CONGRESSIONAL BUDGET PROCESS

Wednesday, July 19, 1995

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON LEGISLATIVE AND BUDGET PROCESS,
AND THE SUBCOMMITTEE ON RULES AND ORGANIZATION

OF THE HOUSE, COMMITTEE ON RULES, Washington, DC.

The subcommittee met, pursuant to call, at 10:35 a.m. in room H-313, the Capitol, Hon. Porter J. Goss (chairman of the Subcommittee on Legislative and Budget Process) presiding.

Present: Representatives Goss, Linder, Pryce, Solomon, and Beil

enson.

OPENING STATEMENT OF HON. PORTER J. GOSS, CHAIRMAN OF THE SUBCOMMITTEE ON LEGISLATIVE AND BUDGET PROCESS

Mr. Goss. Good morning, ladies and gentlemen.

Today, the Subcommittee on Legislative and Budget Process and the Subcommittee on Rules and Organization of the House will come to order and continue our efforts to review the congressional budget process.

Thank you for your interest, distinguished chairman, Mr. Beilenson, acting ranking member of the full committee, and the chairman of the full committee, and other members I think will be coming in.

Today's joint subcommittee hearing which focuses on the testimony of Members with interest and expertise in the budget process is the second in which we will examine the big picture of the budget process. There will be others as well as we go forward on this. Last week, we began the project by hearing from Director June O'Neill of CBO, Associate Director Susan Irving of the GAO, former Budget Committee Ranking Member Bill Frenzel, and Cato budget policy expert, Stephen Moore. At that hearing we talked a great deal about the objectives of the 1974 Budget Act, whether those objectives are still relevant in today's fiscal environment and whether we should be looking to redesign our congressional budget process or not. We hope to continue that conversation today with Members of Congress on both sides of the aisle that have labored under the requirements of our congressional budget process, some for many years and some for only a few months.

All of today's witnesses have exhibited a commitment to ensuring that we have in place an effective and workable budget process as we proceed along the road toward balancing the budget by the year

2002 wand beyond. So without further ado,e wepstarta todaye with Chris Cox, chairman of our Republican Policy Committee, and longtime budget process expertnsider the degree to which we have read th Before I call Chris, does the chairman have any opening remarks?ded the President's, historical role in this.

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Mr. SOLOMON, Not really, Mr. Chairman, You have covered it thoroughly and let's get on with itly outside the control of Congress arMr. Goss, Mr. Beilenson? so much of it is on autopilot. Our budget Mr. BEILENSON. Let's get on with itof-control results because we doMr. Goss. Mr. Linder, can we get on with it?tlement spending is to Mr. LINDER. Yes! as permanent, indefinite appropriations, and th Mr. Goss. Thank you!edicare and Medicaid and AFDC and the thI will say that the people we are going to call on this witness list, each one has submitted in writing something to us, and has ideas and so forth. Those are not the only ones we will get, but these are all very challenging and they focus on an array of ideas which are worthy of consideration. Mr. Coxauts; it might be welfare, it might STATEMENT OF HON. CHRISTOPHER COX, A REPRESENTATIVE entitienIN CONGRESS FROM THE STATE OF CALIFORNIAhink of them this way, but this is what we have done with our budget. We haMr. Coxe Well, I want to thank you, first of all, for convening these hearings so promptly. It has only been a few months that the new Congress has been organized with new committee jurisdictions and you are out ahead exercising your jurisdiction, making sure that we get on with the important business of rewriting the 1974 Budget Act. The reason that we need to do this is that we have got a lot of experience under our belt with the 1974 Act, and it is not working rocess, nearly 200 of our colleagues in the last Congress ich met with June O'Neill after reading her testimony here and talked to her for a while. She worked in the Nixon administration and swatched the 1974 Budget Act being passede le think she and I agree that if you read the 1974 Act and limit your conception of reality to the four corners of the act, it actually makes sense. It is an organized system; it provides deadlines; it would, if everyone paid any attention to it, provide some organization here in the Congress; but what we found is that while the effective parts of the 1974 Act stripped the executive of its role and substituted. Congress, Congress has been able to avoid any of the requirements of the 1974 Act that were meant to impose organization on the congressional process.ogram in my district? We haven't gotten to that It is perhaps not, therefore, a coincidence that 90 percent of our existing $5 trillion, nearly $5 trillion national debt has accumu lated since 1974. I think there are several problems with the exist ing budget process, and I will try and be very simple and give a broad brush picture.mediately whose ox is being gored.

