8. Congress should improve the scheduling of the congressional budget process. The delay of appropriation bills well beyond the beginning of the fiscal year has become a chronic problem that merits congressional attention. We have already noted the trend toward annual authorization as a major factor. Assuming that this trend is not reversed, Congress will soon have to give consideration to changes in its schedule or subject the executive agencies to severe planning difficulties. As a first step, Congress should accept the year-round session with scheduled recesses as normal. It is inconsistent to aim for a July 1 adjournment and press at the same time for a meaningful legislative budget with adequate review at the authorization stage.38 On the basis of a year-round session, the congressional leadership should then project a schedule for authorization and appropriation bills. The current pattern might be regularized with major authorization bills (NASA, foreign aid, etc.) to be completed by the first of September; appropriation bills between then and adjournment. This would in effect shift the fiscal year back six months to coincide with the calen dar year, while adding six months to the period of budget formulation and congressional review (see Figure I). An alternative and preferable course would be, again on the basis of a full-year.session, to advance the authorization phase from the beginning of the session to the previous September for programs requiring annual authorization. Most authorizations could then be completed by April or May; appropriations, by July first. In either case the executive budget process will have to make adjustments to accommodate the expanded congressional activity A six-month span. for the congressional budget process, confined at one end by the budget submission at the other by the new fiscal year is no longer a realistic assumption A Postscript on Expectations The strategy of reform suggested above is essentially a low "cost" strategy in that it does not presen an immediate challenge to the basi elements of the congressional powe structure. We have assumed that high cost strategy has little likeli hood of success without an unfore seeable change in the climate o congressional opinion. It does no follow, however, that the gains tha could be realized from the suggested "An alternative to an extended session would be a shift to a full committee worl week (as opposed to the current Tuesday-Thursday mode of operation). reforms would be inconsequential. Essentially, what we have done has been to take the basic power structure of Congress as given and to seek to rationalize it. In a system characterized by dispersed centers of power rather than hierarchy and command, we have emphasized steps to facilitate inter-unit bargaining, negotiation, and compromise. The recommendations for a Joint Committee on Fiscal Policy and a Budget Information Service attempt to institutionalize communication and information functions that are not being met by the current budgetary system. The reforms that have been presented assume that a need for rationalization at this level exists, and is perceived by a growing number of members of Congress. If this assessment is correct we can expect marginal, yet cumulative, gains in our objectives of economy, oversight, overall policy review, and budgetary control. A serious con gressional effort to rationalize its procedures, in itself, should also realize the gains of increased public prestige and a greater sense of congressional efficacy. The reforms suggested here develop a common theme. Congress should exercise its constitutional powers responsibly by accepting the full implications of a national role. This means equipping Congress and its committees with the means for informed judgment and intelligent action. Congress alone bears the responsibility for the failure to develop the reforms of 1921 and 1946. Further improvements in the federal budget process now await its approval. As Congress begins a new period of introspection, it would do well to consider its disappointing experience with fiscal reform and the still unrealized potential for effective congressional action. Charles L. Schultze Edward R. Fried Alice M. Rivlin Nancy H. Teeters SETTING PRIORITIES The 1973 Budget THE BROOKINGS INSTITUTION Washington, D.C. The Budget Process Itself Two major themes of this book call attention to the fact that the annual budget process is increasingly ill suited to the intelligent setting of national priorities: 1. Setting priorities no longer involves simply a determination of how much of the nation's resources should be devoted to a particular purpose; it also requires difficult decisions about how each purpose can best be accomplished. 2. Most important decisions do not have their major budgetary consequences immediately, but only after several years. Effective allocation of resources among alternative goals can be done only with a budgetary outlook extending over time, perhaps many years. To pretend that a $250 billion federal budget is freshly put together each year is an exercise in self-delusion, for both the Congress and the executive branch. From one year to the next, most of the changes that occur in budget expenditures are "built in"; that is, they result from decisions made in previous years. Thus, in a single year little can be done to restructure priorities. But, as Chapters 1 and 12 emphasized, over a longer period substantial changes in the allocation of budgetary resources can and do occur. Undue concentration on a single year's budget obscures the long-run changes that current decisions will actually bring about. When attempts are made to cut spending, the current annual budget process places most emphasis on actions that affect the coming year's budget, often at the expense of cuts that are more desirable but that may not affect expenditures for several years. Conversely, new programs or military weapon systems are inaugurated with major attention to their cost in the current budget, which may be only a small fraction of their total cost. Tax cuts are enacted with attention to their immediate budget impact and little consideration to their effect on the long-run balance of revenues and expenditures. While an annual budget is essential for purposes of economic policy, the single-year framework for conducting all of the budgetary procedures has outlived its usefulness. Both the Congress and the executive branch need to view the budget totals and major program decisions in a longer perspective. The following suggestions are one approach to achieving this purpose. 1. Each year the administration should present to the Congress a five-year budgetary outlook. Revenues should be projected forward on the basis of full employment conditions, existing tax laws, and any changes proposed by the administration. The expenditure outlook should reflect the future consequences of existing and currently proposed programs. The outlook should be presented in enough detail to show the factors responsible for major changes in revenues and expenditures: assumptions regarding the movement of prices, wages, and productivity should be stated; major components of the budget should be shown separately; and the causes of projected major changes -for example, military weapon procurement or increasing caseloads in welfare programs-should be spelled out. 2. Shortly after the budget is presented, the Joint Economic Committee of the Congress should hold hearings on the five-year budgetary outlook and issue a report evaluating its implications. 3. Each revenue bill that would change federal revenues by more than some minimum amount (for example, $25 million) should show its projected impact on revenues for three to five years ahead. Any major revenue bill should be accompanied by a restatement of the five-year budget showing how the bill would affect the balance of revenues and expenditures. 4. As was suggested in Chapter 5, the administration should submit to the Congress each year a five-year defense plan showing, by major categories and force components, the funds and expenditures needed annually to realize its objectives. After debate and modification, the Congress should authorize the five-year defense program and appropriate the necessary funds for its first year. In each subsequent year the administration would submit a revised five-year plan, adding on the new fifth year and proposing such changes in the existing five-year program as it deemed appropriate. 5. The civilian programs differ among themselves with respect to their budgetary and financial characteristics. Hence, not one but a number of procedural changes are called for, each tailored to the specific circumstances of the program: (a) Appropriations for all programs that provide grants-in-aid to state and local governments should |