May 17, 2004

May 17, 2004 | News Releases on Federal Budget

Analyst: Only Genuine Reform Can Get Spending Under Control

WASHINGTON, MAY 17, 2004-It will take more than restoring budget caps and "PAYGO" requirements to fix a federal budgeting process that is almost hopelessly biased in favor of ever-higher spending, says a new paper from The Heritage Foundation.

The need for reform is plain, according to Brian Riedl, Heritage's Grover M. Hermann fellow in federal budgetary affairs. Federal spending now tops $20,000 per household for the first time since World War II. Federal spending has leapt $455 billion in just three years. Spending on entitlement programs such as Social Security and Medicare has surpassed 11 percent of gross domestic product for the first time ever and is set to keep climbing.

"This is no accident," Riedl says. "For one thing, there are no limits on how much Congress and the president may spend. Two-thirds of the budget is classified as 'uncontrollable' and therefore excluded from the usual oversight. Congress and the president don't even come together to agree on a budget framework until the end of the process, when the government's on the verge of a shutdown. The result: no ceiling on spending."

What's needed, Riedl says, is the type of budget reforms found in the Family Budget Protection Act. His paper examines this legislation closely and shows that it would:

  • Cap entitlement spending as well as discretionary spending. Putting a lid only on discretionary spending would be a mistake, Riedl says. Entitlements comprise two-thirds of all federal spending, and their budgets are projected to nearly double over the next decade.
  • Create a joint budget resolution. It makes no sense, Riedl says, for Congress and the president to work separately on something as critical as the federal budget and come together only at the end of the process. Such an arrangement inevitably courts dissension and "train wrecks."
  • Make it harder to override restrictions. Spending restrictions currently mean little in the House of Representatives, where a simple majority can vote to ignore them. To be effective, budget restraints must be enforceable.
  • Set up a "rainy day" fund. States maintain emergency funds to provide for disaster relief and other unforeseen needs. To keep members from wringing even more money from specious "emergencies," Congress should do the same.
  • Strengthen presidential "rescission." Presidents can attempt to cut wasteful spending from important legislation by requesting a "rescission" bill to eliminate it. Congress, however, usually ignores these requests. The Family Budget Protection Act would force lawmakers to defend wasteful spending-or drop it.

Riedl's paper is available at heritage.org. More Heritage research on budget issues can be found online at heritage.org/research/budget/issues2004.cfm.

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