The other day, my Tax Policy Center colleague Bill Gale proposed a way to avoid the kind of government shutdown the nation has confronted for the past 20 days. His idea: If Congress fails to approve spending bills on time, government funding would automatically default to the most recent year’s levels plus some additional money to cover inflation.
I share Bill’s frustration. The current partial shutdown is pointless and disruptive, and never should have happened. But I am troubled by his solution, which makes it too easy for Congress to yet again abdicate its Constitutional responsibilities to decide how government should raise and spend money.
It would continue what has been a longstanding and troubling trend: Congress is putting more and more of its fiscal decision-making on autopilot. Already, 63 percent of government spending is mandatory. Programs such as Medicare, Medicaid, and Social Security would increase automatically year-after-year even if Congress never met. About 7 percent is interest on the debt that must be paid. In contrast, only 30 percent is discretionary spending, subject to (usually annual) congressional appropriations.
Worse, even those discretionary programs rarely receive proper oversight. That helps explain why, for example, Congress still funds zombie programs such as the Rural Electrification Administration, a New Deal program that outlived its purpose about a half-century ago.
It is important that Congress make affirmative decisions about how much to spend on programs each year. But that requires elected representatives to make choices. Which is, after all, their job—even if they often fail to do it.
Allowing discretionary spending to automatically continue at last year’s levels plus inflation makes it easy for Congress to abandon that role entirely. Why? Because it always is a safe bet that, when faced with a tough decision, Congress will opt to do nothing. The default option effectively would turn all federal programs into mandatory spending. Simply by inaction, Congress would abandon its Article I Constitutional responsibility to decide how to spend taxpayers’ money.
It may also have the perverse effect of making it impossible for a newly-elected president to use the budget to change priorities. With divided government, the opposition could block reforms by…doing nothing.
Congress similarly has abdicated its decision-making role with tax expenditures—tax provisions such as deductions for home mortgage interest, exclusions for employer sponsored health insurance and retirement savings, and special tax credits—all of which operate like spending. They are either permanent or, if they are designed to expire at some future date, rarely subject to any oversight and routinely extended. Even when they are allowed to die, it usually is due to a loss of political support rather than on lack of merit.
In a way, defaulting to last year’s spending levels mimics another example of government on autopilot—sequestration—but turned on its head. That unfortunate budget mechanism imposes automatic across-the-board cuts to discretionary spending and part of Medicare if Congress fails to hit certain deficit targets.
While Bill’s idea would allow Congress to mindlessly increase discretionary spending by failing to pass a budget, the sequester requires Congress to mindlessly decrease spending by failing to make fiscal choices. Trying to understand how these two processes would work together makes my head explode.
The Super Bowl beer tap
My colleague Gene Steuerle has written for years about the price we pay when Congress allows spending for mandatory programs such as Social Security and Medicare to rise automatically to reflect factors such as the longer lives of older adults or, in the case of Medicare, the rise in medical spending. Because Congress has been so reluctant to raise taxes (and recently has been cutting them) the result is that mandatory spending continues to grow as a share of the budget and the economy while discretionary has fallen from about 9 percent of Gross Domestic Product a decade ago to 6 percent today.
Of course, Congress waives these rules all the time. So why worry? And it is true that sequestration, for example, has been turned on and off more times than a beer tap on Super Bowl Sunday. Still….
For all their flaws, current budget rules force the political parties to battle over ideas and, today’s unpleasantness aside, reach some middle ground on discretionary spending. An automatic default to last year’s spending gives Congress an easy way to duck those fights. And, in the long run, that is bad for democracy.
I don’t have a better way to avoid depressingly common shutdowns. But it is troubling when the best we can do is make it easier for Congress to abdicate its obligation to choose how government should spend our tax dollars.