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January 26, 2005

January 26, 2005 | News Releases on

Analyst Proposes Ways to Avoid Budgetary Train Wrecks

WASHINGTON, JANUARY 26, 2005-After nearly 30 years of abuse and loopholes, the federal budget process is broken, according to an expert at The Heritage Foundation who has authored a paper proposing several basic reforms.

For the first four months of last year, federal agencies had to operate without knowing how much money they would receive. As President Bush neared completion of his 2004 budget request, agency managers had to lay the groundwork for their 2005 requests without knowing how much money had been spent in 2003. And in a tacit acknowledgement of the extent of the problem, Congress declined to renew the rules by which federal budgets have been assembled since 1990.

What's needed, says Heritage's Brian Riedl, is a budget process that's simple, easy to implement, less prone to loopholes and designed to encourage communication and cooperation between the White House and Congress.

Riedl suggests five reforms:

  • Place annual caps on total spending rather than bring back discretionary caps and the pay-as-you-go system. Although discretionary caps helped restrain spending, they were too easy to override. PAYGO, with its emphasis on ensuring that any adjustments in the budget were revenue-neutral -- that any additional costs were offset by additional revenues -- also limited the potential for positive change. Instead, Riedl says, Congress and the White House should establish a limit on total spending, rather than a program-by-program approach, then work together to meet those goals.
  • Promote cooperation with the president. Budget resolutions -- in which Congress sets a cap on total spending -- are not binding. Riedl proposes that budget resolutions be cast as acts of law, signed by the president. This would bring him into the process earlier, establish the spending goals up front and impose discipline on the process.
  • Clarify budget allocations. Make mandatory spending part of the budgeting process, Riedl says, and eliminate "advance appropriations and baseline budgeting" -- in which agencies spend at levels they expect to receive, then claim their budgets were "cut" if Congress doesn't fund them at those levels.
  • Enhance accountability. Congress should: Create an emergency reserve fund, limit members' years of service on appropriations and budget committees and prevent government shutdowns by providing that agencies continue to operate at current funding levels if their budgets are not approved by the start of a new fiscal year.
  • Promote realistic estimates of the impact of budget decisions. Implement reality-based scoring of tax proposals that reveals how they will affect the economy in terms of job creation and other elements of economic growth.

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