Tag: debt ceiliing

Instead Of The Nonsense Congress Is Proposing, Here’s What I Suggest To Actually Fix The Budget Debate

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Photo by Rick Bloom.

After my multiple posts ripping (here and here) the Joint Select Committee on Budget and Appropriations Process Reform for proposing totally worthless, utterly nonsensical and transparently self-serving changes in the way Congress considers the budget, a number of people have told me to put up or shut up.

If I’m so adamant that what the committee came up with is such budget tripe, they want to know the changes I would recommend instead.

That’s a totally fair question that, as a budget wonk, I’m ecstatic about being asked, especially because it gives me the opportunity to include my picture above this post with my answers.

The main issue is simple: Despite their continued public protestations to the contrary, members of Congress don’t want to do any of the politically very painful things that responsible budgeting — like tax increases and spending reductions — sometimes require. The current budget process enables this behavior because it doesn’t force the House and Senate either to make those decisions or to take responsibility for not making them.

The only way to correct this is to create several hard-to-waive nudges/penalties. That’s what’s behind my big four proposed fixes.

1. No Budget Resolution, No Other Legislation.

Annual congressional budget resolutions were intended to force Congress to be held accountable on the deficit. Until they were created by the Congressional Budget and Impoundment Control Act of 1974, Congress voted for individual spending and revenue bills but never had to vote on a full budget that compared each year’s total spending with total revenues and, therefore, showed the deficit or surplus.

That worked until the House and Senate realized that the skies didn’t darken, lightning and thunder didn’t come down from the heavens and evil demons didn’t rise from below if they didn’t adopt a budget. There are, in fact, no political or other penalties for Congress failing or refusing to agree on a budget resolution.

My recommendation to deal with this is to change House and Senate procedures so that neither house is allowed to consider any other legislation — certainly not appropriations or tax bills but also no authorizations or even the naming of post offices — until the budget resolution conference report for the coming year is adopted. This requirement could not be waived under any circumstances and the only exceptions would be for bills that could pass with an extra-super majority of, say, 75 percent.

This will create a constituency for passing a budget resolution: every interest group, the White House and every House and Senate committee that wants Congress to do something on any other issue. The pressure on Congress both to do a budget and to do it early in the year would be intense.

I’m not naive. The way around “No Budget, No Other Legislation” will be for Congress to adopt a totally meaningless, pro forma budget that, for example, ridiculously projects a balanced budget with spending cuts and/or tax increases that are never going to be approved and with a wildly optimistic “rosy scenario” economic forecast that’s never going to happen.

If that’s what Congress does, there’s no procedural change that will make any difference whatsoever.

2. An Automatic Continuing Resolution At Half The Rate Of Inflation.

To stop government shutdowns, I suggest a variation on a proposal that has been constantly mentioned whenever the budget process is said to be broken: An automatic continuing resolution that keeps all agencies and departments operating whenever Congress and the president can’t agree on their regular appropriation by the start of the fiscal year.

My variation is the fiscal version of a Solomon-like decision. My automatic CR would fund all departments and agencies at the current level plus half the rate of inflation projected by the Congressional Budget Office. That would increase spending compared to what’s currently expected but reduce it compared to the baseline. That would be a lose-lose for everyone and an incentive to agree on the regular appropriation.

3. Eliminate Having A Separate Vote On The Debt Ceiling.

The federal government’s borrowing limit should be raised automatically to the level projected in the budget resolution. Congress having to vote on a budget that assumes a deficit and, therefore, higher borrowing and to then have to vote again on raising the debt ceiling to allow the government to borrow to that level makes no sense whatsoever. Having periodic threatened defaults over the debt ceiling is even more nonsensical.

4. Fully Fund The Congressional Budget Office.

CBO, the only truly successful part of the congressional budget process, includes the best collection of nonpartisan analysts in Washington. But CBO is understaffed and overworked. Give it the resources it needs to provide Congress with all the information good budget decisions require.

Follow Stan Collender on Twitter by clicking here at @thebudgetguy.

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Trump Will Say Democrats Stole The 2018 Election…And 7 Other Predictions

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Less than a month before the election, about a month before the start of the lame duck session of Congress, a little over about 50 days before the next government shutdown deadline on December 7 and less than three months before the next Congress begins, these 8 things are both keeping me up at night and giving me nightmares while I’m awake.

