U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

29–446 PDF 2018

S. Hrg. 115–204 

TERRIBLE, NO GOOD, VERY BAD WAYS OF 

FUNDING GOVERNMENT: EXPLORING THE COST 

TO TAXPAYERS OF SPENDING UNCERTAINTY 

CAUSED BY GOVERNING THROUGH CONTINUING 

RESOLUTIONS, GIANT OMNIBUS SPENDING BILLS, 

AND SHUTDOWN CRISES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON FEDERAL SPENDING 

OVERSIGHT AND EMERGENCY MANAGEMENT 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

FEBRUARY 6, 2018 

Available via http://www.fdsys.gov 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

JOHN HOEVEN, North Dakota 

STEVE DAINES, Montana 

CLAIRE MCCASKILL, Missouri 

THOMAS R. CARPER, Delaware 

HEIDI HEITKAMP, North Dakota 

GARY C. PETERS, Michigan 

MAGGIE HASSAN, New Hampshire 

KAMALA D. HARRIS, California 

DOUG J0NES, Alabama 

CHRISTOPHER R. HIXON, Staff Director 

MARGARET E. DAUM, Minority Staff Director 

LAURA W. KILBRIDE, Chief Clerk 

BONNI DINERSTEIN, Hearing Clerk 

SUBCOMMITTEE ON FEDERAL SPENDING OVERSIGHT AND EMERGENCY 

MANAGEMENT 

RAND PAUL, Kentucky, Chairman 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

JOHN HOEVEN, Montana 

GARY C. PETERS, Michigan 

MAGGIE HASSAN, New Hampshire 

KAMALA D. HARRIS, California 

GREG MCNEILL, Staff Director 

ZACHARY SCHRAM, Minority Staff Director 

KATE KIELCESKI, Chief Clerk 
(III) 

C O N T E N T S 

Opening statement: Page 

Senator Paul ..................................................................................................... 1 

Senator Peters .................................................................................................. 3 

Senator Jones .................................................................................................... 16 

Prepared statements: 

Senator Paul ..................................................................................................... 27 

Senator Peters .................................................................................................. 29 

WITNESSES 

TUESDAY, FEBRUARY 6, 2018 

Heather Krause, Director, Strategic Issues, U.S. Government Accountability 

Office ..................................................................................................................... 5 

Clinton T. Brass, Specialist, Government Organization and Management, 

Congressional Research Service .......................................................................... 6 

Maya MacGuineas, President, Committee for a Responsible Federal Budget ... 8 

Alice M. Rivlin, Ph.D., Senior Fellow in Economic Studies, The Brookings 

Institution ............................................................................................................. 11 

ALPHABETICAL LIST OF WITNESSES

Brass, Clinton T.: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 42 

Krause, Heather: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 32 

MacGuineas, Maya: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 52 

Rivlin, Alice M. Ph.D.: 

Testimony .......................................................................................................... 11 

Prepared statement with attachment ............................................................. 59 

APPENDIX 

Statement submitted for the Record from: 

American Federation of Government Employees, AFL–CIO ........................ 92 

Senior Executives Association ......................................................................... 96 

(1) 

1The prepared statement of Senator Paul appears in the Appendix on page 27. 

TERRIBLE, NO GOOD, VERY BAD WAYS OF 

FUNDING GOVERNMENT: EXPLORING THE 

COST TO TAXPAYERS OF SPENDING 

UNCERTAINTY CAUSED BY GOVERNING 

THROUGH CONTINUING RESOLUTIONS, GIANT 

OMNIBUS SPENDING BILLS, AND SHUTDOWN 

CRISES 

TUESDAY, FEBRUARY 6, 2018 

U.S. SENATE,

SUBCOMMITTEE ON FEDERAL SPENDING,

OVERSIGHT AND EMERGENCY MANAGEMENT,

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:31 p.m., in room 

SD–562, Dirksen Senate Office Building, Hon. Rand Paul, Chairman of the Subcommittee, presiding. 

Present: Senators Paul, Peters, Harris, and Jones. 

OPENING STATEMENT OF SENATOR PAUL1

Senator PAUL. I call this hearing of the Federal Spending Oversight Subcommittee to order. 

Before we start, I want to express this Subcommittee’s deepest 

sympathy to the family and friends of Ed Lorenzen, who was a senior policy advisor at the Committee for Responsible Federal Budget. 

