DALLAS, October 10, 2013 ― Norm Ornstein is a congressional scholar and political scientist with the American Enterprise Institute. In this three-part interview, he explains the federal budget process as it is intended to work, as well as the current dysfunction. Today, he explains the process established for Congress to legislate government spending.
April Thompson: What is the normal procedure for the budget, for allocating spending?
Norm Ornstein: The short answer is there is no normal procedure if we mean something that’s done all the time. Here is what the process is suppose to look like, and this is true since the Budget and Impoundment Control Act of 1973 created a formal budget process. The House and Senate are each, around April to May, supposed to pass budget resolutions — they don’t have the force of law, but they set priorities. They’re suppose to set overall spending levels, revenue levels based on what we know about the state of the economy.
In an ideal world, they reconcile their differences in a budget conference, and they can come out with numbers that the two bodies are pretty much constrained to operate within. They can also pass something known as “reconciliation” which can be more specific with requirements for the other committees when it comes to policies involving taxing and spending.
Now at the same time, moving through the process are the annual spending bills. There are twelve of these in each house. The appropriations committee deals with them, they divide up all of the areas that we call discretionary spending: domestic and defense. What do we mean by discretionary? One, it’s most of what we know of as government. Two, it’s things that can be changed year to year without otherwise changing the laws.
That makes up about a third of government spending. The rest of government we sometimes we refer to as “uncontrollables,” sometimes use the catchall “entitlements.” That’s the programs that operate on formulas where the spending levels can go up or down depending on who qualifies for benefits. So that’s true of Medicare and Social Security; it’s true of payments to farmers and some payments to veterans.
So most of what we deal with in the budget is that third of discretionary domestic and defense spending. On the domestic side it can range from education to homeland security to border control to medical research to food safety, and so on.
AT: Can any of that non-discretionary spending be changed in the budget at all? Is it hands off in the budget?
NO: It’s hands off in the budget, except that you can conceivably in a reconciliation package call for particular changes in the law to conform with your budget. And of course we saw that to a degree in the Affordable Care Act, which was implemented through the reconciliation process and which included some significant changes for example in Medicare. And we’ve seen it as well on the tax side; the Bush tax cuts in 2001 and 2003 are presumably outside the purview of this process.
The revenues you raise otherwise are determined by the formulas there and the state of the economy, but those tax cuts were all implemented through that budget reconciliation process.
So we get 12 appropriations bills — spending bills. They traditionally go through the House first, the committee, the subcommittees, the committee, and then the floor. Then in the Senate they would go through a similar process. Then they would be reconciled in the usual fashion for a law. If this operated the way it suppose to, we have a fiscal year that begins October 1, and each of those appropriations bills would before October 1 go through the House, go through the Senate, be reconciled so that they’re identical, and then be signed into law by the president.
AT: That hasn’t been happening though. That’s the technical procedure, but when was the last time we actually went through this technical procedure?
NO: Yeah, you know to have everything operating the way it’s suppose to you have to go back decades. Usually what happened is that some of the appropriations bills were enacted and reconciled by Oct 1. By the way, it used to be July 1 before the Budget and Impoundment Control Act changed the date because they were slipping behind.
It turns out that it’s less about the date than it is about the fact these are intensely political decisions and often they get into end games. But the typical process now is that, more often than not, the Senate and the House don’t pass budget resolutions on which they can agree, particularly if the two bodies are held by opposite parties. Also, a large number of the appropriations bills never make it into law before the new fiscal year, and so Congress passes what’s called the Continuing Resolution that generally keeps funding at the previous year’s levels, either until they reach an agreement or for the course of the year.
This year is the limiting case, because we have none of the 12 appropriations bills that has gone through the regular order and been enacted into law.
Tomorrow, Ornstein explains continuing resolutions and the role of the Congressional Budget Office.
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