Budget Committee Proposes Congressional Budget Process Overhaul

Incremental, piecemeal fixes will not correct these deep and fundamental failings in the budget process. What is needed is a thorough rewrite of congressional budget practices. Following an extensive series of hearings and working papers, the House Budget Committee has developed the attached discussion draft describing a proposed overhaul of the process.

• Enhance Constitutional Authority. Emphasize the goal of advancing Congress's power of the purse under Article I of the Constitution, and thereby its governing authority.

• Strengthen Budget Enforcement. Tighten adherence to budget rules and restrictions on emergency-designated spending.

• Reverse the Bias Toward Higher Spending. Dismantle the often subtle procedures and assumptions that encourage higher spending rather than spending restraint.

• Control Automatic Spending. Take control of "direct" or "mandatory" spending, which operates on effectively permanent authorizations, consuming increasing shares of Federal resources outside the regular purview of the Federal budget process.

• Increase Transparency. Account for regulatory costs that reflect an extension of government burdens outside the fiscal budget; acknowledge the government's overall fiscal status; and make the budget more accessible to the general public.

• Ensure Fiscal Sustainability. Expand the budgetary horizon to capture long-term commitments and risks.

Rationale. This adjustment would align the Federal fiscal year with Congress's legislative schedule. It would allow Appropriations Committees more time to pass what would now be six spending bills each year. (See further discussion under "Biennial Budgeting.")

Rationale. The substantial changes in the budget timetable ae a consequence of giving Congress the initiative in adopting the budget resolution, aligning the fiscal year with the calendar year, and miscellaneous changes to improve the efficiency of the budget process. In this arrangement, the congressional budget takes precedence: the House and Senate Budget Committees would complete their respective budget resolutions before the President's budget policy request would be submitted, on April 30. The new arrangement would bring the President into budget discussions around the time the House and Senate go into conference on the budget resolution. This would give Congress an opportunity to determine whether an agreement is possible on statutory spending and debt limits. The change in the deadline for the authorizing committees to submit Views and Estimates would provide the Budget Committees more time to incorporate the authorizing committees' views in deliberations on the budget resolution.

Rationale. According to a 2016 Congressional Budget Office report, there are more than $310 billion of unauthorized programs for fiscal year 2016 spanning two hundred fifty-six laws and fifteen House authorizing committees. More than half of the unauthorized amount -- or $160 billion -- is for programs whose expired authorizations are more than ten years old. Over the past decade, an average of about one-fourth of total discretionary appropriations has been unauthorized, mostly for non-defense programs. This proposal would complement House rules and freestanding legislation to encourage regular reauthorizations by providing a level of enforcement that cannot be waived in the House as part of the rules process.

Rationale. Under current law, authorizing committees may submit their Views and Estimates on elements of the budget resolution, including budgetary levels, reconciliation, and procedures to enforce the budget resolution. As a practical matter, however, the views have been used largely to comment on the priorities in the President's budget submission. Changing the deadline for submitting the Views and Estimates is intended to ensure they are based on the committees' priorities rather than the President's submission, which will now be submitted by April 30. The accelerated deadline will provide the Budget Committees sufficient time for taking the committees' views into consideration before deliberations commence on the budget resolution.

Rationale. This proposal would compel the two Chambers to resolve their differences in conference. Recent conference reports on the budget resolution have established different budget rules for the House and Senate. In the fiscal year 2016 budget resolution, for example, the House and Senate had substantially different rules governing the scoring of energy performance contracts and limits on legislation with long-term costs. Requiring the Budget Committees to resolve all their differences will ensure that legislation complying with the budgetary rules of one Chamber would also comply with those of the other. The result will be more coherent rules and a more enforceable budget resolution.

Rationale. The 302(a) allocation, which is included in the joint statement of managers accompanying the budget resolution conference report, provides a lump sum of discretionary spending to the Appropriations Committees for the forthcoming fiscal year. The Appropriations Committees then divide the 302(a) allocation into twelve separate 302(b) suballocations. The 302(b)s act as binding limits on each of the twelve appropriations bills. Occasionally, the Budget Committee must alter the 302(a) for adjustments made pursuant to the discretionary spending limits provided under current law or reserve funds provided in the most recently adopted concurrent resolution on the budget. The Appropriations Committees frequently find themselves unable to adjust the 302(b)s due to time constraints and other factors. The House is then put in a position in which it cannot enforce the 302(b)s because they do not equal the overall 302(a) limit. This provision would remedy that complication.

