The federal budget process takes quite a beating. The government hasn’t passed all its appropriations on time in 16 years, relying instead on continuing resolutions to keep the government open (or not, as we saw last year). Until last December’s Bipartisan Budget Agreement (BBA), Congress went three years without deciding how much to spend before giving agencies their funding. And with the 2011 Budget Control Act (BCA), we created a budget process Frankenstein that cobbled together inactive features of several previous budget laws and brought them back to life. The reason budgets and appropriations don’t get done on time is usually politics, which isn’t necessarily a bad thing. Budgets are inherently political documents; in some ways they are the most important statement of political priorities the government can make. The fundamental change over the last several years is that debate shifted from being mostly about specific spending decisions to instead being about the overall size of the government and its budget. This created situations where the administration and two houses of Congress could not agree on the starting point for annual budget development, much less specific appropriations.
Given that budgets are political statements and politicians (and their constituents) are divided on the size and scope of government, we should accept that establishment of overall spending levels will continue to take too long for appropriations to be completed on time. Changes to the budget process should therefore focus on ways to reduce the effect of these delays on the near-term operation of government. For example, changes could establish overall spending levels less frequently and tie appropriations decisions to this same periodicity. Changes could also insulate multi-year capital investments from annual interruptions and changes in funding; the cost and schedule of these investments are sometimes dramatically affected by these perturbations.
Our current situation shows the value of such an approach. Because the BBA applied to FY2014 and FY2015, it enabled Congress to make FY2014 appropriations and also enabled federal agencies to complete their FY2015 budget submission with known overall spending levels. As a result, Congress can complete FY2015 authorizations and appropriations in time for the new fiscal year in October. The upcoming election, however, will make that difficult as members have fewer days in Washington and debates about the size of government could delay agreement on appropriations decisions.
We should, therefore, consider the following:
Continue applying budget resolutions for two years, such as with the BBA. Budget resolutions project spending levels for 10 years but are normally only binding for the single budget year under consideration. Making future resolutions for two years at a time, as with BBA, will reduce the frequency of disruption to the budget process caused by deliberations over the size and scope of government. This proposal would also help agencies better plan their requested spending and enable biennial appropriations.
Adopt biennial appropriations. Today most federal appropriations are for one year, with some dispensation to spend funds over several years for capital investments. These new biennial appropriations would be completed in the first year of a new Congress and include two years of spending, subject to modification in the second year. This would help insulate appropriations from election-year delays in a Congress’ second year. It would also provide stability to operating accounts, which are the bulk of discretionary spending. Limiting most appropriations to two years would ensure appropriations made by one Congress aren’t binding on a future Congress.
Commit to stable funding for capital investments. Today, investment appropriations such as infrastructure construction or aircraft production can be spent over several years, since the government (like someone building a house) wants the leverage of future payments to use with the contractor. This works well if the project is completely funded in one year’s budget. Big projects from ships to spacecraft, however, require funds from several consecutive budgets because they are expensive relative to the size of the sponsoring agency’s annual budget. This makes the schedule and cost of the program very dependent on annual appropriations being completed on time and the amount being close to what was planned. This proposal would automatically appropriate funding for these “incrementally” or “split-funded” projects in accordance with the initial authorization for the program. This would enable more efficient spending as programs stay on schedule, economic quantities of material are purchased and contractors establish their industrial capacity for the planned amount of work. The agency or Congress could still change the program’s funding through subsequent authorizations.
These are modest changes. We want budgets to reflect political priorities and should accept that this will sometimes delay spending decisions. Our goal should be to prevent these delays from greatly affecting the operation of government or the cost of the programs it delivers.
Bryan Clark is a senior fellow at the Center for Strategic and Budgetary Assessments. Before joining CSBA, Clark was the special assistant to the Chief of Naval Operations and director of his Commander’s Action Group. Clark previously served on the Navy headquarters staff, where he lead studies in the Assessment Division. In that role, he participated in the 2006 and 2010 Quadrennial Defense Reviews.