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It’s Time for Federal Budgeting Rules to Match the New Reality

The appropriations process is out of date.
February 8, 2022
It’s Time for Federal Budgeting Rules to Match the New Reality

The scramble to avert yet another government shutdown threat—this time on February 18, when the continuing resolution, or “CR,” now in effect expires—is fresh evidence, though none was needed, that the federal budget process has all but collapsed. Fortunately, the likelihood of an actual break occurring in this instance is remote, as both parties say the CR will be extended if need be. Still, the persistent inability of Congress to fund the government in an orderly manner is a signal that reform is overdue.

Congressional appropriations do not cover all budget-related activities. Many programs—such as Social Security, Medicare, unemployment benefits, and other “mandatory” outlays that altogether account for about two-thirds of all federal spending—have permanent appropriations, so they fall outside the annual discretion Congress exercises for other accounts. Even so, a smooth appropriations process remains central to effective governance because so many crucial public responsibilities are affected by it. Among other things, Congress provides the Defense Department, the National Institutes of Health, the Park Service, and scores of other important agencies with their funding through annually approved spending bills.

The dysfunction—of which this year’s long delay is but one symptom—has been evident for some time. According to the rules now in effect, Congress is supposed to approve separate bills reported by each relevant appropriations subcommittee before October 1 (there are now twelve such bills). Congress has not met that deadline since 1997, and in fact has met it only four times since 1977. The new normal is the late—and sometimes very late, such as this year—approval of a phone-book length measure, negotiated behind closed doors by a small group of leaders, covering the entire federal enterprise (and often much else besides). Last year’s omnibus appropriations bill, passed in December, clocked in at 2,216 pages. It is safe to assume that very few House or Senate members read the bill, or fully understood its contents, before they were forced to vote on it.

Part of the problem is polarization. As the parties move away from the center, their interests are in scoring political points, not acquiescing to messy compromises. Appropriations bills need 60 votes to pass in the Senate, which means they are always disappointing to Congress’s most strident members. Party leaders procrastinate to avoid annoying their core supporters as long as possible.

Not all of what is wrong with the process is due to today’s hyperpartisan environment, however. Even in the days when party leaders were more inclined to compromise, Congress struggled to complete its work. That’s because the sheer volume of what needs to be processed each year is immense. Moving twelve separate bills through each chamber implies 24 floor votes on the initial bills (after the committees have had their own debates and votes), a conference to strike House-Senate compromises on each of them, and then another 24 floor votes on the final measures. The amount of legislative time required by this definition of “regular order,” especially in the Senate, would mean conducting almost no other business.

Better procedures won’t make appropriating funds a frictionless exercise for Congress, but they can make the workload more manageable, and thus improve the odds of timely decisions.

Here are four changes that could make a difference.

First, Congress should take a hard look at the repetitiveness of what it is approving each year. Appropriation bills are account-by-account compilations of legal language specifying funding amounts and the conditions attached to the money. The wording each year changes only modestly for most line-items, which means Congress is essentially passing bills that largely duplicate what was passed in the prior year, and the year before that. The only real changes are to the years covered by the spending authority, and the dollar amounts. For instance, in the fiscal year 2021 omnibus bill, Congress provided $12.8 billion for the Social Security Administration’s operational expenses. The language used to provide this funding ran 671 words, and was identical in every way to what had been enacted for the prior year, save for changes to the year specified in various sentences, and the dollar amounts provided. Similarly, the only changes in 2021 to the FBI’s 120-word 2020 appropriation involved the amount the agency was given to spend.

Of course, the conditions attached to appropriated funds are not stagnant permanently. For most accounts, there are amendments from time to time to reflect changing circumstances. But those are usually modest and gradual.

To ease its workload, Congress should eliminate the repetitiveness and pass into law each year only changes to the funding amounts and the conditions it wants attached to the spending authority. There would be base language in permanent federal law for each account that would be operative absent further amendment. The annual appropriations bills thus would become much shorter in length, and include only changes to the base appropriations language rather than full rewrites.

Eliminating hundreds of pages of redundant legislative language would allow for a rethinking of what constitutes an appropriation measure, with a shift away from a fully narrative presentation to one that features consolidated listings of funding amounts. (New Zealand’s parliament, to pick one example, does something along these lines, making annual appropriations for many government activities by spelling out line-item spending authority in tabular format.) Further, Congress has written tables into tax laws to establish important legal parameters. A heavier focus on the dollars provided in appropriation measures would improve the transparency of Congress’s spending decisions.

Second, clearing out unnecessary language also could make room for including in these bills additional information about performance expectations. Alongside funding, Congress could specify numeric targets for key indicators of agency activity. For instance, for Social Security, Congress could identify expected reductions in the backlog of disability cases based on the funds it is providing for that purpose.

Third, Congress should provide automatic funding as a backstop for the routine operational expenses of certain government accounts. There are scores of agencies and offices which receive small funding adjustments each year that could be placed on a list of accounts eligible for predetermined spending authority. The annual adjustment should factor in general inflation and an expectation of productivity improvement. For instance, if inflation were running at 3.0 percent, Congress could provide an automatic funding increase of 2.5 percent, which implies that the affected agencies would be expected to achieve efficiencies equal to 0.5 percent annually. For many small agencies, automatic funding could become the norm, which would dramatically lessen the burden on the appropriations process. (Andrew Taylor of North Carolina State University has proposed an automatic funding mechanism that would go even further than the one recommended here.)

Critics will argue that this change would shift even more of the government’s budget into the mandatory category, and thus erode budgetary control. But current spending practices are hardly conducive to spending discipline, as the temptation is strong all around to pad must-pass omnibus bills with popular spending provisions to ensure they will pass in Congress and get signed by the president. Further, Congress would always retain the right to adjust funding for every appropriated account each year. The default would apply only to a subset of accounts, and would be entirely up to Congress to use as it deemed appropriate. Moreover, tying a portion of the government’s budget to an index that escalates more slowly than general inflation is likely to narrow future deficits rather than widen them.

Finally, Congress should reduce the number of expected annual appropriation bills to a more manageable number, as twelve is clearly too many to process year after year. Consolidation is unpopular with the appropriators, of course, because it implies fewer powerful “chairmen.” A compromise might allow the chairs to keep their positions but make a change in other rules to specify that their bills will be combined into three or four measures moving through Congress each year. The days of all twelve appropriation “cardinals” managing their own bills on the floor is over, and should be acknowledged in a reworked process.

The federal government is a massive and sprawling enterprise requiring active congressional oversight to ensure it is serving the public as intended. Control over funding is the most important power Congress possesses to direct government activity. In recent decades, the appropriations process has become so cumbersome that Congress has lost considerable influence. Reforms which lessen repetitive and non-productive work would allow Congress to focus more of its limited time on questions that matter. Making the nation’s most pressing challenges the priority also might help restore some of the lost trust in government institutions that has deepened the nation’s political divide.