Rationale. The Congressional Budget Office has not been reauthorized since it was established in 1974 under the Congressional Budget Act. The reauthorization also would provide the Budget Committees additional opportunities for oversight of the agency.

Rationale. The elimination of term limits provides committee members the opportunity to develop the critical expertise necessary to shape budget priorities and confront the Federal Government's extraordinary fiscal challenges. It would also conform House service requirements to those of the Senate, which imposes no limits on Budget Committee tenure. The House Budget Committee is one of the few committees with term limits on rank-and-file members.

Rationale. The current budget schedule does not provide sufficient time to complete all twelve appropriations bills before the start of the fiscal year. Only one out of sixty of the annual appropriations bills from the past five years has been enacted by the start of the fiscal year and Congress has funded the government on time only once in the past twenty years. Changing the budget resolution to allow for the annual consideration of six two-year appropriations bills each cycle, rather than twelve one-year spending measures, would free up significant legislative time and help Congress to complete its appropriations bills on schedule.

• In the first year: Defense; Energy and Water Development, and Related Agencies; Financial Services and General Government; Homeland Security; Interior, Environment, and Related Agencies; Labor, Health and Human Services, Education, and Related Agencies.

• In the second year: Agriculture, Rural Development, Food and Drug Administration, and Related Agencies; Commerce, Justice, Science, and Related Agencies; Legislative Branch; Military Construction, Veterans Affairs, and Related Agencies; Transportation, Housing and Urban Development, and Related Agencies; State, Foreign Operations, and Related Programs.

Rationale. A biennial budget cycle could lead to timely completion of six appropriations bills each year in lieu of multiple continuing resolutions or an omnibus appropriations bill that Members have had no opportunity to debate and amend. Congress would have an additional three months to pass six of the twelve appropriations bills. The freed-up floor time could be devoted to oversight and periodic reauthorization of discretionary programs.

Rationale. This rule recognizes that a biennial appropriations cycle may invite long-term continuing resolutions. The provision would compel Congress to fully fund the Federal Government without resorting to long-term continuing resolutions.

Rationale. This provision would align the time period of authorizations with the biennial appropriations process.

Rationale. The current services submission should provide sufficient detail for the Budget and Appropriations Committees to begin their work on the budget resolution and the appropriations bills, respectively.

Rationale. A revised budget resolution affords both Chambers a means of addressing changing priorities, economic developments, and other factors. This change would clarify that a revised budget resolution is valid for all purposes of the Budget Act. Any revised budgetary levels set forth in this budget resolution are binding and fully enforceable through points of order, and any new or revised reconciliation instructions are binding on the authorizing committees. Both a revised budget resolution and a reconciliation bill pursuant to it are fully privileged and would be considered under expedited procedures in both Chambers.

Rationale. This change is intended to focus attention on the elements of the budget determined by the budget resolution: the overall discretionary levels within the 302(a) allocations and the direct spending levels reflected in the allocations and the reconciliation instructions. The budget resolution establishes limits on the overall level of discretionary spending (and in recent years the amount for defense and non-defense) and the proposed changes in direct spending by committee. The proposed distribution would have the added benefit of emphasizing the categories of Federal spending that must be controlled to put the entire budget on a sustainable path.

Rationale. The functional categories would be retained in the report because they provide the Budget Committees a means of highlighting Congress's priorities and offer a common framework for comparing proposed budgets with past budget resolutions.

Rationale. The proposal would create a strong incentive for lawmakers to complete their budget work in a timely fashion and as required by law.

Rationale. This proposal would enable Congress to consider multiple reconciliation bills in each of three categories: spending, revenue, or debt. It also would clarify that the Budget Act permits reconciliation directives to carry over from session to session and Congress to Congress.

Rationale. The budget resolution plays a critical role in defining Congress's priorities, and establishing a broad fiscal policy. Without it, Congress has no context to guide individual spending and tax bills. The Budget Act recognizes these matters, but current practices provide too many options for lawmakers to avoid adopting a budget resolution. Eliminating these loopholes will enhance the imperative for Congress to exercise this fundamental governing responsibility.

Rationale. As previously described, a "blanket waiver" obviates the ability of any Member to enforce budget rules for a measure that would exceed the parameters set forth in the budget resolution. The Rules Committee identifies all budget waivers in the report accompanying a rule governing floor consideration of legislation, but Members seldom have time to read every report before the rule must be voted upon. This proposal would require that all waivers be specifically and individually identified in the rule itself before a vote on the relevant bill or joint resolution.

