Hopelessly Retro Budget Ideas Make a Comeback

Posted September 27, 2010 at 6:14pm

A number of old ways of dealing with budget problems suddenly seem to be back in style. A month or so ago, some lawmakers were seriously suggesting a revival of general revenue sharing, the Nixon-era program that was first discredited back in the late 1970s. Then the phrase “government shutdown” cropped up a few weeks ago, even though the tactic yielded such disastrous political results in 1995 and 1996 that it was assumed to be buried in an unmarked political grave, never to be found again.

[IMGCAP(1)]Now another golden budget oldie has appeared. Two-year federal budgeting, an idea that has been rejected so many times over the past few decades that it should have a personality complex, once again is being discussed as a deficit cure.

What’s next? Budget Committee members wearing bell-bottom pants, crushed velvet ties and three-piece white suits with wide lapels and a black shirt?

There are many variations of two-year federal budgeting. Almost all start with the president submitting a budget proposal for two fiscal years rather than just one. Some plans call for two-year Congressional budget resolutions but annual appropriations. Others would have both two-year budgets and appropriations.

But no matter what the details, the basic idea behind a two-year budget is that Congress and the president don’t have enough time to finish the required annual work on federal revenues and spending, and that leads to bad decision making. Proponents say that biennial budgeting would make it more likely that the process would be completed on time and that, as better budget decisions were made, the deficit would come tumbling down.

I want to state this as directly as possible: The only thing biennial budgeting would absolutely cut is the number of politically difficult votes that Members of Congress have to take on the deficit.

Instead of a required annual vote on a budget resolution — the only time all year that Representatives and Senators are asked to vote on total spending and revenues and, therefore, the deficit or surplus — the House and Senate would only be required to vote once every two years. Cutting the tough votes in half would be guaranteed; reducing the deficit would not.

We’ve heard the there’s-not-enough-time-to-get-everything-done-on-the-budget argument before. In 1974, the Congressional Budget Act changed the start of the federal fiscal year from July 1 to Oct. 1, supposedly to give Congress and the president more time to get all of the budget-related legislation, especially appropriations, done before the year began.

But in the three decades since the new fiscal year was put in place, the appropriations process has been completed by Oct. 1 less than a handful of times. Continuing resolutions, which the revised fiscal year was intended to eliminate, are as common today as they were back then.

Supporters of two-year budgets typically ignore one of the biggest problems with the concept: It will significantly reduce accountability. Given the ample experience gained from changing the start of the fiscal year to October, it’s a safe bet that work on the budget will always expand to fill whatever time is available. Combine that with the general political problems over the past decade of getting budget resolutions adopted, and it’s very likely that votes on two-year budgets and appropriations somehow will always occur after Election Day. In an election year, the previous votes on the budget and spending bills would have happened so much earlier that they would be political history. In addition, the next budget would be approved after voters go to the polls, minimizing spending and revenue as election issues.

But the biggest problem of all with a two-year budget is that it will make budgeting far less accurate and valuable. The world moves much faster than it used to, and budget decisions made even one year at a time don’t often match rapidly occurring economic, military or foreign events. A two-year budget would make that even worse.

For example, the White House is currently formulating the president’s budget for fiscal 2012, the year that will begin 12 months from now. A two-year process would also require the president to prepare a budget plan for 2013, the fiscal year that will begin in October 2012.

Unless they are extremely lucky, there simply is no way for any White House or Congress to correctly anticipate what’s going to happen over that period of time. Biennial budgets would have to be amended frequently, and supplemental and emergency appropriations, which get far less public scrutiny and media coverage, would be the rule rather than the exception.

This argues for the exact opposite of two-year budgets and another golden oldie. Rather than passing a budget every two years, Congress should go back to adopting multiple budget resolutions each year. The change would allow more frequent spending and revenue adjustments and would increase the number of times Members have to stand up and be counted on the deficit.

Or maybe we should just put a disco ball in the Capitol.

Stan Collender is a partner at Qorvis Communications and founder of the blog Capital Gains and Games. He is also the author of “The Guide to the Federal Budget.”