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Lawmakers to confront new post-spending caps reality

Will budget resolutions gain a new lease on life? Or is reinstating caps inevitable?

Some say the end of spending caps will give new life to the budget resolution, but House Budget Chairman John Yarmuth isn’t one of them. (Tom Williams/CQ Roll Call file photo)
Some say the end of spending caps will give new life to the budget resolution, but House Budget Chairman John Yarmuth isn’t one of them. (Tom Williams/CQ Roll Call file photo)

Starting in the 117th Congress, lawmakers will face a reality they haven’t had to deal with since 2010: the absence of discretionary spending caps for the upcoming fiscal year.

After a final stretch covering the next two fiscal years, Congress will have operated under spending caps of one form or another for three decades, with the exception of a nine-year period spanning fiscal years 2003 through 2011.

Without the constraint of caps, discretionary spending is likely to rise faster, some experts say. Even though Congress was unable to live under the caps and raised them through three two-year budget deals — with a fourth expected to be approved by the Senate on Thursday — some say the restraints held down spending growth compared to what would have happened without caps.

Leon E. Panetta, a former Office of Management and Budget director and House Budget chairman, likens Congress’ current fiscal actions to “drinking at the bar and not having to pay for it … until at some point they realize the country is going to face a very serious hangover.”

After the latest budget deal, he said, “We’re going to see added amounts to the debt. And when the caps come off, it will be that much easier” to raise spending.

Without caps in place, a key question facing lawmakers will be: How does Congress set topline spending limits to allow the appropriations process to proceed?

The most obvious answer is that the congressional budget resolution could gain a new lease on life. The tax and spending blueprint sets toplines for Appropriations committees that are enforceable by congressional rules but are not written into law. The budget resolution also sets limits on total spending and revenue, including the roughly two-thirds of the federal budget encompassing Social Security, Medicare and Medicaid among other programs that grow based on eligibility thresholds and economic conditions.

But the most obvious answer may not be the correct one. Congress has increasingly had difficulty adopting budget resolutions, causing many to pronounce the budget process broken and in need of an overhaul. Reaching agreement on a budget has become almost impossible when the House and Senate are controlled by different parties.

‘Why do we need that step?’

But it is not much easier even in an individual chamber.

House Budget Chairman John Yarmuth said he is “yet to be convinced” that the end of spending caps will give new life to the budget resolution. The Kentucky Democrat struggled to write a fiscal 2020 budget resolution this year and could not get enough support to bring it to a markup, let alone the floor, due to divisions in his party over spending levels and taxes.

“In almost a dispassionate, academic sense, you would say, ‘Yeah, it should be’” important to adopt a budget in the absence of caps, he said. “But also the other side of it is, ‘Well, we can do this without a budget resolution, so why do we need that step?’”

Since the first budget resolution appeared in 1975, Congress adopted budget resolutions almost every year up to 2001. That included the period from fiscal years 1991 through 2002 when statutory caps were in place. Then the process began to break down.

During the period between fiscal years 2003 and 2011, Congress adopted budget resolutions only half the time.

After Congress set new caps as part of a 2011 deficit reduction law, it has adopted a budget resolution only three times in the past nine years. And the sole purpose of those was to achieve partisan GOP objectives, when that party had unified control of Congress, through the use of fast-track reconciliation procedures: repealing the 2010 health care law through the fiscal years 2016 and 2017 budget process, and enacting the tax code overhaul under the fiscal 2018 resolution.

Short of adopting a budget, there are other paths to setting discretionary caps:

  • One is for the House and Senate individually to “deem” toplines, allowing the appropriations bills to be brought to the floor under enforceable spending limits.
  • A second is for Congress to take a hint from the latest budget deal and pursue similar agreements after the caps expire in fiscal 2021.
  • And a third, sought unsuccessfully for years, is for Democrats and Republicans to agree on an overhaul of the budget process.

The White House briefly floated the idea of extending discretionary caps into the years beyond fiscal 2021 in the latest round of talks. They didn’t get any traction, but Rep. Tom Cole thinks Congress may be headed in the direction of future caps deals after the current limits expire.

“I think caps have generally served Congress pretty well as long as they’re agreed upon in a bipartisan way,” the Oklahoma Republican said. “We would be better off to do that every Congress. That is, think of a two-year budget and annual appropriations. It takes a lot of the drama out of it.”

Rep. David E. Price sees the possibility of bipartisan budget agreements setting toplines that could last two years or longer. “There’s a precedent for multiyear budget agreements, and certainly for a two-year budget framework,” the North Carolina Democrat said. “So that may be what we go back to.”

Without an agreed topline between the two chambers, the House and Senate would go in their own directions in deeming a spending limit and advancing appropriations bills under that limit.

That could be a recipe for stalemate when the two chambers attempt to negotiate compromise versions. More conflict can lead to longer delays in agreeing on appropriations bills, which in turn increases the likelihood of continuing resolutions and throwing all the spending bills together into an omnibus package.

To go forward, look backward

Panetta, an author of the 1990 budget agreement that put in place spending caps and pay-as-you-go rules, said that deal was one of the factors that helped lead to several years of surpluses when Bill Clinton was president.

The former California Democratic congressman believes lawmakers will have to reinstate spending caps as part of any future effort to reduce the growth of the debt.

“Ultimately, some kind of comprehensive budget agreement has to be arrived at that will deal with future deficits,” Panetta said. “And if that happens, then there’s no question in my mind that caps are going to have to be restored, that PAYGO is going to have to be restored as a discipline, and that both entitlements and revenues are going to have to be part of that package.”

G. William Hoagland, who was staff director of the Senate Budget Committee under Chairman Pete V. Domenici of New Mexico when the 1990 deal was negotiated, hopes for a return to budget resolutions. But the issue is bigger than just discretionary spending limits, he said.

Hoagland said the real challenge in adopting a budget resolution is getting agreement between the two parties on how to address entitlement spending and revenue. Unlike a spending caps deal, he said, a budget resolution forces Congress to confront the entire budget, not just discretionary appropriations.

“I feel that the caps have put an undue focus just on that one-third of the federal budget, just the discretionary budget,” Hoagland said. “That is important, but not the total budget. And I feel that this doing away with the caps might force Congress to go back and look at the total picture, not just discretionary, which would mean actually strengthening the budget process.”

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