Congressman Tom McClintock

Representing the 4th District of California

Testimony to House Rules Committee on the Benefits of Annual Versus Biennial Budgeting

January 6, 2016

Congressman McClintock testified at a hearing of the House Rules Committee on January 16th, 2016 about the beneficial aspects of annual versus biennial budget bills. The Congressman serves on the House Budget Committee, which has begun a comprehensive review of the budget process.  

Congressman Tom McClintock
Testimony to House Rules Committee
January 6, 2016

Mr. Chairman:

Much of Congress’ constitutional role involves the power of the purse -- setting priorities and allocating resources are our principal means of shaping policy and exercising the checks and balances at the core of our constitutional architecture.  

Obviously, the current budget process is not working, and the House Budget Committee has begun a comprehensive overhaul of that process.    

I cannot stress enough that the Budget Committee believes there needs to be a total re-write of the 1974 Congressional Budget Act, and that this is the top priority of its work this year.  We are very concerned that consideration of a biennial budget bill – or any patchwork changes – makes consideration of a comprehensive reform measure this year much less likely.  I would strongly urge the House to give its Budget Committee the time to develop and recommend a complete replacement of the process. 

In the meantime, we should avoid making the problem worse.  I commend the author and supporters of this bill for searching for a better way, but I am concerned that HR 1610 runs afoul of the law of unintended consequences.

Budget Rules
Congressman McClintock testifying in the House Rules Committee 
about the budget process, January 2016.  Click here to watch.

At the heart of this bill is the universal frustration felt by all of us that the budget process consistently breaks down because of its complexity and magnitude.  HR 1610 attempts to address this by changing the annual budget process to a two-year cycle in which the budget resolution, appropriations bills and reconciliation instructions are adopted in the first year of a session to cover the next two years.  

We desperately need a process that produces responsible budgets and appropriations.   

But we need to ask if this measure doesn’t take us farther away from this goal.  This bill DOUBLES both the time-span and the amount of money that are at stake in the budget, reconciliation and appropriations bills.  The difficulties of dealing with these tough fiscal issues are already enormous, and this bill would raise the stakes by a factor of two.    

The nature of the fiscal process is quintessentially one of give and take and compromise.  I think people are more likely to compromise if they know they’ll be able to revisit the issue in a year.  I think they are less likely to compromise if they know the outcome will be locked into law for the next two years.  

I think BOTH sides will be far more likely to dig in their heels on these tough issues under a two-year process, knowing that they won’t be able to revisit them the next year.  

Proponents are rightly critical of Congress’ preference to “kick the can down the road” on the fiscal bills, particularly during an election year.  But doesn’t a two-year budget process institutionalize this problem?  Assuming you can reach agreement in the first year – which this bill makes less likely – the two-year budget puts the second year on auto-pilot BY DESIGN.  

Proponents believe that Congress doesn’t have enough time to do oversight because of demands made by the annual budget process, and this reform would free up a whole year to do that.  But we already do a lot of oversight.  The House conducted more than 767 oversight hearings last year alone.   

What gives oversight TEETH is the money that Congress appropriates.  Otherwise, oversight is just hot air.  Right now, agency administrators must appear before congressional committees EVERY YEAR to justify and defend their programs in order to receive funding.  If an agency’s spending is inconsistent with Congressional intent, Congress can address the situation THAT YEAR in the appropriations process.  When an agency is dependent on Congress for its budget, it is by necessity more responsive.  Why would we render Congress impotent to act one year out of every two?   

True, the two-year budget gives agencies greater certainty of what they will be able to spend.  But doesn’t this come at the expense of Congress having far less certainty of what those same agencies will actually need and far less control over how they’re spending it?

Furthermore, it is difficult enough to peer one year into the future – far harder to anticipate conditions and needs two years hence.  Under the biennial budget, agencies would start their budget process 28 months before the beginning of the second year and 40 months before the end.  The natural result of this will be an explosion of ad hoc supplemental bills and re-programming changes in the second year that are the very antithesis of good budgeting. 

I think the proponents of biennial budgeting tacitly admit these shortcomings.  Recently, some have suggested modifying the proposal by retaining the annual cycle for reconciliation and appropriations bills and only imposing the two year cycle on the budget resolution.
The irony is, the budget resolution isn’t the problem.  In 32 of the past 40 years, Congress HAS enacted a budget resolution – albeit sometimes slightly late.  The appropriations bills are always the heavy lift: we have separately enacted all appropriations bills only four times in the last 40 years.  

There is a reason that since 1940, most states have abandoned two-year budgets in favor of annual appropriations.  In 1940, 44 states had biennial budgets.  Today, only 19 do.  Since 1968, some 15 states have gone from biennial to annual budgets; only three have gone the other way. The states that retain the biennial cycle are generally the smaller ones, and even then it is hardly a panacea.  One of those states, Hawaii, has run up the second highest debt per capita in the country.

A lot of people believe we couldn’t possibly make the budget process more dysfunctional.  I think we can and here’s how.  We could: 

•    Craft a process that makes compromise and concession more difficult by doubling the time-span and money that’s at stake.  
•    Require that Congress kick the fiscal can down the road every election year – precisely when the American people are paying the most attention.
•    Make Congress impotent to ACT on its oversight findings every other year.  
•    Make the final year of each session dependent on information that is between 28 and 40 months stale.  
•    And bypass the comprehensive review that the House Budget Committee has already begun that seeks to reform ALL aspects of the budget process. 

Perhaps we should take a word of advice from Hippocrates.  First, do no harm.