Rationale. Under a long-standing practice in the House, rules providing for consideration of legislation may not be amended. Consequently, Members of the majority have no effective means of enforcing budgetary requirements if a rule waives them. This proposal would empower individual Members to help enforce budget disciplines.

Rationale. This reform ensures that legislation considered by Congress without having been reported by the committee of jurisdiction will be subject to the budget rules set forth in the in the Budget Act and budget resolution. Under the Budget Act, most points of order apply only to reported bills, creating an opportunity to circumvent budget disciplines.

Rationale. The current base of programs subject to automatic budget enforcement procedures is narrow, with many programs exempt from its effects. When automatic enforcement is triggered on a narrow base of programs, the required reductions and other changes in budgetary resources becomes more severe because fewer programs are available to absorb the changes. Broadening the base for automatic enforcement would alleviate this problem. It also would create a greater incentive to correct breaches of spending limits through the legislative process because a much wider range of government programs would be affected by automatic enforcement.

Rationale. Asset sales and timing shifts do not result in real savings and therefore should not be allowed to offset what are frequently permanent spending increases. They are already excluded from calculations under the Statutory Pay-As-You-Go Act of 2010 [Statutory PAYGO] and the Balanced Budget and Emergency Deficit Control Act of 1985.

Rationale. Under current law, emergency-designated appropriations are effectively excluded from both congressional budget limits, such as the 302 allocations, and the statutory discretionary spending limits. This process entails both Congress and the President to designate specific appropriations as an emergency requirement. Members of Congress are not usually permitted to challenge an emergency designation. Striking such a designation would cause previously exempt appropriations to score, resulting in a breach of the 302 allocations and making them subject to a point of order. This proposal would allow for open debate and justification for any use of the emergency designation.

Rationale. Under current law, the Congressional Budget Office baseline retains emergency spending amounts and increases them for inflation over the budget window -- just as with other discretionary spending. Thus, even though emergency spending is supposed to be temporary, the baseline treats it as permanent and growing. The proposal would eliminate this particular bias toward higher spending.

Rationale. Emergency spending is supposed to be temporary and aimed at addressing urgent, unanticipated conditions that threaten life, property, or national security. Allowing such spending to be available without time limits only encourages higher spending. This proposal would reverse that incentive. It also would close a loophole that allows unspent emergency funding to be used as offsets for other spending increases.

Rationale. These proposals are intended to provide some assurance that the emergency designation applies to legitimate.

Rationale. Emergency-designated spending does not trigger points of order or other forms of automatic enforcement. While both the House and Senate hold appropriations bills harmless for emergency-designated appropriations, they achieve this result through different procedures. In the Senate, the applicable limits in the budget resolution are increased by the amount of the designated appropriations. In the House, the emergency-designated appropriations are not counted for the purpose of determining points of order. Conforming House and Senate treatment of emergency spending would simplify an inherently complex process. While the House approach of simply exempting emergency appropriations does not require adjustments to the levels, the Senate approach is more transparent because it recognizes that spending is taking place. The Senate approach has the added advantage of conforming congressional treatment of emergencies under the budget resolution with the Office of Management and Budget's treatment of such spending under the discretionary spending limits in law. The Office of Management and Budget follows the Senate practice of adjusting the discretionary spending limits by the amount of the designated appropriations.

Rationale. The emergency designation is reserved for spending needed to respond to unanticipated events that pose a threat to life, property, or national security. Such spending is exempt from all budgetary limits, which creates an incentive to exploit the designation for spending that does not meet the definition. Hence, it is necessary to closely monitor the usage of emergency appropriations to determine whether restrictions should be imposed on emergency funding. This report would essentially update a similar report the Government Accountability Office submitted to Congress on emergency designations prior to fiscal year 2008.

• The level of discretionary appropriations for each fiscal year is assumed to be the same level as the most recently enacted, excluding any appropriation designated as an emergency. The baseline will not assume discretionary inflation.

• Estimates of the budgetary effects of existing programs that affect direct spending or revenue are assumed to follow current law. Once a program expires, its budgetary effects are not assumed to continue in the baseline unless Congress reauthorizes them.

• Programs financed by trust funds are assumed to follow current law requirements governing the level of allowable spending from the trust fund. The baseline cannot assume a greater level of spending than current law would allow.

