Are permanent appropriations the fix the budget process needs?

As Kevin Kosar discussed recently, political scientist Andrew Taylor has a new proposal, outlined in the latest issue of National Affairs, to reform the appropriations process by shifting to a system of “permanent appropriations.” Under Taylor’s plan, rather than Congress needing to act each year to ensure that discretionary federal programs are funded, agencies “would be directed to plan for annual expenditures of a certain amount. The Treasury would replenish the annual allotment for each appropriation at the beginning of the next fiscal year, and repeatedly thereafter, until legislation alters it.” Kevin suggests that, while permanent appropriations might not address the country’s long term budget challenges, the reform could be helpfully disruptive in the short term.

I have a somewhat different take. One of the arguments that Taylor offers is that the current “regular appropriations process is truly stacked against fiscal hawks,” and that his alternative would blunt upward pressure on discretionary spending. Adopting a process that is explicitly intended to privilege one kind of outcome over another would represent a departure from the example set by the Congressional Budget Act of 1974 (CBA), which lays out the contemporary budget process. As several longtime budget practitioners and scholars have noted, the CBA “was not created to produce a specific result in terms of the deficit.” Rather, it set up a process that could be used to spend more or less and to have bigger or smaller deficits.

What’s more, if the goal is ultimately to reduce the size of the deficit and debt, it’s not clear that a focus on the discretionary appropriations process is the appropriate one. In fiscal year 2017, discretionary spending made up only 30 percent of total outlays, as compared to 63 percent spent on mandatory programs. Indeed, many individuals and organizations who are concerned about the size of the national debt attribute its growth to increases in spending on these entitlement programs, especially those related to health and retirement. These programs, including Medicare, Medicaid, and Social Security, operate now as permanent appropriations would under Taylor’s plan—that is, spending under them continues automatically from year-to-year unless Congress acts affirmatively to change policy. Given the political popularity of many entitlement programs, and the political difficulty of making even small scale changes to them, Congress is often content to let them simply continue as-is. If a permanent appropriations system did not include automatic adjustments for inflation or population growth, it wouldn’t suffer from the same automatic growth over time that confronts entitlements. The absence of automatic adjustments would, however, result in effective cuts to important programs on which many Americans rely. As a result, some sort of automatic increase would likely be necessary to make the proposal politically palatable, leaving discretionary appropriations in a similar place as the entitlement spending that many blame for driving up the debt. (Taylor’s proposal is also largely silent on the revenue side of the budget, which is an important driver of the overall fiscal health of the nation.)

This incentive for Congress not to act is another concerning feature of permanent appropriations. Taylor argues that permanent appropriations would allow Congress to revise spending levels “at any time,” and “would make it practical to re-empower authorizers so they can provide an additional check on augmented spending.” But Congress’s recent legislative experience illustrates how difficult it often is for the body to act without some sort of forcing mechanism—often, a deadline like the end of the fiscal year. The idea that Congress would respond to a process that reduces the amount of work it needs to do by doing work it doesn’t have to do is simply incompatible with the institution’s past behavior.

As we consider how we might improve the congressional budget process—and, to be clear, it has plenty of shortcomings—it is important to consider exactly which parts of the process no longer work well and which ones continue to muddle through more or less effectively. Indeed, a hybrid process whereby individual spending bills are drafted in committee following a regular process and then combined together into large packages for final passage has described the appropriations process for decades. This shift represents an important adaptation by Congress to the partisan and institutional realities it faces; any proposal to reform the process should do the same.

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Topics: Budget & Appropriations