Lesser-Known Budget Facts
Christopher M. Russo highlights the obscure in Discourse Magazine
GMU doctoral candidate and accomplished fiscal-monetary expert Chris Russo published a piece in Discourse Magazine1 in May, “shedding light on some of the lesser-known details about how Congress sets spending, taxes and borrowing.”
I will assume that readers are familiar with the basics of the budget process, but I’d like to showcase some2 points Russo brings up that should be foremost in the minds of all fiscal nerds. Some of these may be reminders to you, others new information.
The majority (around 75%) of federal spending is mandatory spending, and not subject to annual appropriations.
Each year, the fiery debates in Congress only affect “discretionary” budget authorities.
Although revenue bills are required to originate in the House, the Senate can simply obviate this by rewriting them.
The Affordable Care Act is one infamous example: The Senate rewrote a short, unrelated House bill into the act using a 2,406-page “amendment.”
The President’s budget request kicks off the process, but has no teeth. Budget resolutions do not require his signature. Of course, he can still veto finished bills, but this can (and has been) overridden with 2/3 supermajorities in both chambers.
This one is a bit more complicated, but impactful:
Because the House does not have the Senate’s standing rules governing debate (including the procedure for invoking cloture), a special rule is required to govern the consideration of each bill [passed back from the Senate or out of committee] (e.g., specifying the time for the debate and restrictions on amendments). While the House Speaker can instead have the body consider a bill under suspension of the rules, the threshold for passage rises to a two-thirds supermajority. As such, it is possible for the Rules Committee to kill a bill with majority support in the House. [emphasis added]
Some bills are considered “must-pass,” giving an opportunity for members to add a bunch of unrelated amendments (policy riders). Since this is now common practice:
… drafters of must-pass legislation include riders that have the approval of the chairs and ranking members of the committees of jurisdiction for that rider.
When we say the government hasn’t “passed a budget” since 1997, we mean that it hasn’t followed the prescribed process. That includes passing all 12 individual appropriations bills on time.
Instead, Congress tends to pass an omnibus (a single bill that appropriates for all 12 functions) or a continuing resolution (extending the appropriations from the prior year, generally at the same levels).
Reminder of the difference between shutdowns and hitting the debt limit:
A government shutdown occurs when Congress has not appropriated spending; the debt limit is reached when Congress has not authorized the Treasury to borrow enough to meet Congress’ existing payment obligations.
These are the facts that I think are most often forgotten in the budget discourse and among the public, but Russo’s full piece details several other important components. Further, he ties this all back to our ailing fiscal health. Congress must act, but if the procedure trips up its acting, then all the dire warnings about debt and interest are for naught.
Russo concludes with:
As we head into an uncertain and contentious election, we may find ourselves running over the mother of all fiscal cliffs. Republicans and Democrats hold razor-thin majorities in the House and Senate, respectively. Passing appropriations before the start of the new fiscal year (October 1) will require leadership and good faith from both sides.
…
Moreover, the current debt limit suspension expires at the start of the new calendar year. The 118th Congress could kick the can, relying on the 119th Congress to find a solution while Treasury’s “extraordinary measures” allow the government to continue borrowing for a limited time. I urge against that choice.
Discourse is another project by the Mercatus Center. It is run as an open platform for experts on politics, economics and culture to contribute… to the discourse! Highly recommended - you never know what gems you’ll find there.
I am leaving out some points that have been covered in recent BP50 posts.
#4 is even more complicated than that. Leaders PREFER to choose between a "special rule" [which is actually standard practice, not a special thing] and suspension of the rules. Yet House Rules clearly spell out procedures for considering legislation without the controlled sequence "on ordering the previous question" to set up the vote on the simple resolution that's a "special rule" for considering the substantive bill. Floor practices are set out generally in House Rules XIV through XXI, but the entire Rules package shapes the process. Or it does to the extent that it's followed instead of supplanted by "special" rules. Voting down the motion to order the previous question could let this play out, but that would be a much bigger deal than voting down the rule, so it doesn't happen.
Good primer.