Dealing With Out-of-Control Deficit Spending in the New Congress

The appropriations process needs to be fixed

An exterior view of the building of U.S. Department of the Treasury is seen in Washington on March 27, 2020. Olivier Douliery/AFP via Getty Images

Commentary

For all the heat and light associated with the showdown battle for the speakership of the new Republican-controlled House of Representatives, the dealmaking addressed symptoms of the problems, not the root causes.

Consider the symptoms of one of the major problems that have plagued the United States for decades: out-of-control federal spending, as highlighted by the symptoms of massive spending bills that defy regular order, congressional earmarks, endless continuing resolutions, no federal budgets, and omnibus bills that fund Democrat spending priorities and include non-spending atrocities (such as gun control provisions).

What did the Mexican standoff between the Freedom Caucus and the GOP establishment Republicans accomplish to rectify out-of-control federal spending?

While most of the media attention was on the motion to vacate, in which a single member of the GOP caucus could initiate the process for removing Rep. Kevin McCarthy (R-Calif.) from the speakership, there was a glimmer of hope that agreed-upon changes to the budget process on the rules might finally begin to lasso the raging spending bull by forcing individual votes on each of the 12 appropriations bills that are bundled in the recently passed Consolidated Appropriations Act, 2023.

It would prohibit consideration of bills and joint resolutions requiring an increase in the debt ceiling, and restoring points of order against a net increase in budget authority for amendments to general appropriations bills and against budget reconciliation directives that increase net direct spending.

Another debt-related rule change is to “restore the requirement that the Congressional Budget Office and Joint Committee on Taxation, to the extent practicable, incorporate the macroeconomic effects of major legislation into the official cost estimates used for enforcing the budget resolution and other rules of the House.” The Democrats didn’t care about the long-term effects of their profligate spending on the U.S. economy.

While these are good changes in the House rules, the next Democrat-controlled Congress can revert to the existing rules that accelerate deficit spending. No commitment was made to deal with the root causes of runaway spending, and no real structural change to the appropriations process other than a few promises.

Appropriations, the Budget, and Impoundment

During the first 70 years of the 20th century, the only time the federal budget wasn’t balanced was during an economic downturn or wartime. Americans understood that a heavily indebted government ceded control of that government to its creditors, who could very well be foreign governments or others with ill intentions toward the United States.

U.S. Federal Reserve Chairman Jerome Powell testifies before the House Oversight And Government Reform Committee hearings on oversight of the Treasury Department's and Federal Reserve's Pandemic Response on Capitol Hill, Washington, on Sept. 30, 2021. Al Drago/AFP via Getty Images

Veto-proof Democrat control of Congress beginning in 1955 changed all that, as the socialism inherent in Democrat domestic politics resulted in massive spending programs, such as Lyndon Johnson’s Great Society. The Democrats’ political tactics evolved into “pay for play” (a way to milk campaign dollars for donors interested in getting favorable legislation passed) and “tax-and-spend” (a way to buy votes by bringing home the bacon—never mind the pass-through costs to taxpayers!).

The problem for the Democrats was the long-standing congressional appropriations process and a teeny tiny constitutional power granted to the president to withhold spending.

Until 1974, spending was controlled by congressional votes on separate bills that concerned specific appropriations, revenues, and authorizations—generally developed by the congressional committees responsible for funding and oversight of specific cabinet departments and agencies, such as Defense, Health and Human Services, Labor, etc. The process empowered committee chairmen while providing for public scrutiny of all appropriations bills.

Still, the Democrats had pretty much free rein to spend during the 1960s because they controlled Congress and the presidency until 1969.

However, presidential impoundment was also an impediment to profligate congressional spending, and this is the weapon that President Richard Nixon employed to curtail some of the Democrats’ profligacy. Presidential impoundment is the refusal of the chief executive to expend funds appropriated by Congress. Thomas Jefferson was the first president to impound funds, and many others chose to use that power until Congress passed the Congressional Budget and Impoundment Control Act of 1974 over the veto of the Watergate-weakened Nixon.

These are the key elements of the Act: to establish a new congressional budget process; to establish committees on the budget in each House; to establish a Congressional Budget Office; to establish a procedure providing congressional control over the impoundment of funds by the executive branch.

In short, the Act was a structural change to the budgeting process that diluted the power of congressional committee chairmen, curtailed the constitutionally granted impoundment authority of the president, and established a staff bureaucracy (the Congressional Budget Office). The newly created CBO, a particularly important cog in the revised appropriations process wheel, was charged under the Act with impartially gathering data and making estimates, that is, placing a financial “score” on any proposed legislation that affected the budget-making process. The CBO was staffed proportionally by party line.

As Democrats controlled Congress prior to the “Gingrich revolution” in 1994, the CBO became dominated by Keynesian economists who favored deficit spending to “stimulate the economy.” Not a surprise, as this was one element of the Democrats’ political tactic of “rule by the experts” (as long as they got to choose the experts!). These measures opened the door for deficit spending and other spending maneuvers that bloated the federal budgets over the years.

Federal debt has grown exponentially since the Act was passed (it took a couple of years for the kinks to be worked out and the skids to be greased). The Act and all that ensued since its passage have directly led to the current $31.43-plus trillion national debt. Oddly enough, the U.S. debt clock hasn’t registered the $1.7 trillion omnibus appropriations bill that had fiscally-conservative Republicans and others so incensed during the speakership battle.

U.S. Capitol police officers stand on the steps to the House as House members vote on a $1.7 trillion spending package in Washington on Dec. 23, 2022. The House of Representatives voted to pass the spending bill that will fund the government through 2023. Anna Moneymaker/Getty Images

What to Do?

Real structural changes are required in Congress’s appropriations process—and not the kind that can be easily undone or corrupted by future speakers of the House. History has shown that the root cause of out-of-control spending is the Congressional Budget and Impoundment Control Act of 1974.

The new deal that includes the rule changes targeted at reducing spending and making it more politically difficult to increase the debt ceiling is a step in the right direction. Still, it is not a structural change to the appropriations process that carries the force of law that can last over time.

The 1974 Act must be repealed, the CBO disestablished, and power restored to committee chairmen to fund and oversee specific federal departments and agencies. A return to regular order and regular budgets will remove some of the power of the speakership by empowering the committee chairmen, just as the practice had existed from 1781 through 1974.

The American people will have much better insight and ability to scrutinize appropriations bills by bringing an end to the 4,000-page omnibus bills, which include non-budgetary items that would not be passed into law if deliberated separately, as well as put maximum pressure on Congress to balance the federal budget.

It’s long past time to deal with the root cause of out-of-control deficit spending rather than with a few symptoms of the real problem. Not doing so immediately risks a sovereign debt crisis and a disaster for the country.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.