Ed and his 4-year-old son tragically passed away 12 days ago in 

a house fire. Ed was a well-respected member of the budget community and possibly the foremost champion of the PAYGO rule. In 

fact, his Twitter handle was Captain PAYGO. 

By all accounts, Ed was a great guy and a dedicated budgeteer. 

Literally, the day of his death, Ed was working with my staff in 

preparation for this very hearing. So this tragedy is close to our 

hearts, and it is with deep sympathy to his family that I ask everyone to join me in a moment of silence. 

[Moment of silence.] 

Thank you. 

We are here today to discuss continuing resolutions (CR), omnibus appropriations, missed funding deadlines, and shutdowns. This 

hearing is entitled the ‘‘Terrible, No Good, Very Bad Ways of Fund-
2 

ing Government.’’ I cannot think of a better way to describe how 

dysfunctional Congress is with its power of the purse. 

Today, government is open and on its fourth CR of the year. Who 

knows what will happen Thursday? But what we know is we are 

already a third of the way through the fiscal year (FY) and still 

using temporary funding. It just makes no sense. 

And this is not a partisan problem either. The last time we 

passed all appropriation bills on time was 1997, which was only the 

fourth instance all appropriations were done since 1977, four times 

in 41 years. 

Missing appropriation deadlines have consequences. It causes uncertainty in agencies and delays plans, which may increase cost to 

the taxpayer. In October, we had a hearing on wasteful end-of-theyear spending. Part of the problem there is caused by the use-itor-lose-it mentality, but we also heard that delayed appropriations 

compresses the funding window, meaning even good projects become lower quality as there is just less time to plan and obligate 

the funds. 

Another part of the problem that concerns me is that once Congress goes beyond the funding deadline, our incentive turns to 

doing an omnibus appropriation, which is maybe only slightly less 

bad than a continuing resolution. That is where we glue together 

all the unfunded programs into one single giant bill. How can Congress do proper oversight of spending when we throw everything 

into one giant trillion-dollar bill, sometimes with only hours to 

scrutinize and no chance to amend? 

As a doctor, I need an ophthalmoscope to look at the back of your 

eye, but being able to take a closer look helps me to diagnose and 

fix these problems. That is what we need in the budget process. 

That is exactly what we need is a closer look. 

Instead, we are given one giant bill, with little debate and asked 

to vote up or down, and rarely allowed to amend the bill. 

Of course, we all know about and dread the government shutdowns. In fact, I often say while I do not want to shut down government, I also am not sure I want to keep it open and still borrowing a million dollars a minute. They are both not very good solutions. 

Making government less efficient, we have to talk about what we 

can do to fix it. So I have introduced something called the Shutdown Prevention Act, which says at the end of the fiscal year, anything still not funded would automatically be funded at 99 percent 

of the previous budget. 

What should make this a win-win for everyone is that agencies 

will have at least a minimum level of certainty. Government will 

not completely shut down. They will keep spending money, but 

there will be a penalty. They will spend one percent less, and 

around here, spending one percent less ought to be enough of a 

penalty to get everybody to do their job and do the appropriation 

bills on time. 

So I think this is an important and timely hearing, and I thank 

Senator Peters for working with our office to set this up. 

With that, I will recognize the Ranking Member for his opening 

statement. 
3 

1The prepared statement of Senator Peters appears in the Appendix on page 29. 

OPENING STATEMENT OF SENATOR PETERS1

Senator PETERS. Well, thank you, Mr. Chairman, and thank you 

for providing this forum on this topic today, in a collaborative and 

bipartisan way and a bipartisan spirit, and I always appreciate 

that of you, Mr. Chairman. 

The conversation that we are having today goes to the heart of 

how Congress functions as an institution. One of our most fundamental responsibilities is to pass a budget and fund the government. This is our most basic job, and the American people, quite 

frankly, expect us to get it done. 

The way we budget and fund the government is, unfortunately, 

now dysfunctional. It is a problem that has gone on for far too long, 

and we have become accustomed to it. It has become the new normal, and the purpose of today’s hearing is to say enough is enough. 

This is no way to govern. 

This broken process filled with last-minute deadlines, continuing 

resolutions, and even government shutdowns is wasteful. It is inefficient and harmful to the American people. 

That is why our esteemed panel of witnesses are all here today, 

and I appreciate your expertise, your experience, and your time. 

