The Intersection: May 2014

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The Price of Neglect: How our Government is Designed to Manage our National Debt, and Why it’s Failing

Author: Finch Fulton, Former VOXer

The United States is over $17.5 trillion dollars in debt. We are falling further in debt every year; about $492 billion will be added to the debt in 2014 alone. We are penalized around $228 billion annually in interest payments, nearly what we pay for Medicaid every year. Ultimately, it is Congress’ job to work with the White House to find a way to bring our federal budget under control.

Somewhere in the back of your mind you probably have a general idea of how our country’s budget process is supposed to work:

  • The White House releases the annual President’s Budget Request in February (although it’s often late) for each of the federal departments.
  • Congress takes these requests and calls hearings with the department heads to review and justify each request.
  • The House of Representatives and the Senate pass individual budgets that set top-line and some specific limits for each of the policy and spending bills.
  • The House and the Senate come together to work out differences in their budgets until they are identical documents, which must then be passed again through each Congressional body.
  • The President of the United States then agrees to the budget, signing it into law.
  • Congress holds legislation related to spending under the agreed upon limits, until the next budget is passed the following year.

Recently, however, there has been so much action (and inaction) that it’s hard to step back and see the big picture of where we stand in the current budget process and what may be keeping Congress from performing their annual duties.

The power of the purse

The power in Congress is split between committees as well as parties, much like the three branches of government. The budgeting process — broadly speaking — is handled by the budget committees of the House and the Senate, the authorization committees and the appropriations committees. In a perfect world, this is how it works:

Step 1: The House and the Senate pass individual budgets that set top-line limits. Congress is the only body that can actually grant permission for the Executive Branch to spend money. Members of Congress get to decide when they want to follow the rules and the limits they have previously approved. This allows lawmakers to break their own rules whenever they are inconvenient — with relative ease.

Step 2: Committees pass authorization bills, which grant permission for the appropriation committees to spend at certain levels and on certain things. For example, if the authorization committee decides to retire a military jet program, an appropriations committee can’t spend money on that program.

Step 3: Both the House and the Senate are required to pass 12 annual appropriations bills each year:

  • Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
  • Commerce, Justice, Science, and Related Agencies
  • Defense
  • Energy and Water Development
  • Financial Services and General Government
  • Homeland Security
  • Interior, Environment, and Related Agencies
  • Labor, Health and Human Services, Education, and Related Agencies
  • Legislative Branch
  • Military Construction, Veterans Affairs, and Related Agencies
  • State, Foreign Operations, and Related Programs
  • Transportation, Housing and Urban Development, and Related Agencies

In July, the U.S. News & World Report noted, “the last time all appropriations bills were passed individually prior to the start of the fiscal year was 1994 and the last time the spending laws were passed on time was 1996, but that was accomplished with an omnibus package of six spending bills jammed together.” Congress has set no punishment for failing to follow the laws it sets for itself to follow their budget.

Here is where we stand today:

  • In August of 2011, Congress and President Obama agreed to the Budget Control Act, or the “sequester.” Under this deal, cuts of $1.2 trillion between 2013 and 2021 would take place if an agreement wasn’t made to replace these cuts with a deficit reducing deal of the same amount. No agreement was made, so the automatic $1.2 trillion cuts went into effect. This deal, which was was created and approved outside of the normal channels, was despised by many in both parties, and became a great example of why the standard process matters.
  • To replace these cuts set under the Budget Control Act, the Ryan-Murray budget was passed in December of 2013, setting top-line spending numbers for 2014 and 2015. Regardless of this, Congress is required to pass a budget and the 12 spending bills every year.
  • On March 14, President Obama released his annual budget request.
  • The House of Representatives passed their version of the budget, which was authored by Rep. Paul Ryan (R-WI), the Chairman of the Budget Committee and recent Vice Presidential candidate. This is very much a document reflecting the ideals of House Republicans – a starting point for House Republicans in their annual negotiations.
  • The Senate has announced that it does not plan to pass a budget. The process has stalled once again.

Patty Murray, the Senate Chairwoman of the Budget Committee, believes the December 2013 budget satisfies their needs until 2015. Prior to this the Senate hadn’t passed a budget since 2009. However, her idea may have merit. In fact, the idea of a biennial budget is one that her counterpart, the Ranking Member of the Senate Budget Committee Jeff Sessions previously introduced.

In the meantime Congress can still move forward with as many authorization and appropriation bills it deems fit. With the next election coming up in November, Congress seems to be content with avoiding tough battles.

Understanding the process is a key part of knowing how to fix the problem. There are many debates centered on how bad our debt problem is and the steepness of the steps we need to take to bring it back under control. The decisions that our politicians must make have to take into account our growing debt. At some point, the decision to take no action becomes the same as voting against programs politicians are pledging to protect. In the meantime, the debt clock just keeps ticking.