Rationale. The purpose of a trust fund is to provide a mechanism that creates a funding stream dedicated to a specific programmatic goal. Many trust funds are funded by special taxes or user fees by specific groups with the understanding that those resources will be set aside for a specific purpose and not be spent on other non-related programs. The proposed treatment of General Fund transfers is intended to accurately reflect the true cost of General Fund infusions to trust funds and is consistent with the Highway Trust Fund scoring rule that has been included in previous House-passed budgets -- most recently S. Con. Res. 11, the Fiscal Year 2016 Concurrent Resolution on the Budget.

Rationale. Customarily, the Congressional Budget Office prepares a cost estimate for every reported bill. House rules further stipulate that this cost estimate must be incorporated into the report. There is one exception and that is the twelve regular appropriation bills reported by the Committee on Appropriations. While estimates for appropriations bills tend to be the sum of appropriations they provide, Members should be entitled to an objective estimate of the bill before they are forced to cast their votes on the measure. This requirement should not significantly increase the Congressional Budget Office's workload because the agency already prepares estimates of appropriations bills but does not make them public.

Rationale. The Congressional Budget Office customarily provides Congress with the estimated budgetary impact of legislation, called a cost estimate, when legislation is reported from a committee. Members of authorizing committees have a right to know the budgetary implications of pending legislation, however, before they cast their votes in committee. The availability of such estimates will improve budget enforcement because it is easier to secure changes in legislation before Members have voted for it in committee. The Congressional Budget Office would be required to make such preliminary estimates publicly available in electronic form at least twenty-four hours prior to committee consideration. This availability requirement is consistent with the current requirement regarding the availability of legislative text prior to a markup under House rules.

Rationale. The interest costs associated with legislation are not currently reflected in the methodology for producing cost estimates. Including the costs of debt service would better inform Congress and the public of the true costs associated with legislation.

Rationale. The most serious shortcoming of Statutory PAYGO is that it addresses only legislation that would increase the deficit; it does nothing to compel action to reduce the deficit or put the government's budget on a fiscally sustainable path. The statute has created the illusion of budget discipline by ratifying existing budget deficits as the measure of fiscal responsibility. Since Statutory PAYGO was enacted in 2010, the Federal Government has accumulated nearly $7.5 trillion in new debt in seven years -- about $1 trillion per year on average.

• Following congressional adoption of a concurrent resolution on the budget, the Clerk of the applicable Chamber of Congress may be directed to prepare a joint resolution that establishes or adjusts budget limits in law. The measure would be sent to the President for signature.

• The final vote on the concurrent resolution on the budget would be considered a final vote on passage of the joint resolution. Hence, the joint resolution would not require a separate vote.

• If the President did not sign the joint resolution, the concurrent resolution on the budget would continue to serve as the basis for budget enforcement.

Rationale. Direct spending, also known as mandatory or automatic spending, currently consumes two-thirds of the Federal budget and its share is quickly growing larger. This type of spending is largely outside the control of Congress and receives inadequate oversight because it does not require annual appropriations to continue -- that is, it is permanent spending, or in some cases semi-permanent. Subjecting more mandatory spending programs to annual appropriations would represent a significant step toward controlling this spending.

Rationale. The intent of the rule is to stem the proliferation of new direct spending programs. Congress routinely creates programs with mandatory funding, not because there is some feature in the program that requires guaranteed funding, but so Members can feel assured the programs will be funded regardless of their performance and competing priorities.

Rationale. The intent of the rule is to correct a defect in the Budget Act, which provides for the referral of direct spending measures to the Appropriations Committees. In the forty-two years since enactment of the Budget Act, such a bill was referred to the House Appropriations Committee only a handful of times, and the Committee has never reported a bill referred to it under this provision.

Rationale. This provision increases transparency regarding the short- and long-term costs of complying with Federal regulations.

Rationale. This requirement would help control regulatory burdens by monitoring the effects and compliance costs of new rules. It is similar to practices that have been successful in other countries including the United Kingdom and Canada.

Rationale. This proposal would require the Congressional Budget Office, for the first time, to establish a baseline level of regulatory compliance costs the government places on individuals, businesses, and the economy.

Rationale. This provision would prevent guidance documents that have significant regulatory costs from escaping the regular oversight and public input that is required for rulemaking before it is implemented.

Rationale. An annual Fiscal State of the Union presentation would promote transparency and greater awareness of the financial condition of the United States Government. The presentation would include assets, liabilities, spending, revenue, and the sustainability of health, retirement, and economic security programs.

Rationale. The size of the Federal budget and the complexity of the budget process render them virtually incomprehensible to the general public. There is no dependable source that the public can consult to find an objective, clear summary of the congressional budget resolution or the President's budget submission. This table was routinely included in President's budget submission until it was discontinued in fiscal year 2003.

