Bipartisanship Watch

The House Select Committee on Modernization unanimously approves biennial budgeting — a prudent step toward strategic planning & fiscal discipline...

US Treasury, image from CBO website

By Roger Scher

A Brookings Institution blog post this month reported that the Select Committee on the Modernization of Congress was reauthorized by Congress on January 4, 2021, extending its remit through 2023. The Select Committee was established in January 2019 to recommend how Congress could become “more effective, efficient and transparent”.

In Ten Point Plan: Strategic Planning for the U.S., my co-author Lucila Broide and I recommended in 2020 that: “Congress should permanently authorize and adequately fund and staff the Select Committee on the Modernization of Congress, charged with improving operations. This Committee should be directed to consider rules changes that reward consensus.” (See p. 31 of Ten Point Plan).

So, not quite the permanent re-authorization that we recommended, but not bad.

The House also approved the Select Committee’s 97 recommendations (issued in its Oct. 2020 report), which had been backed unanimously by all twelve Committee Members — 6 Ds and 6 Rs — appointed by Speaker Pelosi and Minority Leader McCarthy.

This post will focus largely on one of these recommendations — the call for biennial budgeting — given the unfortunate trajectory to the stars that America’s government debt is on.

On fiscal policy, the Select Committee urges Congress to:

  1. Require an annual Fiscal State of the Nation, a practice that the Brookings blog suggests would provide an important baseline of facts and figures for making budgetary decisions.
  2. Require a biennial budget resolution alongside annual appropriations bills. This would institutionalize planning ahead two years instead of just one.
  3. Implement a deadline for Congress to complete action on a biennial budget, giving Congress an additional two weeks to consider budget proposals.
  4. Require that the President submit an annual supplemental budget by Dec. 1, in order to provide enough time to Congress.
  5. Evaluate the effects of the biennial budget process on the work of the Budget and Appropriations Committees.
  6. Strengthen budget enforcement through the reconciliation process, by permitting budget reconciliation’s 51-vote threshold in the Senate (vs. the 60 required for other legislation) only for deficit-reducing bills. Today, all fiscal legislation, whether it increases or reduces the deficit, can pass via reconciliation.
  7. Allow more information to be included in the budget resolution, including on tax expenditures (e.g tax credits, exclusions, and deferrals), providing a more transparent view of public finances.

Biennial budgeting is exciting because it represents a step in the direction of the international best practices of medium-term budgeting and strategic planning, endorsed by the OECD and the IMF, and put forth strongly in Ten Point Plan.

Biennial budgeting could help align the federal budget with national goals and ensure the long-run sustainability of public finances. This would strengthen the credit quality of the national debt and likely be seen positively by the credit rating agencies in their consideration of the U.S. sovereign rating.

The Brookings blog suggests that the reconciliation reform — by sharply restricting reconciliation to deficit reduction — is perhaps the most radical recommendation. Such a requirement would not have allowed President Biden’s American Rescue Plan to move forward. This may prove challenging to pass. And, while sound from a fiscal standpoint, this provision could increase gridlock.

Other countries have adopted medium-term budgetary planning including fiscal rules that cap spending or deficits. Such practices remain elusive in the U.S. context. The OECD and the IMF highly recommend such a rules-based approach to fiscal policy.

Tools to cap or sequester spending, or impose a debt ceiling, have failed in the U.S., often aggravating gridlock, rather than being accepted broadly across the political spectrum and civil society, as necessary to stabilize the trajectory of government debt.

Biennial budgeting represents a modest step toward the U.S. government thinking beyond the short term, by introducing a structure whereby government begins to plan for the future, the way many of America’s peers do. Having the bipartisan imprimatur of the Select Committee is valuable.

Unfortunately, also part of the Select Committee’s recommendations is a return to earmarks, which are gaining increasing bipartisan support. Now dubbed the “Community-Focused Grant Program (CFGP)”, the Select Committee’s proposal “allows Members of Congress to advocate for district-specific projects requested by the communities themselves. The process is grounded in community input, bipartisan support, and unprecedented transparency.” This new vehicle applies to local governments and non-profits, not to for-profit business, and promises transparency through online applications.

