Five Proposals to Fix a Broken Budget Process

Passing a stop gap measure that covers half of the fiscal year is one more sign of how broken the U.S. budget process is

By Mark Strand

Congress comes back in session next week.  The House is expected to pass a “short-term” continuing resolution (CR) to carry this year’s budget into next year and avoid a government shutdown on October 1. 

But let’s get one thing straight: a six-month CR is not “short-term” by any stretch of the imagination.  Half of the fiscal year would be covered under the previous year’s terms.  Once again, Congress refuses to meet its obligation to pass all 12 appropriation bills by October 1.  This year, they have not even gotten close.

While this particular proposal is probably doomed from the start (more on that in the future), it nonetheless shows how far Congress is from doing its job and passing a budget.

The Constitution assigns the job of spending, taxing, and borrowing to the House of Representatives. Yet, by their inability to pass a budget, both parties seem determined to shirk their responsibility.

Continuing resolutions differ from normal appropriation bills in a few significant ways. One important distinction is the duration each is in force. Regular appropriation bills usually last for the entire fiscal year. CRs, however, can vary in length. One type, an interim CR, is in effect only for a specified time, such as three weeks or a month and a half. The second type, a full-year CR, provides funds from the time it goes into effect until the end of the fiscal year. Some CRs combine the two, providing full-year funding for some budget items and partial funding for others.

Continuing resolutions establish what are called “rates,” levels of funding for government programs. Sometimes, CRs provide funds at the same levels as the previous year. Sometimes, they provide more money to account for inflation and other price increases that would inhibit the effectiveness of programs if they were denied additional funds. Interim CRs often will set spending limits this way. Full-year CRs can also provide funding via spending rates like interim CRs, but they might incorporate the language of an appropriation bill floating around the House or Senate. Passing a CR is not just an accounting trick played by Congress; it has consequences. 

As Defense Secretary Lloyd Austin has said, year after year:

“While the short-term CR passed by Congress was a necessary measure to keep the government open and provide additional time to reach agreement on full-year appropriations bills, some have even suggested a CR could last an entire year, an unprecedented move that would cause enormous, if not irreparable, damage for a wide range of bipartisan priorities – from defense readiness and modernization, to research and development, to public health.”

All the new programs in the budget cannot start until the regular appropriation bills pass.  The old wasteful programs cannot be discontinued until the new appropriation bill passes.  Bureaucrats are left in the lurch; some will do nothing, while others might be tempted to get creative.  Either way, Congress is cutting itself out of the decision-making process, relegating it instead to the Executive branch by shirking its fiscal responsibility. 

According to the Constitution, Congress has one essential job: making decisions about spending, revenues, and debt. It seems futile to hold elections after another for a job that no one is willing to do once they get to Congress.

Perhaps this is because the budget process has been broken for a quarter of a century. The last time it worked according to the law and on time was when Bill Clinton was President, and Newt Gingrich was Speaker. It is time to fix what is broken so that Congress can meet its Constitutional responsibilities.

The next Congress should reform the budget process to prevent government shutdowns, make the budget process more manageable, restore its oversight function by incentivizing the authorization process, reviewing all federal programs on a six-year cycle, and changing the start of the fiscal year.  Here are five ideas that Congress should consider.

Automatic Continuing Resolutions

The deadlines in the current budget process are ripe for partisan exploitation. One party can use them to exact concessions from the other and hold up appropriations for unrelated budget items. An easy way to end the incentive for a budget shutdown would be to pass a law requiring an automatic continuing resolution if appropriation bills are not passed by the start of the fiscal year. Since one of the main incentives for delaying the passage of appropriations is the leverage a government shutdown creates, an automatic continuing resolution eliminates the possibility of a shutdown.

Members of Congress are introducing legislation along these lines. Senator James Lankford (R-OK) has introduced the End Government Shutdowns Act. Senator Rand Paul (R-KY) has introduced a similar bill. House Republican Whip Tom Emmer (R-MN) has introduced a bill in the past to do the same thing in the House. This legislation provides an automatic continuing resolution for 90 days at the previous year’s levels if an appropriation for some activity or office has not been adopted by October 1. After that, the funding is cut by one percent every 90 days. It would prevent a shutdown, and the spending reduction would provide a strong incentive to finish the normal appropriations bills, which could fund the government at adequate levels.

An automatic continuing resolution would end the practice of using government shutdowns as leverage for policy debates. It is a powerful option since both parties have funding priorities they want to protect. Republicans might wish to increase defense spending, while Democrats may be willing to make a deal in exchange for hikes in healthcare spending. Both sides in this example have potent reasons for completing the budget process on time. The idea is to change from the current state of affairs that creates an incentive for a budget shutdown to one that creates an incentive to complete the budget process.

Biennial Budgeting

Automatic continuing resolutions are a stopgap and cannot replace a functional budget process. Biennial budgeting should be the centerpiece of a reformed budget process. Biennial budgeting switches all or part of the congressional budget process to a two-year cycle rather than the current annual one.

Every two-year Congress would have its own budget and two years to complete the required authorization bills. One variation of biennial budgeting would require the entire budget process, including appropriations, to be completed every other year. Another would have the budget resolution every other year, but lawmakers would wrangle through appropriations bills annually. Decreasing the frequency of one or more steps in the budget process can eliminate the opportunities for time-consuming legislative conflicts.

Lawmakers can then use the time they spend on appropriations for other priorities.

This reform has been discussed for decades and is a fix that many people in both parties have supported. Biennial budgeting should be a major and relatively uncontroversial part of any reform package.