Rationale: The current budget process lacks a mechanism that ensures fiscal sustainability. Establishing enforceable long-term debt targets is critical to implementing a sound strategy for tackling the mounting level of debt and putting it on a sustainable path. Instead of focusing mainly on short-term spending levels for annual appropriations -- which is emphasized in today's budget process -- this reform would add emphasis to long-term fiscal sustainability. The reform would also establish an expectation that Congress would need to make regular, annual progress toward dealing with the Nation's long-term debt problem, rather than continually delaying action, which only causes the debt problem to grow worse and solutions to address it ever more difficult.

Rationale. Enforceable debt targets are a fundamental means of limiting Federal debt. The reform outlined here aligns the enforcement of the debt limit with the desired debt targets and trajectory established by Congress and the President. It would also provide a more economically useful measure to limit the Federal debt -- the ratio of debt to gross domestic product -- which better reflects the Nation's ability to finance debt than does either a fixed dollar value that has little connection to the Nation's fiscal health or a debt limit suspension period that has no connection to it. The reform would also avoid high-drama debt-limit votes so long as the debt remains on a sustainable path determined by Congress and the President. The debt limit vote, however, would not be avoided if the debt strayed away from the required fiscal path.

Rationale. Accrual-based budgeting, which is designed to capture the total life-time costs of programs, can often provide more accurate budget data than cash-based accounting, which only projects year-by-year cash flows and does not capture budgetary effects outside of the budget window. Some Federal insurance programs and most retirement programs have budgetary effects that occur outside of the budget window and are not included in Congressional Budget Office cost estimates. This reform would capture those missing budgetary effects, thereby providing better information to Congress to make funding decisions.

Rationale. Under current law, cost estimates of the budgetary effects for Federal credit programs do not include a measurement for systemic market risk, which causes Congress to underestimate the true costs of credit programs. The proposal would remedy this shortcoming and improve the allocation of resources among Federal programs. It would also provide two years for the President to analyze systemic market risk to Federal credit programs and incorporate those changes into the President's budget submission.

Rationale. The appropriations justifications, as they are known, are one of the most significant parts of the President's budget submission, but there is no uniform requirement that these estimates be made available to the general public. Establishing publishing requirements and guidelines would help ensure the reasonableness of agency requests, and improve transparency and accountability to the public.

Rationale. This proposal modifies and codifies a rule in section 3101 of the fiscal year 2016 budget resolution (S. Con. Res. 11). This rule has proved to be an effective deterrent to committees that move legislation whose costs balloon outside the budgetary window.

Rationale. By incorporating the budgetary effects of how major legislation will affect the economy, this reform will provide Members of Congress with a more comprehensive estimate than can be produced using only the traditional, conventional scoring methods which implicitly assume that legislation has no effect on the broader economy. This reform will allow Members to make use of the best information available when considering this kind of legislation.

Rationale. The functional distribution table, which was previously included in the text of the budget resolution, provides valuable information on the assumed purposes of proposed spending levels. The table comparing user fee collection and spending by function shows the extent to which user fees support dedicated activities versus general government and the degree to which user fees offset spending.

Rationale. Currently, contract authority is treated as mandatory budget authority, but outlays are controlled by obligation limits that are set in the annual discretionary appropriations process. This current budgetary treatment allows funding provided by contract authority to escape the statutory limits on discretionary spending, which only apply to budget authority, not outlays. The proposal would correct this problem by treating obligation limits as discretionary budget authority, which is subject to the statutory spending limits. This proposal would not otherwise change the operation of contract authority.

Rationale. The most recent assessment on budget concepts occurred in 1967. Numerous fiscal conditions have changed since then, including the predominance of direct spending programs in the Federal budget. A reassessment of budget concepts is clearly warranted in view of major developments over the past fifty years.

Rationale. Social Security, the Postal Service, Fannie Mae and Freddie Mac all have very real impacts on the Federal budget notwithstanding their classification as off-budget. This proposal would remove a common misperception that these programs are not part of the budget, do not affect taxpayers, and have no impact on Federal finances. The protections these off-budget programs currently receive -- that is, they are not subject to the Budget Act and other enforcement rules and, therefore, cannot be used to offset unrelated spending -- will remain. The provision titled "Treatment of Trust Funds" described elsewhere in this document, includes a proposal that does not allow changes in the budgetary effects of trust funds to offset unrelated spending. This proposal does not impose limits on Social Security or any other direct spending program.