Fiscal Incontinence

This essay originally appeared in The New York Post on May 11, 2001.

The budget resolution just passed by Congress is designed to enforcespending discipline. But if history is any guide, lawmakers could bust thespending targets by the end of the year in a blaze of fiscal incontinence.

President Bush wants to limit federal spending increases to 4 percent, halfof last year’s 8 percent growth. But even 4 percent is faster than eitherinflation (2.6 percent) or the growth of the economy (2.5 percent to 3percent by White House estimates). Congress, bristling at the thought ofslowing spending, thought that was too little and approved a discretionarybudget increase of 5 percent.

This was not unexpected. For weeks, many on Capitol Hill have been sayingthe president’s budget hikes are paltry. And those are the Republicans. Sen. Ted Stevens (R-Alaska), chairman of the Senate Appropriations Committee and one of the most important Republicans in the budget process, said that Bush’ s 4 percent increase is “too low.” Sen. Pete Domenici (R-N.M.), head of the Senate Budget Committee, has expressed similar sentiments.

A budget resolution is required by the Budget Enforcement Act of 1974, whichalso put into place rules that would safeguard the budget targets in theresolutions. But the numbers in the resolution are often treated assuggestions. During the course of the budget process members of Congress canpass supplemental bills that exceed the budget caps. They call these “emergency” spending bills, as if funneling pork back to the home districtis the equivalent of providing hurricane relief. “Emergency” spendingtotaled $35 billion in 1999 for such “crises” as the decennial Census and an expansion of congressional staffs. Last year’s tally was $8 billion for such unexpected emergencies as the Salt Lake City Olympic games. Unfortunately, there are no safeguards to keep “emergency” spending under control in this new budget resolution.

Congress can even ignore its own rules by stating in its new budget that therules of the old budget don’t apply. Last year, for instance, the militaryconstruction bill included a provision that threw out the spending caps fromthe budget resolution passed three months earlier.

The result is that over the past five fiscal years lawmakers have spent atotal of $142 billion above what the budget resolution said they could.

And what of those five-year spending caps passed in 1997? Congress pulledthe plug on them, too. The budget would be $136 billion smaller this yearalone if those caps were still in place.

In recent years, the spending targets in the budget resolution have beenmore of a floor than a ceiling, thanks to large tax surpluses. Policymakerswould be advised to find ways of keeping the budget caps in place.Tightening the rules that allow Congress to pass emergency spending bills would be a good start. Actually cutting government spending would be even better. Best of all would be getting the surplus money out of Washington.

Tax cuts do that, which is why there should be a tax cut every year there isa surplus. If Congress tries to spend more this year than Bush’s already generous budget will allow, the president should veto those bills. And fiscal conservatives in the House and Senate need to make sure Congress follows its own rules. This budget resolution is not the worst possible outcome, but it’ s not the best either. At the very least, the budget caps must be honored. The cost of failure is steep—literally billions of dollars a year.