Your testimony today is critical to helping us diagnose the severity 

of our budgeting problem and how it impacts government services 

and waste taxpayer dollars. I hope you can help us explore some 

constructive solutions. 

Our broken budget process needlessly shortchanges effectiveness 

of Federal programs through the never-ending cycle of short-term 

continuing resolutions and omnibus spending bills, creating budget 

crisis and keep the government perpetually at the edge of a shutdown. That threat occasionally comes to pass, as we just saw recently. 

Though Congress designed a clear budget process in the 1974 

Congressional Budget Act to establish our own funding priorities 

and set a timeline for enacting them into law, we have failed time 

and time again to live up to our own standards. In fact, Congress 

has only managed to enact all 12 required appropriation bills on 

time in four of the past 40 years. 

Instead, this body has passed an average of four CRs every year, 

and the frequency has only increased in recent years. Since 2011, 

we have passed 34 CRs. Sometimes these CRs fund the government 

for as little as one day at a time. As a result, the majority of sitting 

Members of Congress have never seen this body pass a budget 

through ‘‘regular order.’’ 

We can and we must do better. I am hopeful that this hearing 

will offer a candid discussion of the facts and emphasize the true 

cost and consequences of governing through short-term CRs. We 

lurch from crisis to crisis, wasting countless hours across the Federal Government, as employees prepare for shutdowns or draft detailed comprehensive yearly budget documents that are completely 

disregarded. 

Most significantly, this dysfunctional pattern needlessly threatens our national and economic security. Without a long-term budget outlook, our military is unable to plan ahead and effectively con-
4 

1The letter from the American Federation of Government Employees appears in the Appenidx 

on page 92. 

duct their critical missions to protect the American people and 

American interests abroad. 

Instead of thoroughly evaluating spending priorities or conducting meaningful oversight of government programs, Congress 

kicks the can down the road and lets taxpayers foot the bill. 

In the event of a shutdown, hundreds of thousands of Federal 

workers are furloughed from their jobs, and Americans of all walks 

of life lose access to important public services that they count on. 

To offer a better sense of the real impact this has on Federal 

workforce, I ask unanimous consent (UC), Mr. Chairman, to enter 

into the record a letter that I received today from the American 

Federation of Government Employees.1

Senator PAUL. Without objection. 

Senator PETERS. Last week during a hearing in the Commerce 

Committee, I asked the Director of the National Science Foundation (NSF) about the impact of continuing resolutions and shutdowns on her agency. Not only did the NSF have to cancel a whole 

slate of important meetings, including with several Nobel Prize 

laureates, the Director also told me that, ‘‘Everybody just basically 

stops work in order to gear up for a shutdown.’’ That is unacceptable. 

That is a lot of time and tax dollars wasted preparing for a shutdown that would not happen if Congress simply did its job. 

I look forward to hearing a robust discussion from today’s witnesses about potential reforms and solutions that will help us 

break this harmful cycle and restore regular order to the congressional budget and appropriations process. We must work together 

in a bipartisan way to reduce our reliance on short-term CRs, mitigate the harmful effects of this uncertainty on Federal agencies, 

and minimize the cost of this broken process to taxpayers. 

I am sure the Chairman would join me in saying that we are 

very eager to hear your ideas today. 

So let us get to work. Thank you very much, and thank you 

again, Mr. Chairman, for this hearing. 

Senator PAUL. Thank you, Senator Peters. 

With that, I will begin with our witnesses’ opening statements. 

I will remind the witnesses that their statements have already 

been submitted, and we would like to try to keep it to five minutes, 

if possible. 

Our first witness is Heather Krause. She is the Director of Strategic Issues for the Government Accountability Office (GAO). Ms. 

Krause previously testified before this Subcommittee on wasteful 

end-of-year spending. In that testimony, she pointed out that part 

of what can cause spending surges at the end of the fiscal year and 

lead to waste in agency funding being continually delayed, so we 

wanted to bring Ms. Krause back and continue that discussion to 

learn more about the cost and inefficiencies created by funding 

delays and uncertainty. 

Ms. Krause has a bachelor’s degree in political science from the 

University of Minnesota Duluth and a master’s degree in public 

policy from the University of Minnesota. 
5 

1The prepared statement of Ms. Krause appears in the Appendix on page 32. 

