Senate Democrats’ monumental budget blueprint would increase spending by $3.5 trillion over the next decade. The new spending comes with unclear revenue offsets.
Still, by referring to it as “mandatory spending” and by using budget procedures, Democrats may be able to enact the spending by a simple majority vote. Tack on $1.2 trillion bipartisan infrastructure legislation and federal spending could be locked in at nearly $4.7 trillion with public debt, according to their proposal, topping $45 trillion by 2031. The future cost of servicing this level of debt means a lower standard of living for everyone.
Before adding crippling levels of mandatory spending to the books, it might be worth understanding how we got here.
President Richard Nixon’s budget message to Congress in 1973 stated: “The fragmented nature of Congressional action (on the Budget) results in a … serious problem. ‘’Backdoor’ financing, provides permanent appropriations, authority to contract in advance of appropriations, authority to borrow and spend without appropriations, and program authorizations that require mandatory spending whether or not it is desirable in light of current priorities. … Congress must accept responsibility for budget totals and must develop a systematic procedure for maintaining fiscal discipline.”
Congress responded by enacting the Congressional Budget and Impoundment Act of 1974. Nixon resigned a month later, but for almost 50 years, the CBA remained the basic tool to develop the country’s fiscal blueprint.
Today, that tool is under assault, altered in ways the authors never imagined.
Yes, amendments have been added to improve its functioning, some with poor, unintended consequences. But the concerns expressed by Nixon and Sens. Ervin, Nunn, Metcalf, Percy, Byrd, and Cranston remain as real today as they did in 1974. The federal deficit, 3.3% of GDP in 1975, today exceeds 13%. More disturbing, publicly held debt averaged 24.6% of GDP in 1975. Today, it exceeds the size of our entire economy — standing at 103% of GDP.
Further, the makeup of government spending has changed dramatically. In 1975, total federal spending represented 18% of our economy, and half of that spending (10%) fell into the category most controllable by Congress: annual appropriations. Today, federal spending exceeds 30% of GDP (driven in part by COVID-19 expenses), and Congress-controlled annual appropriations declined to less than 8%. But mandatory spending: “backdoor” financing, authorizations to spend without appropriations, the raison d’etre for the CBA, originally less than 7% of all spending in 1975, has exploded to over 20%. Yet, federal revenues have not changed — 17.4% of GDP in 1974 and 17.2% today.
The blame rests with both political parties for decisions made to unleash uncontrollable spending while depressing the revenues necessary to pay the country’s bills.
Beginning at the turn of this century, both parties turned to budget reconciliation to advance their agendas. In 2001, the Congressional Budget Office, Federal Reserve, and outgoing Clinton administration projected surpluses as far as the eye could see. Facing a 50-50 Senate, President George W. Bush used the procedure to reduce the projected surplus with 10-year tax cuts. But if Republicans could use reconciliation to cut taxes, why couldn’t Democrats use it to increase entitlement spending?
Again, in 2017, in the face of projected deficits instead of surpluses, reconciliation was used to pass President Donald Trump’s $1.5 trillion tax cuts. It’s no surprise President Joe Biden, facing a 50-50 Senate, used reconciliation to enact the $1.8 trillion American Rescue Plan.
Democrats are looking to use the process once again for major spending increases, including transforming programs that are normally subject to annual appropriation into mandatory expenditures. With an annual deficit exceeding $3 trillion, the last thing we need is more mandatory spending. Progressives also see reconciliation as their opportunity to advance legislation not directly related to fiscal issues, such as election reform, immigration, and climate change.
In 2009, Democratic Senate Majority Leader and CBA author Robert Byrd wrote:
“I oppose using the budget reconciliation process to pass health care reform and climate change legislation. Such a proposal would violate the intent and spirit of the budget process and do serious injury to the Constitutional role of the Senate. … The ironclad parliamentary procedures it authorized was never intended for this purpose. Reconciliation was intended to adjust revenue and spending levels in order to reduce the deficit.”
On this specific issue, Congress would do well to take the late senator’s advice.
G. William Hoagland is a senior vice president at the Bipartisan Policy Center. He is the former staff director of the Senate Budget Committee and an original employee of the Congressional Budget Office.
