cooperation will emerge whether or not the President is formally a part of the process of devising the budget resolution. If conflict over budget priorities is significant, requiring that the President sign the budget resolution might even make useful dialogue and cooperation more difficult to achieve. The possibility of a veto might lead to heightened political posturing as each branch tries to pin the blame for a budget impasse on the other.

Another concern is that although a joint resolution would force Congress and the President to agree on the aggregate level of spending and revenues, it might not force them to confront specific policy disagreements. A joint budget resolution which allowed Congress and the President to avoid or delay negotiating individual policy questions would not necessarily enhance the quality or speed of later deliberations.

The Power of Congress Relative to the Executive Branch

In general, arguments in favor of a joint budget resolution posit that Congress would not be materially disadvantaged by allowing the President to be directly involved in negotiating the budget resolution. Therefore, if it would do no harm, even marginal improvements in either the character or timing of presidential/congressional agreement on the budget would be worthwhile.

Opposition to having the budget resolution enacted into law is generally rooted in the belief that it would compromise Congress's ability to express its policy preferences independent of the President's. Supporters of joint budget resolutions point out that Congress could still pass a budget resolution that was at odds with presidential preferences, just as the President could still submit a budget proposal that was "dead on arrival." In either case, the mandate to enact a budget resolution would not preclude either side staking out a position wholly unacceptable to the other as a position during the negotiation. More likely to be important in such a situation would be the potential for delay. Under current rules the House may not consider appropriations bills until after the budget resolution is adopted or May 15, whichever comes first, and the Senate may not consider them until after the budget resolution is adopted. Delays in negotiating a budget resolution acceptable to all parties therefore could also cause delays in the consideration of legislation necessary to implement it.

Despite this argument, the view persists that by giving the President the opportunity to veto something he does not now have the ability to veto would inherently undermine the position of Congress. Supporters contend that since the budget resolution must be implemented through enactment of public laws (which could be vetoed) granting the President the ability to veto the plan does not grant him any real additional power.

Opponents point out, however, that perceptions can be as powerful as reality, and that the question of negative perceptions may be as important as whether or not Congress would be materially disadvantaged. Perception by the public that involving the President meant Congress could not formulate budget plans on its own, or that a vetoed budget resolution represented an irresponsible Congress being "reigned in" by the President, rather than simply a negotiating ploy, could be problematic and difficult to explain.

Enforcement of Budget Agreements

Some have suggested that making the budget resolution into a law would add rhetorical weight to enforcement questions, but have little, if any, practical effect. This argument is built on the assumption that current enforcement provisions, based on chamber rules and procedural points of order, would continue to be sufficient. To the extent that violation of the terms of a joint budget resolution involved such procedural issues they would presumably be under each chamber's rulemaking authority, and therefore not require any different enforcement mechanism than is currently the case. In addition, subsequent enactment of implementing legislation would effectively supersede any conflicting provisions in a joint budget resolution.

Such arguments are also implicitly based on the idea that the format and content of budget resolutions will remain the same. It is likely, however, that what information would be presented in statutory language or in report language, and the effect of its relative placement, would become an issue, as would the possibility of additional enforcement mechanisms. The Budget Enforcement Act of 1990 is often used as an example of involving the President in negotiations about budgetary aggregates. The Budget Enforcement Act, however, also established enforcement mechanisms to ensure compliance. Enacting similar mechanisms (i.e., spending caps, pay-as-you-go) to enforce statutory budget resolutions should not be overlooked. Indeed the availability of such mechanisms could be considered an incentive (either positive or negative) for the making the budget resolution a public law.

Questions

1. In your opinion, what advantage would Congress derive from having the President sign the budget resolution? What advantage would the President derive?

2. Would a joint budget resolution which focused entirely on budget aggregates gloss over presidential-congressional differences in specific policy areas?

3. Should a joint budget resolution have the same format that budget resolutions do currently? What information should be excluded or new information included to make it more effective?

4. Should Congress adopt new mechanisms for enforcing a joint budget resolution? Would such changes be necessary to make a joint budget resolution effective?