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The first biggest, deepest problem is that at the very beginning of the 1974 Budget Act process, the President starts by sending up to Capitol Hill a budget that is so detailed that every single Member can look up and find out whether a project inchis district is funded at the appropriate level, and that feature has enabled every single one of us to go immediately to our reporters and say that the President's fiscal priorities are out of whack because we haven't been treated properly. We may not be quite that up front about it and say the reason that the whole budget of the United States

makes no sense is that I was treated improperly, but that is why so many people can seemingly read thousands of pages in about a half hour and go out and talk to the press.

The theory is that the President's detailed budget submissions will be the start of the process here in Congress, but what really happens is that we are all at each other's throats instantly because of particularity. We taken the time to agree on the broad brush big picture, and that is what Congress in particular is well suited to do.

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We are 535 people, we are a huge committee. Arguably, one of the few things we can do effectively together is go see a baseball game, but we should operate as a board of directors giving broad policy y guidance that is when we we will be fulfilling our institutional THE SURCOMMITTEE ON RULES AND ORGAN, charter best rather than attempt to operate as micromanagers of OF THE HOUSE, the entire executive branch. COMMITTEE ON RULES

At the very least there ought to be a time in the process when we are not micromanaging, when we do look at the big picture because that is an important part And and I think biggest, us off in direction to begin

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fom wrong that and Democrats Tinge agree. It makes it almost certainty that the President and Congress can't agree.

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And so here we find ourselves, for example, in 1995, the President has a 10-year budget, we have a 7-year budget, the President has a lot of different priorities that we don't share and he called us to the White House to say I hope, we can avoid the impending train wreck, and one has an idea how we are how we are going to do that because we haven't agreed on first principlesnd Budget Process and thThe second procopassing a budget, as how the congressional problem with t then existing system is that when con! gress gets arou gets around

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it is nonbinding, it is a noncommu it is a nonbinding concurrent resolution of the Senate and the House, and so it has only moral force that is to say, all the rest of our committees. It doesn't really bind jam thithe force of Ste law. er members 1 think will be comanyone; it doesn't have the force of law.

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During the past 15 years I had my staff go add this up for me overbudget spending, that is act that is actual spending as as compared to budg et, has totaled more $300 than the budget binding

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ourselves $300 billion. Woonan the project by hearing from Director June O'The President was read out of the 1974 Act in another way. Up until 1974, President Nixon, and every President back to Jefferson who first exercised the power, could decide not to money att some point during the fiscal year if it proved not necessary to fulfill a program's objectives, That has been called variously rescission and impoundment, although rescission these days means something to which Congress subsequently assents. Members of In 1960, President Eisenhower decided not to spend 8 percent of the entire budget, and that was not uncommon. Between 1959 and 1972, the average of all actual appropriations that the President decided not to spend wase6 percent of the total If that 1974 Budget Act provision hadn't been enacted and changed the pattern, the na tional debt would be $750 billion smaller today simply for that

Now, I don't know that there is going to be a political consensus in the current Congress to restore the President's impoundment authority, but we ought to consider the degree to which we have read the President out of the budget process, the degree to which we have ended the President's historical role in this.

The worst problem of all from a materiality standpoint is that so much of our budget is now allegedly outside the control of Congress and the appropriators, that so much of it is on autopilot. Our budget process virtually guarantees out-of-control results because we don't exercise control over the spending. Entitlement spending is technically defined as permanent, indefinite appropriations, and they run not just to Medicare and Medicaid and AFDC and the things that we are all familiar with, but to such things as the independent counsel. There are literally hundreds and hundreds of permanent indefinite appropriations, and when you add them up in different categories you can see that it is not necessarily health care that is driving our budget nuts; it might be welfare, it might be some other category that you decide to put an awful lot of these entitlement programs into because we just don't often think of them this way, but this is what we have done with our budget. We have decided that all these programs, the favored programs, will have appropriated to them such sums as may be necessary, that is, a blank check. If you are willing to give a blank check to a program, don't be surprised that in the end it runs out of control.