Ms. Krause, thank you for coming back. 

TESTIMONY OF HEATHER KRAUSE,1 DIRECTOR, STRATEGIC 

ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. KRAUSE. Thank you, Chairman Paul, Ranking Member Peters, and Members of the Subcommittee. I thank you for the opportunity to discuss our work on how continuing resolutions and other 

budget uncertainties affect agencies and the services that they provide. 

As you know, Congress annually faces difficult decisions on what 

to fund among competing priorities and often postpones final funding decisions to allow more time for deliberations. 

To prevent funding gaps, Congress enacts continuing resolutions, 

so that agencies can continue to operate government services until 

Congress and the President reach agreement on regular appropriations. 

In all but four of the last 40 years, as was noted in the opening 

statement, Congress has passed CRs to provide agency funding 

until agreement is reached. In some years, including the current 

fiscal year, when new appropriations or a CR have not been enacted, there is a lapse in appropriations or government shutdown. 

This leads some agencies to halt their activities and furlough employees until appropriations are enacted. 

Our prior work on Federal budgeting has shown that operating 

under a CR, the possibility of a government shutdown, or both, creates uncertainty and management challenges for agencies. 

In response to these uncertainties, agency officials have taken 

various actions and leveraged available authorities to execute their 

budgets and carry out their missions. 

Today, I will focus my statement on, one, the effects of CRs and 

shutdowns on agency operations and, two, legislative authorities 

and agency actions that assist in managing these budget uncertainties. 

Our prior work has shown that CRs and government shutdowns 

can increase cost and reduce government services and productivity. 

For example, in 2009, we reported that agencies delayed contracts, 

grants, and hiring during a CR because final appropriations could 

have been less than anticipated. 

For example, officials at the Bureau of Prisons (BOP) told us 

then that delaying one of their contracts had prevented them from 

obtaining lower prices and resulted in $5.4 million in additional 

costs. 

We also found that the effects of CRs can differ based on their 

number and duration. Shorter and more numerous CRs can lead to 

more repetitive work. This includes having to enter into short-term 

contracts or grants multiple times to reflect the duration of a CR. 

On the other hand, longer CRs can allow for better planning in 

the near term. However, they can lead agencies to rush to obligate 

funds late in the fiscal year. Agency officials told us that following 

a lengthy CR, they can end up spending funds on lower-priority 

items that can be procured quickly if they do not have enough time 

to spend funds on higher-priority needs. 
6 

1The prepared statement of Mr. Brass appears in the Appendix on page 42. 

Congress and agencies have taken several actions that help manage budget uncertainties and disruptions associated with CRs and 

shutdowns. For example, CRs include standard provisions that require most agencies to operate similar to the prior year but to 

spend conservatively and without starting new activities. 

Congress may also choose to include other provisions in CRs 

called legislative anomalies. Such provisions can address specific 

issues certain agencies face in executing their budgets during a CR. 

Further, Congress can provide some agencies with multiyear 

budget authority. With this authority, there is less pressure to obligate the funds at the end of the year, and agencies may be able 

to continue some activities during a shutdown. 

Agency officials can also take actions to mitigate budget challenges. For example, agencies may have the ability to shift contract 

and grant cycles to later in the fiscal year when they are less likely 

to be under a CR. Agencies also establish contingency plans and 

other guidance to assist in managing CRs and shutdowns. 

In close, the Federal budget is an inherently political process in 

which Congress faces difficult decisions on what to fund among 

competing priorities. While not ideal, CRs continue to be a common 

feature of the annual appropriations process. There is no easy way 

to avoid or completely mitigate the effects of CRs and other budget 

uncertainties on agency operations. 

Agencies must act within their authorities to manage their programs in the face of funding uncertainties and constraints. We believe the experiences identified in our work provide useful insights 

for Congress. 

This concludes my statement. I look forward to answering your 

questions. 

Senator PAUL. Thank you, Ms. Krause. 

Our next witness is Clint Brass, who is a Specialist in Government Organization and Management at the Congressional Research Service (CRS). Mr. Brass is here to talk about how the process is supposed to work and what happens when it does not, what 

goes on at agencies when they are on a CR or worse during shutdowns, and how the process has evolved over time. 

Mr. Brass has a bachelor’s degree from Cornell, a master of public policy from Michigan’s Gerald Ford School, and an MBA from 

Wharton School at the University of Pennsylvania. 

