To avoid government shutdowns, fix the budget process
In the musical “Hamilton,” the protagonists riff on dueling:
Aaron Burr: Can we agree that duels are dumb and immature?
Alexander Hamilton: Sure. But your man has to answer for his words, Burr.
Aaron Burr: With his life? We both know that’s absurd, sir.
(As we all know, Burr fatally shot Hamilton. Duels were not outlawed until 40 years later).
Federal government shutdowns are the modern equivalent of duels — a dumb and immature way to resolve disputes. The current shutdown has closed 25 percent of the government over a dispute that amounts to just .001 percent of the federal budget. This is the 18th shutdown since 1974, with dozens of near-shutdowns. It is time to fix the federal budget process to prevent these harmful stunts.
Shutdowns end up costing taxpayers heavily in wasteful, last-minute spending. They wreak havoc on states and cities that rely on federal dollars and hurt morale in the civil service. Regardless of who ends up getting the blame (Congress, the president, or both), shuttering non-essential programs is futile. The current episode is ostensibly about border security. But preventing the National Park Service from servicing restrooms won’t solve America’s immigration problems.
Paying government workers not to work is contributing to public disenchantment with government in general. Taxpayers can’t stop paying taxes if they disagree with an item in the budget. Yet whenever the president and Congress can’t agree on a particular funding bill, portions of the government are forced to close. This deterioration of the budget process is dangerous. Empires have fallen due to failure to trade off between guns and butter in accordance with public wishes. As budget guru Paul Posner of George Mason University testified to Congress in Feb., 2016: “The failure to budget has become a metaphor for the underlying national disenchantment with government itself.”
According to Pew Research only 18 percent of Americans say they can trust the government in Washington to do what is right “just about always” (3 percent) or “most of the time” (15 percent) — a historic low.
The present dysfunction can be traced back to the Congressional Budget and Impoundment Act that was passed in 1974, post-Watergate, in an effort to give Congress more control over the national purse. Since then, there have been only four years (1977, 1989, 1995, and 1997) in which Congress passed its 12 annual appropriations bills on time. Instead, lawmakers rely on short-term spending measures (“continuing resolutions”) ranging from days to months to keep the government going. In this volatile environment, federal programs lack the “steady administration” and “predictability” that Alexander Hamilton argued for as pillars of effective government in Federalist No. 72.
Here are four steps the United States can take to begin to mend the budget process.
First, put government on a two-year budget cycle. The Department of Veterans Affairs already has such a biennial budget so that programs like veteran’s hospitals are exempted from annual funding crises. The simplest way to minimize budgetary disruption is to extend this cycle to the rest of government. Most programs should get their budget renewed automatically, unless there are exceptional disasters.
Second, overhaul the congressional committee structure regarding money. The budget committees have term limits, ensuring that the least experienced members are in charge and limiting their effectiveness. The appropriations and authorizing committees have multiplied into hundreds of overlapping sub-committees. We need to restructure and simplify, with committees that oversee both revenue and expenditures for vital programs.
Third, implement the basic tools of good budgeting, such as the way we track and account for government expenses — costs, overheads, and capital expenditures. These proven techniques will help the federal government improve performance at the same or lower costs. Some states and cities already do this.
Fourth, get rid of the “Overseas Contingency Operations” mechanism that funds the wars in Iraq and Afghanistan. Unlike the rest of the military budget, this money is exempt from budget limits and financed entirely by borrowing. There is virtually no congressional oversight on how this money is spent and whether it is being used effectively.
The framers of the Constitution structured our system to give the executive branch the key role in budget formulation, while the spending function (“power of the purse”) was put squarely in the legislative branch. This division of responsibility is fundamental to the idea of checks and balances. However, by placing so much authority for deciding on government revenue and spending in the hands of the legislature, the framers ensured that many competing interests would constantly vie for resources in Congress. This arrangement puts the budget at the heart of our democratic process.
It is perhaps this aspect of budgeting that has broken down most profoundly at the federal level. Increasingly, stakeholders are seeking and obtaining resources outside of the regular legislative budget — using the tax code, mandatory authorizations, emergency funds, or debt to pay for services, instead of regular appropriations. Meanwhile, rising mandatory spending and deep tax cuts have led to a chronic imbalance between government revenues and expenditures. This means that congressional appropriations committees (which have no jurisdiction over long-term spending and taxes) are dueling over a smaller slice of the pie each year.
During his short life, Hamilton wrote of the importance of energy and not squandering it. Ending the dumb and time-consuming practice of government shutdowns is a good start. Let’s fund the American experiment. Let’s not “waste our shot.”
Linda J. Bilmes teaches budgeting at the Harvard Kennedy School. She served as assistant secretary and CFO of the US Department of Commerce from 1998 to 2001 and is coauthor of the forthcoming book “Budgeting for Better Performance.”