What Should Be Included in the Federal Budget?

There is no single correct way to determine the dividing line between the activities included in the federal budget and those excluded. As a result, disagreements exist over budget coverage. For example, some critics argue that programs currently in the budget have characteristics (such as special financing sources) which should preclude their inclusion in the budget. Others claim that government policies currently not recorded in the budget, but which allocate nonfederal resources (such as regulation), should be in the budget.

I. Current Coverage of the Budget

The federal budget is intended to comprehensively cover the federal government's cash flows. The objective of comprehensive coverage in large part resulted from the President Johnson's 1967 Commission on Budget Concepts which recommended that agencies owned or controlled by the federal government should, with rare exception, be included in the budget. The Commission supported comprehensive coverage because: (1) having more than a single, comprehensive budget and a single unified, budget total (deficit or surplus) led to confusion in the public and among decision makers, (2) comprehensive budget coverage allows policy makers and analysts to better understand how government spending and revenue collection affects the economy and (3) government resource allocation would be improved if all government programs were included in the budget and were subject to and controlled by the budget process.

To be comprehensive, the budget records all cash flows resulting from the government's collection and disbursement of money (i.e., these are "on budget") unless they are legally excluded. The on-budget deficit/surplus is calculated by totaling the government's annual cash outflows and inflows resulting from onbudget programs. Cash flows resulting from the transactions of Social Security (the OASDI trust fund) and the Postal Service (and Part A of Medicare starting in 1993) are legally "off-budget". That is, these programs meet the criteria for being onbudget but are legally prevented from being included in the on-budget deficit/surplus.

Many financial flows which support government activity are not included in the budget. This means that even if the budget contains information on the financial performance of non-federal or off-budget programs, they do not figure into the calculation of the federal government's deficit. These include borrowing and repayment of debt, certain types of credit accounts, and agencies like the Financing Corporation and the Resolution Funding Corporation (which funded part of the savings and loan bailout). In addition, transactions of government sponsored enterprises (such as Fannie Mae, Freddie Mac, and Sallie Mae) and the Federal

Reserve System are not included in the budget since these agencies are not owned or controlled by the federal government.

Furthermore, there are numerous programs which receive federal funds, such as AMTRAK, the Corporation for Public Broadcasting, and the Legal Services Corporation whose financial activities are not considered part of the government and are thus, not covered by budgetary reporting.

II. Proposed Changes In Coverage

Current practice is not embraced by everyone. Many proposals have arisen to change the composition of the budget, in three ways. First, by excluding activities that are currently part of the budget, including trust funds and business operations. Second, by adding activities that are not presently considered budgetary, including government-sponsored enterprises, regulatory and mandate activities, and tax expenditures. Third, by switching from a focus on a single budget to focusing on multiple budgets representing different types of federal activities. Six proposed changes in the makeup of the budget are discussed below.

A. Place Trust Funds Off-Budget

In general (Social Security and part of medicare are notable exceptions), federal trust funds are on-budget. Some argue that trust funds are not regular parts of the government and should be put off-budget because: (1) the funds are financed by revenues which are specifically earmarked and are not transferable to other uses, (2) the monies in the funds are being held in trust for beneficiaries and do not belong to the government (3) including these funds in the budget clouds the true causes and size of the budget deficit, (4) the intent of Congress was to make these fund autonomous from the annual budget process.

Supporters of retaining trust funds in the budget oppose any movement to exclude trust funds arguing that: (1) not including the activities of these funds (which spent more than $500 billion in 1992) inaccurately depicts the government's role in the economy and its drain on the credit markets, (2) these programs are completely controlled by the federal government and are governmental activities, (3) these program's assets are, in fact, IOUS from the taxpayer; financing these programs relies on the same source of funds which supports all other government programs and (4) putting trust funds off-budget puts them on favored political footing. In recognition of the importance of including trust fund activity in the deficit, legislation to lower the budget deficit (such as Gramm-Rudman-Hollings) used deficit figures including social security in its targets (although in 1994 the deficit target will be the on-budget deficit). Likewise, OMB and CBO continue to stress the total deficit figure.