TESTIMONY OF CLINTON T. BRASS,1 SPECIALIST, GOVERNMENT ORGANIZATION AND MANAGEMENT, CONGRESSIONAL 

RESEARCH SERVICE 

Mr. BRASS. Thank you, Mr. Chairman. 

Chairman Paul, Ranking Member Peters, Members of the Subcommittee, thank you for the invitation to testify. As requested, 

this testimony focuses on interim continuing resolutions, their purposes and effects, and related subjects, including the possibility of 

a government shutdown. 

The written statement goes into more detail, and I would like to 

acknowledge the work of CRS colleagues from which the statement 

benefits, so some highlights. 
7 

First, context. The power of the purse is a legislative power. The 

Constitution provides that funds may be drawn from the Treasury 

only through appropriations made by law. Nevertheless, the Constitution does not spell everything out. So the budget process has 

evolved with statutes, chamber rules, and the use of discretion. 

As practiced in recent decades, the process entails many subprocesses, and many actors are involved. If problems are perceived 

with aspects of the overall process, it may be fruitful to look at 

these aspects but also how they relate to the whole. Notably, 

changes to the budget process may affect power relationships and 

influence policy outcomes. Proposals may be controversial, therefore. 

During high-stakes negotiations over annual appropriations 

measures, several options present themselves to Congress and the 

President. These include coming to agreement on regular appropriations acts by October 1st when the fiscal year begins or using 

one or more interim CRs to extend temporary funding beyond October 1st until decisions are made on full-year funding or not agreeing on full-year appropriations or interim funding in a CR, resulting in a temporary funding gap and a corresponding shutdown. 

As has been noted in practice, CRs are commonplace in the Federal budget process. During the 25 fiscal years covering fiscal year 

1952 to 1976, one or more CRs were enacted during all but one fiscal year. From fiscal year 1977 to present, all of the regular appropriations acts were completed before the beginning of the fiscal 

year in four years out of 42, including this one. 

In general, interim CRs are intended to, one, preserve congressional funding prerogatives to make decisions on full-year funding 

and, two, to prevent the government shutdown during negotiations 

within Congress and between Congress and the President. 

Consequently, interim CRs include significant restrictions on 

agencies. An interim CR may be structured purposefully as less 

than optimal in order to retain incentive for negotiators to come to 

an accord. 

If restrictions would cause major disruptions, a CR may include 

exceptions to the restrictions or so-called anomalies. Anomalies 

tend to be rare, however. 

Thus, apart from preserving prerogatives and preventing a shutdown, CRs may have significant effects. First, the restrictive funding level and pace of an interim CR may affect an agency’s activities; for example, agencies may reduce or delay hiring staff or 

awarding contracts and grants. 

Second, an agency may experience uncertainty about what its 

final funding level and composition of the funding will be. Uncertainty may cause an agency to alter its operations, rates of spending, and spending patterns. 

Third, because an interim CR imposes tight restrictions, it may 

increase an agency’s administrative work burden. 

Fourth, a CR’s prohibition on new projects may delay or disrupt 

an agency’s ability to undertake planned activities and also to be 

nimble in response to events. 

In 2008 and 2009, CRS and GAO each explored potential and reported effects of interim CRs. GAO also identified factors that in-
8 

1The prepared statement of Ms. MacGuineas appears in the Appendix on page 52. 

fluenced how agencies manage during CRs and mitigate uncertainty. 

While common themes emerge from analyses like these, the specific reported impacts vary across agencies and from year to year, 

as one might expect from agencies with varied missions and funding mechanisms. 

Looking ahead, CRS takes no position on the advisability of particular options. However, if options for legislation or oversight or 

further study are of interest, potential strengths and weaknesses 

may be explored and analyzed. 

In the meantime, I would be happy to answer any questions. 

Thank you. 

Senator PAUL. Thank you, Mr. Brass. 

Our next witness is Maya MacGuineas, President of the Committee for Responsible Federal Budget and the head of the Campaign to Fix the Debt. Ms. MacGuineas is one of the leading voices 

on budget policy. She has testified numerous times before committees on the dangers of our fiscal trajectory and has worked on several commissions to reform the process and right the fiscal ship. 

Her work has caused The Wall Street Journal to dub her an ‘‘antideficit warrior.’’ That is great. 