It’s therapeutic (at least for me) to share them.

1. Trump Will Insist The Democrats Stole The 2018 Election

If Democrats win one or both houses of Congress this November, Trump will insist that it happened because (1) they colluded with the Russians or Chinese, (2) they hacked the election results in all 50 states, (3) illegal immigrants voted in record numbers or (4) all of the above. Trump will say he has information proving that the results weren’t a referendum on him, that he doesn’t plan to change a thing and that he will make the Democrats pay for stealing the election.

Then see #s 5,6, 7 and 8 below.

2. Big Federal Budget Deficits Are Now Permanent

The Trump administration will soon verify what the Congressional Budget Office reported last week.  When the U.S. Treasury releases its monthly statement for   September, it will confirm that the fiscal 2018 federal budget deficit increased to close to $800 billion dollars this past year and will be at or above $1 trillion for 2019.

But that will be just the beginning.  With more tax cuts about to be considered (see #3), a trillion-dollar infrastructure plan likely to be enacted at some point in the next few years, hurricanes and other disasters almost certainly on the horizon and no serious revenue increases or spending reductions likely to be considered, $1 trillion or higher federal budget deficits are now a permanent part of the U.S. economy and American politics. The previous political goal of projecting on paper (let alone actually achieving) a balanced budget in 10 years is now gone…forever.

3. Another Huge Tax Cut Will Happen This Year

I’m increasingly convinced that, during the lame duck, the Senate will take up the tax cut the House passed just before it recessed for the election. My sources on Capitol Hill tell me that preparations are already underway for Congress to quickly adopt a budget resolution at the start of the lame duck just so the Senate will be able to avoid a filibuster on the tax bill.

This will increase the deficit by another $600 billion to $700 billion over the next decade, and much more after that.

4. The Budget Deficit Will Reach $2 Trillion By 2024

There will be an economic downturn at some point over the next few years. Combined with #2 and #3 above, this will increase the deficit to close to $2 trillion.

5. Trump Will Ignore Democratic Subpoenas And Set Off A Huge Appropriations Fight

The common assumption seems to be that, if the Democrats are in the majority in one or both houses of Congress next year, as part of official committee investigations they will inundate the Trump administration with subpoenas for documents and witnesses. Not only do I seriously doubt that the White House will meekly comply with these subpoenas, I expect the president to routinely assert every possible reason that he doesn’t have to do so.

Yes, the courts will then get involved. But I also expect congressional Democrats to use next year’s appropriations process to push the administration to comply. It wouldn’t be shocking, for example, if Democrats threaten the funding for several assistant secretaries and the White House counsel in response to the White House’s stonewalling.

6. Shutdown Showdowns Are About To Become Even More Of A Thing

There will be multiple shutdown fights for two reasons.  First, Trump may not agree to full-year funding in any form (a continuing resolution, omnibus appropriation or Department of Homeland Security appropriation) without money for his wall. He’s far more likely to agree to a series of short-term funding bills that allow him to keep raising the issue, especially if he’s able to blame a Democratic majority for the wall not happening. That will set up frequent shutdown threats every year.

Second, see #5.

7. Trump Will Precipitate A Debt Ceiling Fight Sooner Than Expected

The federal debt ceiling was suspended by the Bipartisan Budget Act of 2018 until March 1, 2019, and the overwhelming assumption is that the Treasury will use “extraordinary measures” (the Washington equivalent of getting a cash advance on one credit card to make a payment on another) to delay raise the debt ceiling until September.

But just because Treasury has always used extraordinary measures in the past doesn’t mean it’s guaranteed to use them this time. Trump could easily at least threaten not to use these bookkeeping gimmicks at all or to stop using them at some point before September if the president doesn’t get something (such as funding for his wall, a space force and a military parade) he wants in return.

8. Trump 2020 Budget Will Be An Even Bigger Political Statement

The first two Trump budgets basically were campaign brochures masquerading as official federal documents. The next Trump budget — fir fiscal 2020 budget — will be released as his reelection efforts formally get underway and so will have very little to do with governing. It will be largely forgotten on Capitol Hill within two weeks of it being released.

Click Here To Follow Stan Collender on Twitter @thebudgetguy