STATEMENT BY JIM HORNEY AND ROBERT GREENSTEIN
ON THE SENATE BUDGET COMMITTEE PLAN
The budget plan being
unveiled today by Senate Budget Committee Chairman Kent Conrad represents a
fundamental and important change in budget policy. In contrast to budgets of
recent years that simply assumed that new entitlement spending and tax cuts
would be financed by additional borrowing, the Conrad plan requires that even
widely popular expansions of entitlement programs and tax cuts be offset by
reductions in other entitlement spending or increases in other taxes.
Some early news accounts of
Chairman Conrad’s plan seem to have missed this key point by focusing instead on
the failure of the proposed budget resolution to specify exactly what offsets
will be used to pay for the program expansions and tax-cut extensions that are
assumed in the plan (and specified in several “deficit-neutral reserve funds”).
This represents not only a misreading of the big picture, but also a
misunderstanding of the role the budget resolution plays in the Congressional
budget process — particularly the role of the budget resolution under a
Pay-As-You-Go regime.
By the design of those who
drafted the Congressional Budget Act in 1974 (and those who have modified it in
the years since), the budget resolution is not a detailed budget plan like the
President’s budget. A budget resolution is, instead, a vehicle that allows the
Congress to set and enforce overall targets for federal spending and revenues,
to indicate Congressional budget priorities in broad terms, and to serve as a
blueprint for the consideration of subsequent legislation that fills in the
details of the budget. The Budget Committees are not allowed to use the budget
resolution to dictate to other committees exactly what actions they should take
on the budget. The Budget Act does not even allow the Budget Committee to
determine how overall discretionary funding will be distributed among the
various Appropriations Subcommittees.
When the Pay-As-You-Go
requirement helped turn deficits into surpluses in the 1990s, budget resolutions
regularly included so-called “deficit neutral reserve funds,” which indicated a
commitment to enactment of certain high-priority program expansions or tax cuts,
but allowed legislation to achieve those goals to go forward only if the costs
of the legislation were offset. Consistent with the role of the budget
resolution in the Congressional budget process, those reserve funds leave it to
the committees with jurisdiction over those programs and taxes to determine the
details of the program increases or tax cuts and to produce the entitlement
reductions or revenue increases to pay for them. With the renewed commitment to
Pay-As-You-Go, it is appropriate that budget resolutions rely once again on
deficit-neutral reserve funds to identify high-priority goals and accommodate
legislation to achieve those goals, while maintaining the requirement that even
legislation to achieve high-priority goals must be paid for.
Instead of being criticized
for not laying out a budget that details how initiatives identified in the
budget resolution should be paid for, Chairman Conrad should be commended for
sticking with his commitment to Pay-As-You-Go in the face of pressure to allow
popular initiatives (including an expansion of farm programs that are so
important in his home state of North Dakota) to go forward without offsets and
thereby add to the serious budget problems that face the nation in coming
decades. The real test of the commitment of this Congress to Pay-As-You-Go will
come later, when the legislation providing for assumed program expansions and
tax cuts is considered, but the development of a budget resolution that
reinstates the Pay-As-You-Go requirement and adheres to it is a crucial step in
the return to fiscal responsibility.
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The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. It is supported primarily by foundation grants. |