These programs are not uncontrollable; they are simply uncontrolled. We have to bring them back within the budget process. To address these deficiencies that I have described in the existing budget process, nearly 200 of our colleagues in the last Congress joined with me in introducing the Budget Process Reform Act.

The bill does the following: First, in order to get Congress, Democrats and Republicans, House and Senate, to agree early on a macroeconomic budget big picture and to get the Executive and the Congress as coequal branches to agree together, we will have a one-page budget, comprising only the 19 major functions, signed into law or passed over the President's veto.

By forcing debate, discussion, negotiation, and agreement at a high level of abstraction, we can make it possible for Members of Congress to go back to their districts and defend a sound decision on the big picture and permit them to answer questions such as, what about my program in my district? We haven't gotten to that yet, but I guarantee you I will take care of it.

We can all agree on a fiscally responsible big picture and leave the detail until later, but if we have the current system, as I pointed out, and we start at that hyperdetailed level we can't agree because we all know immediately whose ox is being gored.

Second, to encourage timely congressional action, and timely agreement, and negotiation in good faith between the Congress and the executive branch it will be out of order to consider appropriations and authorizations until that budget is in place in the form of the law.

Now, fish swim, birds fly, and Congress spends money, so if you tell Congress that it cannot do that until the budget is in place, you have provided a very powerful incentive to get that document signed into law or passed over the President's veto.

Once the broad budget totals are agreed upon in the form of that one-page budget, then and only then can Congress get about the business of spending. Thereafter, if any Member of Congress proposes spending outside the scope of the budget law which Congress has passed in the form of a law intended to bind itself, it would take a two-thirds vote.

Congress can pass the budget by majority vote. Congress can set those budget levels wherever it wants, but once it makes a decision, we want it to be a serious decision that we agree then will provide the plan for all of our smaller decisions that we take for the rest of the year, and we will make it difficult for people to avoid the force of law that they have given to that budget by requiring a two-thirds vote, the same as would be necessary for a veto override to go outside the budget.

If any Member of Congress is thereafter deprived of pork barrel spending in his district, we will have the same political dynamic that presently exists with the Base Closure Commission; we can all go back to our districts and say that darn process, it is outrageous, it is political, it is wrong, but the overall system will be responsible.

Individual Members won't have to self-immolate. How many times have you heard, "The process isn't the problem, we need to make tough decisions." And yet in order to make those tough decisions we have got to come up with a process that binds us as a group. If the only defense against runaway deficit spending is that every single Member can stand up and self-immolate it won't happen, so we have to design a system that tolerates what we know to be the priorities and the incentives that operate on all of us.

The new procedure will also bring entitlement programs within budget control by adopting a proposal recently endorsed by President Clinton's Bipartisan Entitlement Commission on which the chairman and I both served. For every Federal program, except Social Security and interest on the debt, Congress will actually decide how much to spend in the coming year. Congress can raise the level of spending for any of these programs. These are not caps, but Congress will decide instead of writing a blank check.

At the same time, following the example of the Lugar amendment to the food stamp program some years ago, the agency head, the Secretary of Agriculture in the case of food stamps, is given regulatory authority to adjust benefit levels and eligibility requirements, so at the end of the fiscal year that program costs no more than Congress appropriates for it.

These days food stamps continue to run out of control because everyone knows that there will be a supplemental. If there is any shortfall, Congress will provide it in a supplemental, but under the Budget Process Reform Act, spending outside the budget, as I have already described, will require a two-thirds vote, so we will have budget control over our spending.

The process is nonpartisan, nonideological in the sense that it doesn't tell us either whether we should prefer guns or butter or whether we should spend more or less next year. Congress can triple the budget, triple Federal spending next year under this process, but once Congress decides what the budget is, there will be enforcement, and there won't be blank check spending.