February 18, 2005 | WebMemo on Federal Budget
There is widespread recognition that the federal budget process is in shambles and that this is a major reason why it is so difficult for Washington to get the nation's finances under control. In his budget proposal this year, President Bush called for important changes to the budget process, as he has done before. Many House Republicans, particularly members of the Republican Study Committee (RSC), have been pressing for rule changes to make it more difficult to expand programs. And moderate Democrats have been working with Republicans in the Senate to explore how the budget process could factor in unfunded federal obligations.
This week, the prospects for a bipartisan consensus became ever stronger when the House "Blue Dogs" unveiled their proposal for budget process reform. The Blue Dogs are a group of 35 moderate Democrats in the House. Their budget process proposal is very consistent with proposals from the Administration and RSC Republicans.
This latest package of ideas reflects a growing bipartisan consensus that budget process reform is essential. Both the RSC and Blue Dogs, like the Administration, understand that a commitment to restraint is not enough. Lawmakers also need a budget process that helps them set priorities and make necessary trade-offs.
Congress remains saddled with an outdated budget process created in 1974 to maximize federal spending. Meaningful spending caps are absent, and the few remaining restraints are routinely bypassed through large loopholes. The Blue Dogs' proposal focuses on capping spending increases, closing loopholes, and providing lawmakers with tools to spend tax dollars more effectively and efficiently.
The Blue Dogs' 12 proposals fall into the following general categories:
There are other elements in the Blue Dog proposal that could gain bipartisan support if carefully designed, such as a balanced budget amendment. On the other hand, there are elements that will be hard to include in a bipartisan consensus, such as renewal of Pay-As-You-Go (PAYGO) rules. PAYGO requires that new legislation to increase entitlements or reduce taxes be balanced by a choice of tax increases or entitlement reductions. Congress should examine these two ideas very carefully. A balanced budget amendment, for instance, should not include loopholes or be a tool for tax increases. Similarly, PAYGO may simply force damaging tax increases if it does not include realistic steps to rein in the massive cost increases projected in major entitlement programs like Social Security, Medicare, and Medicaid.
The Blue Dogs deserve credit for putting out a strong, serious proposal to restrain runaway spending. Taken together with the Republican Study Committee's similar proposal and Administration initiatives, this proposal represent a growing bipartisan consensus that sanity must and can be restored to the federal budget process. While a few elements of the proposal will be problematic, most of it could form the foundation of a bipartisan improvement of the budget process and should be considered swiftly by Congress.
Brian Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
 Many of these House rules proposals are explained in Brian M. Riedl, "A Budget Agenda for the 109th Congress," Heritage Foundation Backgrounder No. 1812, December 15, 2004 at http://www.heritage.org/Research/Budget/bg1812.cfm.
 Many of these proposals were introduced in the 108th Congress as HR 3800. See Brian M. Riedl, "Better Budget Reform: A Guide to the Family Budget Protection Act," Heritage Foundation Backgrounder No. 1758, May 14, 2004, at http://www.heritage.org/Research/Budget/BG1758.cfm. For more on the Heritage Foundation's budget process agenda, see Brian M. Riedl, "What's Wrong with the Federal Budget Process," Heritage Foundation Backgrounder No. 1816, January 25, 2005, at http://www.heritage.org/Research/Budget/bg1816.cfm.
 For a sample list of recent pork projects, see Brian M. Riedl and Keith Miller, "Another Pork-Laden Omnibus Spending Bill," Heritage Foundation Webmemo No. 613, November 22, 2004, at http://www.heritage.org/Research/Budget/wm613.cfm.
 For examples of waste, fraud, and abuse, see Brian M. Riedl "How Congress Can Achieve Savings of 1 Percent by Targeting Waste, Fraud, and Abuse," Heritage Foundation Backgrounder No. 1681, August 28, 2003, at http://www.heritage.org/Research/Budget/bg1681.cfm.
 See Brian M. Riedl, "The Balanced Budget Amendment: The Wrong Answer to Runaway Spending," Heritage Foundation Webmemo No. 580, October 4, 2004, at http://www.heritage.org/Research/Budget/wm580.cfm.
 See Brian M. Riedl, "Restoring PAYGO Would Mean Tax Increases and High Spending," Heritage Foundation Webmemo No. 447, March 15, 2004, at http://www.heritage.org/Research/Budget/wm447.cfm.