May 26, 1976
Page 15599
MORE THOUGHTS ON SPENDING REFORM
Mr. MUSKIE. Mr. President, in the May 22 issue of the Nation, Richard Leone, State treasurer of New Jersey, has presented a thoughtful argument in support of the so-called "sunset" bill which was approved by the Subcommittee on Intergovernmental Relations on May 13 and is now pending before the full Government Operations Committee.
Earlier this spring, Treasurer Leone testified before the subcommittee on this legislation — S. 2925, the Government Economy and Spending Reform Act of 1976 — introduced by Senators ROTH, GLENN, BELLMON, and myself. His testimony at that time was most persuasive and so I am delighted to have the benefit of his additional insights on the "sunset" concept and on zero base budgeting, as presented in the Nation article.
Because of Mr. Leone's direct experience with zero base budgeting, and because of the large number of cosponsors S. 2925 now has in the Senate, I would like to share Mr. Leone's thoughts on this subject with my colleagues today. In particular, I would like to call attention to two observations which I find especially interesting.
First, Mr. Leone notes that the zero base approach tends to reveal just what the constituency is for every program. This is important in the democratic system. Programs ought to have a constituency or they are probably not worth continuing. There is probably nothing better than the discussion of total dismantling as a short cut to finding out who supports a program, how much importance they place on its continuance, and what those people have in terms of alternatives.
A second advantage of the zero base approach, notes Mr. Leone, is that it "allows policymakers to deal more effectively with the question of equity in spending public tax dollars. We frequently look at equity in terms of how money is raised — that is, who pays how much. But there are also arguments of equity in terms of how the money is spent. In New Jersey, for example, it costs us about $500 in State money to provide the rail subsidy for each rail commuter. Few of the latter group think of themselves as equivalent to 'people on welfare' but they cost us about as much. (Zero base) analysis makes it easier to determine who gets hurt and who gets helped by budget decisions."
S. 2925 does not require the implementation of zero base budgeting per se, as it was adopted in New Jersey's budgeting process. The bill does require, however, that the executive branch and the Congress review the consequences of eliminating individual programs and activities, as well as of funding them at below current levels, and so I think that Mr. Leone's comments are quite relevant to the upcoming debate on this legislation.
I ask unanimous consent that Treasurer Leone's article, entitled "How to Ride Herd on the Budget," be printed in the RECORD.
There being no objection the article was ordered to be printed in the RECORD, as follows:
THE "SUNSET PROPOSAL"— HOW TO RIDE HERD ON THE BUDGET
(By Richard C. Leone)
TRENTON.— Until recently, progressives viewed Congress as the enemy of change. Much was made of the "stranglehold" of ancient conservative committee chairmen and of the coalition between Republicans and Southern Democrats. The Congress proceeded slowly, if at all, and opportunities to delay or kill a program far outweighed the prospects for enactment. A liberal like Joseph Clark, then a Senator, called the national legislature "the sapless branch."
But for more than a decade now, the progressives have been dominant in Congress. Sometimes in partnership with the executive, but now more often against Presidential wishes, the Congress has been enacting and funding hundreds of progressive domestic programs. They have set before the people and the state and local governments, a $60 billion smorgasbord of grants in aid and related programs — up from $12 billion for this portion of the budget in 1966.
Much of what has been done has had a good effect; nearly all of it is well intentioned. But with power, sooner or later come: accountability, and these liberal successes have now spawned doubts, even among liberals, about the wisdom of all this spending.
A good many people who not long ago would have opposed anything that made it easier to kill a program in Congress, have come to believe that we should take a fresh look at the more than 1,500 domestic spending programs, and find new ways to evaluate the defense and foreign affairs portion of the budget.
A symbol of this changing attitude is a bill now before the Congress, sponsored by Sen Edmund Muskie (D., Maine) and supported by members of both parties, the so-called "Sunset Proposal." (The name originated with a proposal backed by Common Cause in Colorado.)
In effect, the bill would create new Congressional opportunities to kill programs and it would also subject programs to close review and critique from within the government itself. The essence of the proposal is that nearly all federal programs should expire after four years, unless reenacted by the Congress after thorough consideration by both the executive and the legislative branches. The bill also establishes a zero base budgeting system for the federal government, similar to that currently in use in several states, including New Jersey.
The notion is that all federal programs with the exception of some of the mandated expenditures, would be grouped into four categories:
(1) National Defense, International Affairs, General Sciences and Law Enforcement and Justice.
(2) Agriculture, Commerce and Transportation, Community and Regional Development, all Education, Public Assistance and other income supplements (public housing only).
(3) National Resources, Environment, and Energy, Health, Income Security (except public housing), and Veterans' Benefits and Services.
(4) Training and employment, other labor services, Social Services, General Government and Revenue Sharing and General Purpose Fiscal Assistance.
Each year, the spending authority for programs in one of the categories would expire unless individually reenacted after the review process. During the year preceding scheduled expiration the programs would be analyzed by the Office of Management and Budget, the Congressional Budget Office, and the General Accounting Office.
There is little doubt that the major public debate of the next decade will focus on seeking a solution to the increasing costs of government programs, given the limits of available resources.
These limits may soon become "real"in economic terms; perhaps even more important, they are already apparent in political terms. It is evident that, whatever the real economic constraints on government spending, we are at or very near the limit of the public's will to see a larger and larger share of national income spent in the public sector.
