Mr. Goss. I thank you both very much for your testimony. We have gone a little longer than we anticipated, actually not too badly, and I apologize that it is such a busy day and we didn't have more of the members, but I know this subject is going to be a continual one with us and that we will all be up to speed and that your contributions are indeed valuable.

Mr. FRENZEL. We believe the quality of the Members made up for any deficiency.

Mr. Goss. We appreciate that. Thank you very much.

[Whereupon, at 12:10 p.m., the committee was adjourned.]

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 and beyond. So without further ado, we start today with Chris Cox, chairman of our Republican Policy Committee, and longtime budget process expert.

Before I call Chris, does the chairman have any opening remarks?

Mr. SOLOMON. Not really, Mr. Chairman. You have covered it thoroughly and let's get on with it.

Mr. Goss. Mr. Beilenson?

Mr. BEILENSON. Let's get on with it.

Mr. Goss. Mr. Linder, can we get on with it?

Mr. LINDER. Yes.

Mr. Goss. Thank you.

I 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. Cox.

STATEMENT OF HON. CHRISTOPHER COX, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Cox. 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.

I met with June O'Neill after reading her testimony here and talked to her for a while. She worked in the Nixon administration and watched the 1974 Budget Act being passed. I 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.

It is perhaps not, therefore, a coincidence that 90 percent of our existing $5 trillion, nearly $5 trillion national debt has accumulated since 1974. I think there are several problems with the existing budget process, and I will try and be very simple and give a broad brush picture.

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 in his 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 we have started at such a level of particularity. We have never taken the time to agree on the broad brush big picture, and that is what Congress in particular is well suited to do.

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 guidance, that is when we will be fulfilling our institutional charter best rather than attempt to operate as micromanagers of the entire executive branch.

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 of our responsibility. And so that is the first, and I think biggest, problem because it sets us off in the wrong direction to begin with. It makes it almost a certainty that Republicans and Democrats won't agree. It makes it almost a certainty that the President and Congress can't agree.

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 no one has an idea how we are going to do that because we haven't agreed on first principles.

The second problem with the existing system is that when Congress gets around to passing a budget, as heroic as this effort has been this year, it is nonbinding; 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 anyone; it doesn't have the force of law.

Ďuring the past 15 years-I had my staff go add this up for me— overbudget spending, that is actual spending as compared to budget, has totaled more than $300 billion, so if we had simply given the budget binding force over appropriations, we would have saved ourselves $300 billion.

The President was read out of the 1974 Act in another important way. Up until 1974, President Nixon, and every President back to Jefferson who first exercised the power, could decide not to spend money at 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.

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 was 6 percent of the total. If that 1974 Budget Act provision hadn't been enacted and changed the pattern, the national debt would be $750 billion smaller today simply for that

reason.

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.