis and information designed to elucidate budget decisions not only for committee members but for the rest of Congress as well.
Shifting to such a system would focus the attention of the Congress, the executive and the public where it belongs: on the major decisions that must be made now if budget priorities are to be altered three years in the future. It would provide a mechanism for debating future priorities as well as for adjusting short-run taxing and spending policy to the needs of the economy. It would simplify the committee structure and reduce the time consumed in separate hearings and presentations, and it would improve the flow of digestible information to the congressmen and senators who have to make the hard decisions about the nation's future.
SUMMARY AND EXPLANATION OF PROPOSED MUSKIE-BROCK-SAXBE AMENDMENTS
The series of amendments to be offered by Senators Brock, Muskie, and Saxbe are designed to strengthen and to reform the Congressional budget process.
The amendments will insure a meaningful debate on budget priorities early in each session of Congress; give members of Congress and Congressional Committees maximum flexibility during consideration of spending measures; and provide for firm spending controls on both the Congress and the Executive Branch.
These amendments would provide Congress with additional information it needs for meaningful budget consideration and with additional time to consider that information. Most importantly, they would force Congress to complete its consideration of the budget by the beginning of the fiscal year – and in no case later than by the beginning of its summer recess. Completion of budget consideration by Congress before the fiscal year begins or immediately thereafter will end the chaotic situation that now exists of government agencies not receiving their funds until several months after the fiscal year has begun.
EXECUTIVE SUBMISSION OF THE BUDGET
These amendments would provide the Congress with additional and more timely budget information by requiring the President to submit his budget in two parts.
First, by October 1, the President would be required to submit to the Congress a current services budget. This would provide the Congress with an estimate to spending for the next fiscal year based on current spending levels. A current services budget will ordinarily be a 90 to 95 percent reflection of the final budget, and will provide the Congress basic budget information to start its own budget consideration process. The current services budget submitted by the President – as would all Executive Budget submissions under these amendments – would include five year expenditure and revenue projections.
Second, the President's final budget would be submitted December 1. This earlier submission of the budget will not subject the Executive Branch to undue hardship because of the new Congressional Reconciliation process. In addition, with the current services budget as a base Congress will be in a better position to analyze the budget impact of policy changes by the Executive Branch as soon as the final budget is submitted.
FIRST CONCURRENT RESOLUTION ON THE BUDGET
Like Committee Print No. 2, these amendments would require enactment of a First Concurrent Resolution on the budget. This resolution would set out the following:
1. Total budget authority and total outhays;
2. Revenue estimate;
3. Estimated surplus or debt;
4. A breakdown of individual spending measures by the budget authority contained in regular appropriation bill categories and in permanent appropriation categories (backdoor and mandatory spending measures) by functional areas.
The timetable for consideration of the First Concurrent Resolution would be somewhat changed.
The Budget Committees in each House would be required to report the resolution to their respective Houses by March 15. By April 1, each House shall complete its action on the resolution, and by April 15, final Congressional Action on the First Concurrent Resolution shall have been completed. Action on these measures will be eased by the earlier submissions of the President's budget and the Current Services budget.
The date for final action on the resolution is moved up in order to allow the appropriations process additional time before Congressional action on the budget is finally reconciled. Because the First Concurrent Resolution contains a breakdown of budget authority by major spending categories, it should allow for a meaningful debate on Congressional budget priorities.
AUTHORIZING LEGISLATION
All authorizing legislation to be considered by the Budget Committees for the purpose of reporting out the First Concurrent Resolution would be enacted by March 1. With budget information submitted to the Congress as early as October 1, along with input from COB, it is anticipated that each fall Congress will, in effect, have an authorizing session where it enacts authorization measures for the next fiscal year.
All authorizing legislation for the next fiscal year must be enacted prior to June 30. If action on regular authorization bills is not completed by June 30, Congress may move directly to consideration of appropriations measures in those areas where authorizing legislation has not been enacted.
CONSISTENCY IN THE FIRST CONCURRENT RESOLUTION
Before action on the First Concurrent Resolution can be completed it must be consistent in that the sum of the budget authority contained in the breakdown of individual spending measures must equal the total budget authority in the resolution. In the event that is not the case after action on all amendments is completed, the resolution shall be recommitted to the Budget Committee to be made consistent. A consistent First Concurrent Resolution must then be reported within three days.
REPORT ACCOMPANYING FIRST CONCURRENT RESOLUTION
The report accompanying the First Concurrent Resolution should include the following items:
1. A comparison of the figures in the resolution with those in the President's budget.
2. A statement of the economic objectives underlying the resolution.
3. Five year projections of expenditures, revenues, surpluses and deficits.
SCOREKEEPING PROCEDURES
These amendments would add extensive scorekeeping provisions. The purpose of the scorekeeping provisions is to keep the Congress informed during its consideration of authorization and spending measures of how its actions correspond to the appropriate spending levels set forth in the First Concurrent Resolution.
The elements of the scorekeeping provisions include:
1. All reports of all committees shall include a section written in consultation with the director of the COB detailing:
a. How that bill would compare with the figures in the Concurrent Resolution.
b. A five year projection of the impact of the bill on expenditures.
2. The COB shall prepare daily tabulations of Congressional progress on spending bills.
3. After reconciliation COB shall prepare a report detailing a five year projection of the impact of Congressional action.
REAFFIRMATION OF CONGRESSIONAL SPENDING PRIORITIES AND RECONCILIATION
By June 30, Congress shall enact a bill that reconciles the actions it has taken on individual spending measures with the appropriate levels for spending it set out in its latest Concurrent Resolution. In no case can the Congress adjourn for its summer (August) recess before action on this bill is completed.
This process will not only allow the Congress to adjust its spending actions, but it will also permit the Congress to take a final look at its overall spending priorities and either reaffirm or adjust the priorities it established in the First or succeeding Concurrent Resolutions.
The process would work like this:
All Congressionally approved spending bills – including appropriations bills and backdoors – would have written into their enacting clause a provision triggering their going into effect upon the passage of the reconciliation bill.
If the sum of the individual spending measures approved by the Congress is equal to or less than the total spending ceiling in the most recently enacted Concurrent Resolution, then the Budget Committees would report and the Congress would enact a bill to trigger the previously approved spending measures.
If the sum of the individual spending measures approved by Congress exceeds the total spending ceiling in the most recently approved Concurrent Resolution, the Budget Committees would report and the Congress would enact a bill that makes the spending total in individual bills consistent with an overall spending ceiling. That bill can raise the overall spending ceiling to equal the total of the spending in individual bills; it can contain cuts in individual bills to meet the spending ceiling in the latest Concurrent Resolution; or it can make adjustments somewhere in between. In the case that floor amendments make the reconciliation bill inconsistent, the same recommital process should be followed as during consideration of the First Concurrent Resolution. The reconciliation bill, when enacted, would automatically trigger previously approved spending bills.
A key element of this reconciliation process is that it be completed before the beginning of the fiscal year – or as close to the beginning of the fiscal year as possible. If the reconciliation process is not completed before July 1, the government would operate at existing spending levels until the reconciliation bill is enacted.
The reconciliation bill is reported by the Budget Committee so that total spending can be controlled. This includes both backdoor spending as well as regular appropriations measures.