The Democratic Governors, who are getting so much attention for espousing this view, have not all abandoned liberal principles, nor have they given up the fight to reverse the trends of decay and urban blight in their cities. What they have been forced to do is recognize that there are limits to what their governments can do about these problems. This recognition, sooner or later, will have to come also at the federal level.
I draw a distinction between those officeholders who perceive their jobs — and popularity — as deriving from asking interesting questions about spending, rather than answering such questions. Governing, as I understand it, involves meeting problems — but given the inevitable limits on time and resources (financial and political) it also involves choosing among both competing demands for action and alternative responses to problems. And, already short of money, many urban governors and mayors understand, as Hugh Carey puts it, that the days of wine and roses are over. In New Jersey, in 1975, Governor Byrne noted, "There has been, perhaps, a touch of mindlessness in the steady increase in public expenditures. A period of fasting may be a good thing for state government ..."
There is a need in such times to heighten the "tension" in the process by which federal programs are developed. The forced reexamination aspect of the Sunset bill does just that, and is a sensible antidote to the way we have had it in the last ten years. Zero base budgeting may help as well.
From the standpoint of policy makers, the budget process must be judged ultimately by how well it helps them to evaluate and compare competing demands — and thus to make choices. In fact, given scarce resources, an effective process should appear to force choices. Too often these choices are masked by routine or are only vaguely perceived because of the sheer complexity of large public budgets.
The zero base approach moves policy makers away from the traditional "incremental" approach to budgeting by requiring every agency, in effect, to construct its budget from 0 to 100 per cent or beyond of current appropriations. At least theoretically, Congress and the President will then be able to review options for each governmental activity at various spending levels.
This approach also tends to reveal just what the constituency is for every program This is important in the democratic system. Programs ought to have a constituency or they are probably not worth continuing. There is probably nothing better than the discussion of total dismantlement as a short cut to finding out who supports a program, how much importance they place on its continuance, and what those people have in terms of alternatives.
The zero base approach also allows policy makers to deal more effectively with the question of equity in spending public tax dollars. We frequently look at equity in terms of how money is raised — that is, who pays how much. But there are also arguments of equity in terms of how the money is spent.
In New Jersey, for example, it costs us about $500 in state money per Medicaid recipient. It also costs us about $500 in state money to provide the rail subsidy for each rail commuter. Few of the latter group think of themselves as equivalent to "people on welfare" but they cost us about as much. This type of analysis makes it easier to determine who gets hurt and who gets helped by budget decisions.
The zero base approach is not without its disadvantages. It is hard to measure output in government, even harder to judge the value to society of output, and it is difficult to judge what you really buy at different levels of expenditures. Obviously, such an approach cannot be applied across the board to every governmental agency. Little will be accomplished by having the federal prison system prepare a zero budget, since it is not at present a realistic option to close prisons and release inmates. It may be an option, under severe fiscal pressures, to reduce particular programs within the prison system.
Despite the disadvantages, the zero base approach probably is superior to other ways of cutting a budget — especially to "across the board" cuts of a given percentage, which assumes that, no matter how scarce the resources, every program maintains its same level of importance. Zero base budgeting, indeed common sense, tells us that it is not so. Organizing a budget is not just an exercise in arithmetic. Some parts of a state budget, for example, pension payments, may grow at a mandated and very high rate. Others increase because of change in conditions or federal policy.
Whether the zero base approach would succeed, should it be adopted by the federal government, is open to question. In New Jersey, it has had a measure of success because the state has a constitutional requirement to maintain a balanced budget and has faced two years of marginal revenue growth and rapidly growing needs, particularly in three areas: Medicaid, Public Assistance and educational support for local school districts. Ultimately, the need to meet a target for budget cuts was more of a force in weeding out unneeded spending than any procedural change in budgeting.
The federal analogy with this process cannot be exact because of the crucial role federal spending policies play in the national economy, but the requirements of the new Federal Budget Act may be one way for Congress to force itself to meet budget targets. Another way would be to require agencies which propose spending increases in some of their programs to suggest offsetting cuts in other programs they administer.
In the end, when dealing with scarce resources and marginal dollars, all you can do is try to look at how many people are going to be affected and to what extent. In doing so, you may reveal what the extra dollars mean.
There is no magic in any budgeting system. The zero base approach is better than others but it cannot be a substitute, nor should it be, for the political process which determines budget outcomes. I suspect that as the competition for scarce public dollars intensifies, the purely "political" aspects of the process will become an even more important determinant of the way we spend public dollars.
The Sunset Proposal can force clear choices on the legislative and executive branches; it may help to stop the process of spreading money around, maintaining programs indefinitely and never facing up to the need to abandon failed activities.
There remains a nagging doubt, however, that because of the size and persistence of some of our social problems, it is unrealistic to test and perhaps abandon programs after three or four years. The political process tends to leaven attempts to concentrate resources and solve very deep human problems. Because of this tendency toward superficial and slow moving programmatic activity, it may be that even after a few years' experience with a program only a few of its options will have been tested. There is no reason why a good program analysis cannot point out that this is the case and urge the continuation of a program and perhaps concentration of resources.
Reassurance on this point is important if you believe, for example, that some of our key problems — education of the underprivileged, redevelopment of central cities, etc.— require a specially concentrated and tenacious approach.
But finally, one shouldn't worry much that programs will be judged too harshly, or curtailed prematurely. There is no evidence that the present system is working to meet social problems efficiently, or even providing the kind of framework in which it will be more likely that decisions to deal with those problems will be made. Euthanasia for failed or failing programs may, in the long run, enable us to breed a set of federal responses to our most urgent human needs which have the strength and focus actually to make a difference.