Fixing a Broken Budget Process: Perspectives of Two Former Chairmen

The experience of the Budget Committee and its current and prior leadership only takes us so far, as my prior comments reflect. I would point to past successes due to bipartisanship and negotiation with the executive branch. Any reform should be done differently than the Joint Select Committee, which gave parties a veto instead of each house of Congress. Luckily, with each house in a different party, bicameralism has the same effect without the same insanity. Let us not mess with a constitutional process that has worked for over two centuries. 

The current executive should be included in any reform negotiations to the extent that they were involved in negotiating the unaptly named Balanced Budget Act of 2018. Like that Act, the budget caps should be increased to at least 2025 at realistic levels. More spending offsets liquidity in the asset markets created by the Tax Cut and Jobs Act. Letting the extra liquidity go into anywhere but the bond markets will set off an unwanted boom and bust cycle. 

We have already stated what could be a way to enhance the budget side, although some will not like it. Abolish the Budget Committees and create a Joint Committee to consider only the high-level spending, tax and entitlement goals submitted by the Administration to be enacted in a Joint Budget Resolution. If no agreement is reached by a reasonable deadline, the increased Budget Caps are automatically enacted as the next annual or biennial budget. If they snooze, they lose. That would put pressure to get something done. To add more pressure, delay delivery of detailed Administration and Current Services estimates until the Joint Resolution is signed or overcome by events. 

The real dysfunction in the process has nothing to do with the Budget Committee and is outside the experience of the witnesses. This is the inability to pass appropriations by the beginning of the fiscal year. This can also be solved with an automatic process, which deems the current services budget submitted under the Joint Budget Resolution or the Budget Caps deemed passed if not enacted by September 30th. 

There is likely some concern about enhanced executive power. These comments would be useless if the issue were ignored. 

The answer is bipartisanship to enough of an extent to override any veto of appropriation or joint resolution.  As some may remember, I defined bipartisanship as more than a process with a partisan veto.  It demands leadership and the willingness to simply disregard offending members, seeking votes and compromise with the other party. There is no organizational fix for this, just leadership and courage by leadership. 

The topic of bipartisanship always comes up when the current majority is facing an electoral rout. There is Balanced Budget Amendment which often includes super-majority requirement to either run a deficit or raise taxes. It essentially guarantees the new minority either a veto or more likely a way to stop the budget process. It is exactly the wrong thing to do. The right thing to do is to make sure the process moves forward automatically so that shutting down the government is never a possibility. 

A summary of our previous comments to this Committee on February 24th to responding to their proposals is attached as a reminder. They include automatic appropriations and an increased control period with higher appropriation levels until 2025, when the temporary provisions of the TCJA expire. 

In the short run, agreement is vital. In the long run, the only way to make budgeting work is adequate revenue from the savings sector, who use their excess for asset speculation rather than real growth. Investments as part of GDP come from consumption, not from the availability of capital. Capital can always be had, but until there are customers, there is no investment. 

The comments below detail how and why income tax payers owe $13 of gross debt for every dollar of taxes paid. The other way to look at this is by economic class. The following table should prove convincing.