Fiscal Reform and the National Debt

Fiscal Reform and the National Debt

I believe the single greatest peril to our nation is our national debt – now exceeding $19 trillion.  That debt grew by $595 billion this year – think of that as more than $4,000 added to an average family’s credit card bill.  Interest on the debt is now the fastest growing component of the federal budget and the Congressional Budget Office warns that on our current trajectory, interest costs will exceed what we are currently spending on our entire defense establishment in just six years.

Obviously, the current budget system is not working.  We need a balanced budget amendment to constrain borrowing, while restoring budget procedures that will allow Congress to regain control of the purse strings.  The explosion of mandatory spending – mainly entitlements over which Congress lacks direct control – are the crux of the problem, and I believe that two simple reforms in the budget process can go a long way to fixing it: placing mandatory spending programs under the same annual review as discretionary spending and forbidding appropriations not authorized by law.

 

Back to Basics with the Balanced Budget Amendment

House Chamber, Washington, D.C. - November 2, 2011

Mr. Speaker:

The International Monetary Fund estimated that as of Halloween night, the debt of this nation surpassed its entire economy for the first time since World War II.  We all know that if you live beyond your means today you must live below your means tomorrow.  That’s the tomorrow that our generation has created for the children who were dressed up as princesses and cowboys when they came calling on Monday.  That is our generation’s eternal shame, and something that our generation must set right. 

The House is expected soon to vote on a balanced budget amendment that is critical to stop this plunder of our children.  There are a number of excellent proposals out there and I would have no trouble supporting any of them. 

I do rise, however, to express the hope that the final product of these deliberations proves worthy of the wisdom that guided the drafting of the Constitution.

The beauty of the American Constitution is in its simplicity and its humility.  The American Founders recognized Cicero’s wisdom that “the best laws are the simplest ones.”  And they realized that they couldn’t possibly foresee the circumstances and conditions that may confront future generations and therefore they resisted the temptation to micro-manage every decision that might be made centuries in the future.  Instead, they set forth general principles of governance and erected a structure in which human nature itself would naturally guide future decisions to comport with those principles.

In crafting a balanced budget amendment, we need to maintain these qualities. We should not attempt to tell future generations specifically how they should manage their revenues and expenditures in times that we cannot comprehend.  The experience of many states that operate under their own balanced budget amendments tells us that the more complicated and convoluted such strictures become, the more they are circumvented and manipulated.

Many have quoted Jefferson’s 1798 letter to John Taylor as support for a balanced budget amendment.  Here’s what he actually wrote:

“I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing."

What is a balanced budget? It’s simply a budget that doesn’t require us to borrow.  Then why not just say so, as Jefferson did?

Instead of trying to define fiscal years, outlays, expenditures, revenues, emergencies, triggers, sequestrations and on and on, I hope we would consider 27 simple words:

“The United States government may not increase its debt except for a specific purpose by law adopted by three-fourths of the membership of both Houses of Congress.”

That’s it.

Such an amendment, taking effect ten years from ratification, would give the government time to put its affairs in order and thereafter naturally require future Congresses to maintain both a balanced budget and a prudent reserve to accommodate fluctuations of revenues and routine contingencies.  It trusts that three-fourths of Congress will be able to recognize a genuine emergency when it sees one and that one-fourth of Congress will be strong enough to resist borrowing for light or transient reasons.  The experience of the states has warned us that a 2/3 vote is insufficient to protect against profligacy.

Some advocate going much farther and establishing limitations on spending and taxation as well, but if borrowing is prohibited, there exists a natural limit to the ability and willingness of the people to tolerate taxation and therefore spending.  The real danger is when run-away spending is accommodated by borrowing – a hidden future tax – and the best and most effective way to invoke that natural limit is a simple prohibition.   

At the end of the week, I will introduce this 27-word amendment and ask my colleagues to consider it with the many others that are now before the Congress.  As I said, I like virtually all of them – they all accomplish the purpose of restraining the reckless deficits that our generation has produced.  But in drafting an amendment to guide not only this generation, but all those to follow, I would hope that we would do as the Constitutional Convention would have done if it had the benefit of Jefferson’s wise counsel: set down the general principle only and allow future generations, with their own insight into their own challenges, to put it to practical effect.

 

Reforms to Restore Congress’ Power of the Purse

House Rules Committee - April 14, 2016

Mr. Chairman:

As Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen warned that in his professional military judgment, our greatest national security threat is the national debt.  He issued that warning about four trillion dollars of debt ago.

The interest costs on that debt are eating us alive -- $255 billion this year that will accomplish nothing more than to rent the money we’ve already spent.  The Congressional Budget Office warns that within six years, our interest costs will exceed what we are currently spending on the entire defense budget.

Last May, Congress adopted a budget that changed this disastrous trajectory and pointed us back to balance by 2024.  But having set that course, we had to stay that course, and we haven’t.  The budget now awaiting House action doesn’t balance until 2026 – and only then if we are able to summon the discipline to stick to these new numbers.

In very rough figures, we are now spending $4 trillion per year.  $2 trillion of that is mainly for trust funds: social security and portions of Medicare.  When these funds run out of money, benefits automatically plunge.  That’s a major problem, but not, strictly speaking, a budget problem.

Roughly $1 trillion is the discretionary spending directly under Congress’ annual appropriations control.  This spending is actually declining.  In 2010, our discretionary spending was $1.35 trillion.  The budget now before us spends $1.07 trillion.  That’s down almost $280 billion. 

