The Heritage Foundation

Backgrounder #1297 on Federal Budget

June 22, 1999

June 22, 1999 | Backgrounder on Federal Budget

Last Chance for Washington to Show Good Faith on the Budget

When Congress and President Bill Clinton reached a historic budget agreement in 1997, it was heralded by its authors both as a crucial long-term bipartisan strategy to achieve a budget surplus and as giving substance to the President's declaration that the "era of big government is over." Despite those solemn words, it became clear within weeks that President Clinton did not intend to abide by the agreement. The first budget he submitted after the agreement (for fiscal year [FY] 1999) contained discretionary outlays scored by the Congressional Budget Office at $12 billion over the agreed level.1 And the budget he submitted this year, for FY 2000, continues this abrogation of the agreement, with discretionary spending exceeding the agreed caps by $30 billion.

Last week's House vote for a huge cap-busting boost in airport spending2 strongly suggests that the House majority leadership, and many conservative Members, also are not serious about holding the line on spending. The lopsided vote makes a mockery of their pious statements about curbing the growth of government and reducing taxes. As The Washington Post accurately concludes, the bill

essentially puts airports ahead of other government priorities--such as defense or education--and could suck up the money that GOP lawmakers had wanted to use for a big tax cut this year.3

If the congressional leadership really intends to keep its commitments, it must refocus lawmakers' attention on decisions they must make now to get spending under control, such as the Senate's paring back of the airport bill. Beyond that, they must challenge the President to take actions now to reform major entitlement programs so that future Congresses and Presidents will not face an insurmountable task in restraining the growth of taxes and the federal government.

Hold the Line on Spending

If pledges to control spending are not to be viewed cynically by ordinary Americans, the first thing Congress must do is adhere firmly to caps on discretionary spending and block creative accounting to avoid them--such as shifting spending from "discretionary" to "mandatory" accounts. This Congress committed itself in this year's budget resolution to holding to the multi-year budget caps agreed to in the last Congress. It must continue to hold this line: Raising the discretionary budget caps would be a disaster for taxpayers and every American who desires a federal government that is reasonably efficient and carries out only its appropriate functions.

History shows that, once the spending floodgates are opened in Washington, efforts to prune waste and introduce long-overdue reforms are the first things to be washed away in the deluge, and special interest lobbyists no longer face any obstacle in making sure that their clients prosper at the expense of ordinary Americans.

Unfortunately, pressure has been mounting for Congress to abrogate the budget agreement by breaking the discretionary caps. The Clinton Administration continues its policy of ignoring the agreement by proposing a stream of popular spending plans funded with new taxes or shady accounting. And Congress has been reinventing the English language by using cap-avoiding "emergency" appropriations to shift spending items from the regular appropriations process.

Progress on the current appropriations bills also does not auger well for the future. Instead of making significant reductions in the first-up "easy" appropriations, such as agriculture, to leave room for extra spending on politically sensitive health and education bills later in the year, the committees and the full House are making only token cuts or none at all. And the success of Representative Bud Shuster (R-PA) in winning House support for a huge increase in airport funding means the House will violate the caps by $19 billion over the next two years. That measure had the support of Speaker Dennis Hastert (R-IL) and the votes of many leadership and conservative members--including those who regularly condemn creative accounting tricks in the budget.

What to Do Now

Instead of running up the white flag on spending control by raising the budget caps on discretionary spending, congressional leaders should make clear that they will honor the 1997 agreement. In addition to maintaining its commitment to the budget caps, Congress should call on the White House to join with it to:

  1. Eliminate programs that are clearly wasteful or duplicative.

A host of "corporate pork" programs continue to receive funding because of the narrow but vehement business interests that support them. Examples include the Fossil Energy Research program, which uses taxpayers' money to offset the research costs of oil, gas, and coal companies. Other programs clearly have outlived their usefulness or are wasteful, such as the $9,000-per-employee furniture costs at the proposed new U.S. Patent and Trademark Office.4 Others duplicate one another or private activities and could be consolidated or eliminated, such as the Department of Energy's national laboratories, which the U.S. General Accounting Office noted duplicates much private-sector research.5 Such programs reflect neither the needs of ordinary Americans nor the political philosophy or agenda of either party. They are the "A list" that lawmakers of either party who are serious about efficient government should pledge to eliminate.

