September 17, 2014

Congress Should Not Duck Its Responsibility to Approve a Budget Resolution

We need a budget. 

Our deficit is hovering near post-WWII record levels and is on an unsustainable path. Our debt is projected to double over the next 10 years, reaching an alarming 90 percent of the gross domestic product (GDP). The International Monetary Fund (IMF) has warned developed nations, including the United States, to rein in their burgeoning budget deficits as the economy recovers. The public is increasingly, and justifiably, concerned about what all this means for the future.

Washington’s response to these developments has been inadequate. 

The President submitted a budget in February that would reduce the deficit, but not by enough to be sustainable. He has appointed a bipartisan commission to finish the heavy lifting. Its recommendations, however, will not come until late this year, if at all.

The Senate Budget Committee, to its credit, approved a five-year plan that would get the deficit down to a sustainable level over the short-term. However, because the plan relies on somewhat lower spending than the President proposed, while also assuming higher revenues from paid-for extensions of some current tax policies, it has not been warmly received and has not been slotted for consideration on the Senate floor.

With the President and the Senate Budget Committee having at least laid down their respective markers, the House must now take the next step by moving its own budget through committee.

Yet, there is an increasing possibility that the House will produce no budget at all; not in committee and not on the floor. If so, it would be a first since the current budget process was enacted in 1974.

Action in the House has been delayed by two factors. One is a dispute over the level of discretionary spending. Fiscally conservative Blue Dogs are holding out for a two percent cut in non-security spending in each of the next three years and a freeze in the two years beyond that. Progressives fear that this would cut too deeply into domestic programs and insist that defense cuts must also be on the table. 

This standoff may seem like a simple matter of splitting the difference except for the other factor holding things up: politics. 

There is simply no way to make the numbers look good. Deficits will remain unusually high over the next five years with or without a budget resolution, and heading into the fall elections, many Democrats do not want their names on a budget plan that looks so bad. Their solution? Don’t pass a budget.

This reluctance is understandable. Republicans are sure to pounce on the “irresponsible debt” regardless of their role in running it up. 

That is no excuse, however, for ignoring the problem. Quite the contrary. Failure to adopt a budget resolution when fiscal “resolution” is needed most would send the worst possible signal.

It would say to investors in Treasury securities, foreign and domestic, that the federal government is still in denial about its fiscal problems and has no plan to address the situation any time soon. It would say to the public that their leaders are incapable of leading or unwilling to do so. Neither signal is likely to provide “political cover.” 

House Budget Committee Chairman John Spratt (D-SC) has warned, “we’re approaching some kind of limit beyond which it wouldn’t be reasonable to do a budget resolution.”

This assumes, however, that the budget is a procedural matter whose importance will soon be overwhelmed by the press of other business. Yet, without a budget resolution Congress has no framework within which to enforce trade-offs among competing priorities. A more responsible approach would be for House and Senate leaders to declare that no other business will be considered until a budget is adopted. 

That tough stance may not be in the cards but, before giving up on a budget resolution, House Democrats should consider the consequences. Those who want tougher spending restraint and lower deficits are unlikely to get their wish by simply refusing to vote for a budget. All they will get is criticism for ducking hard choices.

Appropriations bills eventually have to pass or the government will shut down. Without a budget, Congress would likely “deem” spending limits for 2011. There is no reason to believe that such a cap would be any tighter than a cap passed through the regular budget process. On the other hand, adopting a budget resolution would allow Congress to demonstrate a more serious approach to fiscal restraint by including multi-year spending caps as recommended by the Senate Budget Committee.

A budget resolution is also needed to authorize the reconciliation process, which could prove crucial in enforcing the new pay-as-you-go law (PAYGO). Under that law, strongly supported by the Blue Dogs, offsets must be found for items such as a new jobs bill and extending estate tax or Alternative Minimum Tax (AMT) relief beyond 2011. This will require new revenues or substantial spending cuts that will be easier to pass in the Senate through the filibuster-proof reconciliation process.

The Senate plan acknowledges this reality. If some House Democrats now find the prospects of living up to the realities of PAYGO too daunting, they should not have voted for it in the first place.

The choice is clear. Congress can either fulfill its fundamental duty to pass a budget or punt. Punting may appear to offer relief from the short-term political pain of voting for a budget with big deficits but it would do nothing to relieve the nation’s fiscal pain. Meanwhile, any temporary political relief would soon be overtaken by the shame of having failed to enact a budget in the face of record deficits and rising debt.