Trouble is the country cannot afford earmarks right now. Money for earmarks would be better spent on other priorities that enhance U.S. competitiveness, such as education and job training, anti-poverty programs, and green R&D and investment.

You can’t open all spigots at once.

House Appropriations Chair Rosa DeLauro supports earmarks, as does much of the Democratic leadership. Minority Leader McCarthy has likewise signed on to bringing earmarks back. Bipartisanship is easiest when both parties go to the trough.

Reintroducing earmarks wouldn’t be such a problem if debt to GDP was not at an all-time high of ~130% of GDP today, breaking through the last high of 121% set the year after WWII. And, with deficits in double digits, government debt is set to rocket higher, perhaps as high as 235–260% of GDP by 2050.

Another Brookings blogger has argued ardently in favor of earmarks. John Hudak’s argument is that earmarks, at ~$12 billion, represent only 1% of the budget, and that local community organizations, constituents, and Members of Congress themselves are the best positioned to determine which government investments are best.

Extending this logic to the extreme, though, would have government send every voter a check for her portion of federal discretionary spending, as s/he knows best how to spend her portion of government funds. Ridiculous, yes, but it is the logical extreme of giving decision-making power over federal spending to constituents, rather than to their elected representatives.

In a representative democracy, we elect people to make the tough decisions on how best to make the country a success. If they misallocate resources we vote them out. Maximum democracy is no substitute for strategic planning.

$12 billion in earmarks — just 1% of the budget — is not the right metric, except for the marketing of CFGPs. Equal to almost 20% of the federal education budget of $66 billion, earmarks are expensive. $66 billion for the Education Department budget, cut sharply under Trump, is a paltry amount for educating our kids. It represents an obscenely low 0.3% of GDP and 5.5% of the federal budget.

The Education Department budget is perhaps the most important line item for the nation’s future, funding skills acquisition for the future labor force. As noted in an earlier post, given that most of America’s K-12 education is funded locally by property taxes, an important role is played by the federal Education Department to offset this abjectly unfair funding, through Title I support of disadvantaged schools.

So, instead of earmarks, perhaps we should plow that $12 billion into education.

Regarding building bipartisanship, the Select Committee recommends:

  • non-partisan freshman Member orientations;
  • staffing decisions made jointly by the Speaker and Minority Leader;
  • opportunities for bipartisan interaction — at retreats and in Members-only spaces, via Member visits to the districts of colleagues in the opposing party, and by having Members in opposing parties sit next to one another in committees; and,
  • alternative committee hearing formats that promote policy debate rather than political grandstanding (such as moves to 30-minute blocks for witness questioning in place of the 5-minute-per-member practice, and to bipartisan pre-hearing committee meetings designed to pre-empt partisan surprise attacks).

The Select Committee’s bipartisanship proposals are in the right direction, but should be supplemented by changes with teeth (as proposed in Ten Point Plan).

A formal change to House rules proposed by the Problem Solvers Caucus, a bipartisan group in the House, would require that any bill with the support of two-thirds of House members should move to a floor vote within thirty days. Similarly, there is a proposal that amendments for bills with three-fifths support be prohibited. Such rules changes could operationalize consensus-building in the House. Likewise the Congressional “gang” approach could be harnessed again to roll out consensus legislation.

Point 10 of Ten Point Plan focused on political polarization — how tweaks to the rules and practices of politics such as these could potentially help counter gridlock in America.

Other Select Committee recommendations would:

  • streamline House processes;
  • increase transparency (notably of the activity of lobbyists);
  • and, strengthen Congress’s critical policy support organizations, e.g. the Congressional Budget Office (CBO), the Congressional Research Service (CRS), and the General Accounting Office (GAO), as well as make permanent the Office of Diversity and Inclusion, and restore the Office of Technology Assessment (OTA), Congress’s source of independent technical and scientific information, shut down in 1995 by Newt Gingrich.

The Select Committee on the Modernization of Congress is a rare focal point of bipartisanship in Washington. So, the extension of its life expectancy can only give us hope!

From OECD

Roger teaches political economy at NYU, is the former Head of Country Risk at GE, & co-author of Ten Point Plan for the U.S. (https://countrysuccess.net/)

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