Fix the Authorization Process

Despite the rules against unauthorized appropriations, Members of Congress routinely pass them, preferring to ignore this procedural requirement rather than shut down all or part of the government due to the failure to pass appropriation bills on time. The House works around the rules prohibiting unauthorized appropriations by using the Rules Committee to waive points of order against them or dispensing with them in other ways. Congress is well within its rights to dispense with the rules against unauthorized appropriations. But it’s a fool’s errand since by doing so, Congress reduces its constitutional power to hold the Executive Branch accountable.

The sheer size and scope of the Federal Government and the complexity of the authorization process means Congress often fails to authorize some programs before the new fiscal year. As a practical matter, Congress frequently works around the rule on authorizations to prevent a government shutdown. However, since the authorization process aims to ensure oversight and accountability, as well as create new programs and eliminate ineffective ones, using these waivers signifies a failure in the budget process.  Efficiency is not always the same as effectiveness.

The fact that appropriations are unauthorized might seem like a parliamentary triviality, but authorization bills provide instructions to agency officials. In the absence of authorizations, bureaucrats have greater influence over how an agency will carry out its mission – and if the committee persists in its failure to pass authorizations, an agency eventually stops paying much attention to it.  Although there may be some capable and well-intentioned public servants in the Executive Branch, the Constitution gives the responsibility for setting policy and spending money to Members of Congress since citizens can hold them accountable at the ballot box.

Aside from setting policy, the authorization process is the key to Congress exercising Executive Branch oversight. In theory, authorizing committees can exercise oversight powers independent of the authorization process. Still, few things change how an agency is run, like the prospect of losing money or being subjected to a grilling at a public committee hearing. Today, with unauthorized appropriations routinely flowing to government agencies, there is no incentive for these agencies to respond to authorizing committees since these committees cannot turn off their funds if they do not reauthorize or enforce them.

Congress can enhance the authorization process in several ways.  It can reduce the spending levels for unauthorized appropriations, incentivizing Appropriators to encourage the authorization process.  Congress can also make those sections of an omnibus appropriation bill that are unauthorized subject to an open amendment process on the Floor, making the Committee of the Whole House an ad hoc authorization committee. 

Six-Year Sunset Cycle

All federal programs should have a sunset date, at which point Congress must specifically renew or terminate them. This will force authorizers to do their jobs by reviewing current programs and cutting out waste. Besides providing an opportunity to eliminate or consolidate existing programs that have not been reviewed for years, it would incentivize Congress to treat the authorization and appropriation process more seriously. If a program is sunset, either deliberately or by default, the Appropriation Committee would be prohibited from appropriating money for that program.

A six-year cycle would allow Congress to review one-third of programs each Congress. It would provide for public debate during elections for Congress, knowing specific programs would have to be considered in upcoming Congress. 

For political and practical reasons, Congress could exempt some programs from the sunset provisions, though the more popular the program, the more urgent the need for periodic reviews.  One great benefit of sunset laws is that they require a periodic review of all federal programs.  As pressure is increased to reduce the size of the discretionary budget, both parties will have an incentive to eliminate wasteful programs to preserve programs they support.

Changing the Fiscal Year

Under the category of “Who are we kidding?” Congress should accept reality and change the start of the fiscal year to January 1. Congress never completes its work by October 1, and given that the entire process is too big and too complicated, it should not surprise any of us. Congress has not passed the budget on time and according to law since 1996.

Typically, the budget process is initiated by the President submitting a budget on the first Tuesday in February. President Biden did not submit his budget until March (President Obama was the worst – always late by months). Then the Congressional Budget Office and the House and Senate Budget Committees are supposed to review the President’s request, hold hearings to get the views of all the Committees and come up with a budget blueprint by mid-April that must pass both Chambers (the President does not sign a budget resolution). In the next six months, according to the 1974 Budget Control Act, all authorizing committees should pass reauthorization bills that, in theory, become the basis for 12 appropriation bills. All these bills must then pass both Chambers and be signed into law by the President before October 1. In fairness to Congress, it’s practically a miracle that it ever worked. However, in the highly polarized Congresses of the 21st Century, the government has never completed the budget process on time and according to law. 

Making January 1 the start of the fiscal year would buy Congress another three months, lengthening the appropriations season to 11 months. If Congress passed a biennial budget, it would allow 12 months in the second year of a Congress to complete the appropriation process. Making this change also takes the end of the budget season away from the end of the campaign season, which heightens the chances for political shenanigans around such a critical function of Congress.

The arguments for extending the fiscal year based on experience over the last two decades are close to undeniable: Congress often does not finish its appropriations until December, so changing the fiscal year would conform the budget process to how lawmakers work today.

Conclusion

These five changes can be enacted within the current legislative framework.  Some of these changes can be accomplished by changing the House Rules at the beginning of the next Congress.  However, those rules would have to be tightly written to prevent the House Rules Committee from waiving those rules when it is politically convenient.  Others can be enacted by amending the 1974 Budget Act. 

The cure for the atrophy of Congress’ legislative muscle is to legislate more.  All these provisions would increase the responsibility of authorizing committee members, who comprise the vast majority of Congress. The prospect of eliminating and preserving programs in the authorization process would also create incentives for bipartisan compromise, resulting in larger majorities for legislation on the Floor. 

The current process is broken.  However, it would not be difficult if Congress wants to fix it.  Better now than during the inevitable fiscal crisis caused by out-of-control annual budget deficits and spiraling national debt. Before voting, ask your candidates for Congress what they intend to do to fix the broken budget process.