Fuss Budgeting: An Excerpt
There is no area of American government where dysfunctionality has been on greater display than in the annual Federal budget process. The political obstacles to agreeing on a budget in a timely fashion would be solved if either party achieved solid control of both houses of Congress and the Presidency, or if a centrist majority somehow emerged that forced both parties to compromise.
Unified government has existed, however, only intermittently over the past few decades. While we await its return, serious reform would need to focus instead on institutional changes that might improve results under conditions of continued polarization. The basic strategy would be to centralize authority and reduce the number of veto points in the political system. Since we cannot move from a presidential to a parliamentary system, this requires introducing selected parliamentary-type mechanisms into the American presidential system. There are several ways to do this that are within the realm of political possibility.
The most obvious strategy for forcing agreement on a budget is to delegate the decision not to the Executive Branch but to a non-partisan commission, or to a carefully selected bipartisan commission, that would then present the whole budget to Congress for approval in a single up-or-down vote.
A second approach has to do with the setting of reversion points that would prevent future government shutdowns. A reversion point automatically sets the budget in the event that the legislature cannot agree on a new one by the beginning of the new fiscal year. Currently, the default reversion point is zero—that is, the government shuts down entirely in the absence of a budget.
It is possible to set alternative reversion points that would mitigate this problem. The simplest would be to keep the previous year’s budget in force (in other words, automatic continuing resolutions), which would guarantee against future shutdowns. Congress could also eliminate the need for annual votes on the debt ceiling. Another possibility would be to set a reversion point involving serious tax increases and spending cuts that would be sufficiently obnoxious to both parties that they would be forced to negotiate more seriously.
One could also make the incentives more personal. Bargaining failure occurs because enough members of Congress are willing to impose costs on the whole community in the event of failure to achieve their preferred policy outcome. One could concentrate the costs on the legislators themselves, however, by forfeiting their pay or access to campaign funds for every day that a budget is not passed. (Currently, members of Congress continue to receive their pay during a shutdown, while their staffers do not.)
Alternatively, one could increase positive incentives to negotiate by bringing back earmarks, which were banned in 2011.
There are a host of smaller measures in the spirit of parliamentarism-within-presidentialism that the U.S. government could take that would improve budgeting around the margins. If top-down budgeting is not possible on the part of the Executive Branch as a whole, then it might be workable within individual cabinet departments.
The Federal government could also try to exercise more authority over the states, whose practices and transparency are often worse than those of the Federal government. Although all but one of the fifty states have constitutions mandating balanced budgets, the definition of “budget balance” can be fudged through a host of accounting tricks. Many states have failed to move from cash to accrual accounting, thus vastly understating their future liabilities. Most states do not have a local equivalent of the CBO to score expenditures and help consolidate budgets, with the result that budget transparency is significantly lower than for the Federal government. Many use non-recurring revenue to support routine operating expenses, and make highly questionable assumptions about future actuarial and growth trends in order to achieve budget “balance.” The Federal government could create both positive and negative incentives for states to move toward budgeting best practices.
The only one of the above proposals that has any empirical track record of success is the personal sanctioning of members of Congress for failure to agree on the budget. Whether this would work at a Federal level or survive Constitutional challenges is an open question. So is whether Congress would ever be willing to subject itself to such constraints absent a major shock to the system from outside.
The problem of budgeting, then, reverts to the underlying problem of polarization in the political system. Reforms leading to better and more sustainable Federal budgets may thus lie in an area outside of the budget process itself—that is, in electoral or campaign finance reform.