  1. Move forward with major reforms to yield significant savings.

Addressing the inappropriate or inefficient role of the federal government in other areas would yield large savings and redirect federal agencies to carry out functions that are more appropriate. The most urgent step needed to accomplish these savings is a drastic change in the Shuster airport bill. Not only does the spending need to be scaled back and the accounting tricks removed, but also all funding and spending decisions for airports should be transferred to the states, where they belong. The Senate still has to address the measure and, of course, President Clinton has a veto pen. Congress also should make it easier for states and cities to privatize their major airports, as Great Britain has done. Such sales or leases would improve airport facilities and bring huge revenues to cities.6

Other major actions need to be taken as well. For example, the host of local and regional economic development programs spread through several agencies are the proper domain of the states, not Washington, D.C. Similarly, the huge, pork-laden surface transportation programs of the federal government have had little national rationale since the completion of the interstate system. These should be turned back to the states with the fuel tax authority to fund them. Congress also should sell the remaining federally owned power marketing administrations (PMAs). The relatively small Alaskan PMA was sold last year for $82 million.

  1. Begin reforming programs that will not yield savings today but will help future Congresses and Administrations bring spending under control.

Congress and the Clinton Administration must focus on taking the first steps to reform major entitlement programs and the budget process itself. Although these steps will make little or no difference to this year's budget, they are needed to prevent future Congresses from becoming overwhelmed by long-term entitlement spending.

Unfortunately, President Clinton has shown no interest in making progress with bipartisan proposals in Congress to address such sensitive programs as Medicare and Social Security. In particular, he should be working with Senator John Breaux (D-LA) and Representative Bill Thomas (R-CA) to move forward with bipartisan legislation based on the views of a majority of members of the recent Medicare Commission.7 In addition, he should support the efforts of a bipartisan group of lawmakers in both chambers to achieve Social Security reform through personal accounts funded with a portion of the payroll tax.8 Instead, the President prefers such steps as shifting money from one trust fund to another or raiding general tax revenues while declaring he successfully averted the need for action.

It is time for influential lawmakers to demand that President Clinton exercise leadership by encouraging bipartisan approaches on Capitol Hill. Action, too, is needed to tighten the budget process to limit the opportunity to avoid spending controls, such as tighter requirements for spending to be considered as an "emergency" and more effective obstacles to shifting money into mandatory accounts.

Conclusion

Congress is at a crossroads in the battle to restrain the size of the federal government while saving Social Security and returning Washington's tax windfall to the American people. Right now, it is on course to do none of these things. Only by reviving its sense of purpose and challenging the President will it be able to avoid more spending, more taxes, and greater public cynicism.

Stuart M. Butler, Ph.D., is Vice President of Domestic and Economic Policy Studies at The Heritage Foundation.


1. Congressional Budget Office, An Analysis of the President's Budgetary Proposals for Fiscal Year 1999, March 31, 1998, pp. 3-20. Also available on the Internet at http://www.cbo.gov

2. H.R. 1000, "Aviation Investment and Reform Act for the 21st Century," sponsored by Representative Bud Shuster (R-PA).

3. Eric Pianin, "Big Boost Voted for Air Travel Facilities," The Washington Post, June 16, 1999, p. A1.

4. U.S. Patent and Trademark Office, "Business Cost Analysis of Space and Facilities Management," prepared by Deva and Associates, May 14, 1998.

5. U.S. General Accounting Office, Uncertain Progress in Implementing National Laboratory Reforms, GAO/RCED-98-197, September 10, 1998, p. 4.

6. For more information on the issue of airport privatization, see Ronald D. Utt, Ph.D., "FAA Reauthorization: Time to Chart a Course for Privatizing Airports," Heritage Foundation Backgrounder No. 1289, June 4, 1999.

7. See Stuart M. Butler, Ph.D., "Reorganizing the Medicare System to Ensure a Better Program for Seniors," Heritage Foundation Backgrounder No. 1294, May 27, 1999.

8. David C. John, "Kolbe-Stenholm: A Firm Foundation for Social Security Reform," Heritage Foundation Backgrounder No. 1279, May 10, 1999.

About the Author

Related Issues: Federal Budget