The problem is the remaining $1 trillion that Congress does not directly control.  That’s mainly entitlement programs like food stamps, Obamacare, Medicaid.  This spending is exploding. The only way to control it is to change the underlying laws, something that today’s divided government makes virtually impossible. 

But there is an alternative: to control mandatory spending through the same appropriations process that controls discretionary spending.  The problem is that our own rules won’t allow it.  Rule XXI, Clause 2(b) forbids any changes to mandatory spending in an appropriations bill.  

I propose permitting appropriations bills to include such statutory adjustments to mandatory spending as are necessary to keep within the enacted budget.  Think of it as one-stop reconciliation.   It’s necessary because spending is a pleasant experience.  Cutting spending is painful.  Thus, spending bills pass and the reforms necessary to control spending do not.  

This reform would not give the Appropriations Committee carte blanche to assume the prerogatives of authorizing committees.  It would be limited to annual and temporary changes necessary to keep spending in line with the budget parameters.  It could be done upon consultation with the authorizing committees or at least their chairmen, and would be pursuant to the budget that the Congress has already enacted.  

A second reform I urge you to consider is to gradually revive enforcement of House Rule XXI clause 2(a), which forbids appropriations except for purposes authorized by law.  This rule dates back to 1837, and is the mechanism that forces Congress to review its programs periodically.  As a program’s authorization expires, Congress must revisit it to ask the obvious questions: Is it effective?  Is it meeting its goals?  Is it still needed?  Is it worth the money we’re paying?  Depending on the answer to these questions, Congress then renews the program, reforms it, or lets it die.

This process has broken down to the point that today nearly one third of our discretionary spending is for programs whose authorizations expired years, if not decades, ago.  Some of these programs are vital.  Others have degenerated into the outrages often cited by taxpayer watchdog groups.  But authorizing committees feel no urgency to review them because we routinely fund them anyway, by routinely waiving this rule.

Given the backlog of unauthorized programs, such a reform can’t be implemented overnight.  But the House should express its intention to restore this rule over a reasonable period, first by freezing appropriations for unauthorized programs and ultimately forbidding them.  And of course, case-by-case exceptions could still be made by the House. 

Before we can provide for the common defense or promote the general welfare, we must be able to pay for them, and history warns us that countries that bankrupt themselves aren’t around very long.   I believe these two reforms – that we can make by ourselves, without action by the Senate or by the President – are essential to restoring functional control of the purse strings to Congress.

 

A Proposal to Reform Unauthorized Appropriations

Memo to Speaker’s Organizational Task Force

May 18, 2016

I propose to restore the House ban on unauthorized spending through a conference rule that includes the following provisions:

FIRST:  To direct all authorizing committees to identify any expired or soon to expire programs within their jurisdictions and to adopt a timetable for adopting legislation reauthorizing them.

SECOND: To direct the authorizing committees in this process:

1. Except for trust fund programs, to remove all possible mandatory spending provisions, and to require all revenues derived from these programs to be deposited in the Treasury and subject to annual congressional appropriation.

2. To remove all legislative and judicial authority ceded to the executive agencies in the program authorizations.  NO agency rule should have force of law without being enacted by Congress, and ALL legal disputes arising from these laws should be adjudicated by the federal courts and not by administrative agencies. 

THIRD: To direct the Rules Committee members not to report any rule to the floor that waives a point of order on Rule XXI (2)(a) on any appropriations bill for a program that has not been reauthorized after the deadline set by the authorizing committee timetables, unless otherwise requested in writing by the chairman of the relevant committee of jurisdiction AND the chairman of the relevant Appropriations subcommittee.

FOURTH: To direct the Appropriations Committee members not to appropriate above the prior year’s appropriation for any program that  has not been reauthorized after the deadlines set by the authorizing committee timetables, unless otherwise requested in writing by the chairman of the relevant committee of jurisdiction AND the chairman of the relevant Appropriations subcommittee.

 

FAQ’s

Won’t this clog the committees with reauthorizing bills?  No, because the committees will set their own timetables based on their own estimates of work load and priorities and can alter these timetables if necessary.

What happens if the reauthorization fails?  Two things.  The Appropriations Committee would not approve funding above the prior year’s level for that program, and the Rules Committee would expose that appropriation to a point of order – unless the chairmen of the authorizing committee and the appropriations subcommittee both agreed to do otherwise. 

Wouldn’t this jeopardize vital programs like the State Department and the Coast Guard?  No, the Rules Committee could still waive a point of order IF requested by the chairmen of both the relevant committee of jurisdiction AND the Appropriations subcommittee.  The House could also exercise its will to override the point of order on the floor if a majority were so inclined.

Doesn’t this hamstring the Rules and Appropriations Committee members?  When it comes to setting the agenda of the House, the Rules Committee members serve as a ministerial arm of the Republican Conference, and this rule would direct them in exercising this responsibility on behalf of the Conference.  The Appropriations Committee members would be no more constrained under this provision than they already are not to enact appropriations above the 302(a) level.  

What happens if the Senate approves funding for an unauthorized program after the deadline for reauthorization?  The differences would be resolved in a conference committee, and conference reports are not subject to Rule XXI(2)(a).   

What rules changes would be required?  This reform could be enacted by a simple rule of the House Republican Conference, in the same manner as we currently ban earmarks.