Ms. MACGUINEAS. Like that? 

Senator PAUL. Congratulations. I just wish we are more effective 

at listening. 

Ms. MacGuineas has a bachelor’s degree from Northwestern and 

is a graduate of the Kennedy School at Harvard. 

Ms. MacGuineas, you are recognized. 

TESTIMONY OF MAYA MACGUINEAS,1 PRESIDENT, COMMITTEE 

FOR A RESPONSIBLE FEDERAL BUDGET 

Ms. MACGUINEAS. Thank you so much, and thank you very much 

for your kind words about Ed Lorenzen, who was an invaluable colleague, and doing a hearing on CRs without him, it just does not 

feel right. 

So thank you to the Committee for having us here today, and I 

will touch on several main points. 

First, budgeting is one of the most basic functions of governing, 

and we are failing at it. 

Second, CRs and omnibuses represent a failure of the budget 

process, as do obviously shutdowns. 

Third, our fiscal situation is approaching dangerous territory, 

and we seem utterly intent on making it worse. 

And finally, there are multiple ways to improve the budget process, though none of them will replace the actual political will that 

it is going to take to fix this. 

So budgeting is central to governing. It is the opportunity to 

agree to national goals, to contemplate the policies to achieve them, 

to lay out the means of financing them, and our budget reflects our 

values, our priorities, our Nation’s game plan, and our shared purpose as a Nation. So no business would consider operating without 

a thoughtfully designed budget, and certainly no country should. 
9 

And yet, the way we budget now represents how broken our process of governing has become, and basically, our budget process is 

completely different, what we have on paper and what we have in 

reality. 

So the process we engage in suffers from a number of shortcomings, including a lack of transparency, a lack of accountability, 

a focus on the short term, an abundance of gimmicks which seem 

to grow with every budget session, auto-pilot spending for both 

mandatory spending and tax expenditures, and increasingly terrible fiscal outcomes. The fact that shutdowns and defaults are sort 

of part of the budget terms right now is just utterly alarming. 

The breakdown of the budget process has caused policymakers to 

bounce from one self-imposed crisis to the next. We have already 

heard a lot of the details about the cost and the specific shortcomings involved in CRs and omnibuses, so I will just say that both 

of them are both qualitatively and quantitatively problematic. I 

will focus a little bit on the cost of must-pass legislation, which is 

something that is becoming incredibly costly and we are experiencing right now. 

In the most recent example, just a few weeks ago in the CR which ended the brief shutdown, we actually tacked on $31 billion 

to our debt to pass that legislation; that is, if it were made permanent, that would be close to $300 billion in borrowing. That was 

part of that. 

And it now appears that we are on the verge of a new budget deal. Rumors have it adding about 300-to $400 billion to the debt, 

and what is happening now is these financing methods, this borrowing is being added to bills without any discussion. It is as 

though the issues of deficit and debt have just kind of disappeared, 

and because of these must-pass bills, there is always an opportunity to tack more things on. 

Because I am really pleased that you are doing this hearing in 

a bipartisan way—it seems that most often things that are bipartisan only get there because both parties get to borrow for the 

things they want instead of working on bigger budget deals. 

This all is happening also while our fiscal picture is already quite 

alarming. Things were very bad a year ago when the debt was at 

a near record level, the highest that it has been relative to the 

economy since World War II. 

Since then, as the result of an incredibly costly tax bill, our debt 

trajectory is much worse than it was before, and now we appear 

intent on making it even worse with stunningly little resistance as 

we put more into these CRs and other spending maneuvers. 

We are in the midst of what I see as kind of a fiscal free-for-all, 

and we are soon going to see trillion-dollar deficits that have returned during a time of economic expansion. Last time we saw 

that, we were in the midst of a huge downturn, but now we are 

going to have a trillion dollars that are completely self-imposed at 

the time where we should not be borrowing. We should be getting 

control of our debt so that we have enough fiscal space to deal with 

the future crises and downturns. 

There are multiple ways that we can think about improving the 

process, and there are certainly few defenders of the current process that we have right now. But again, I do want to emphasize that 
10 

budget process reform will in no way be able to replace the political 

will to confront the issues that we are trying to fix. 

I would group the kinds of fixes into three categories, basically 

incremental reforms, increasing punishments or stronger enforcement mechanisms, and finally a major overhaul to the budget process. 

I put myself in the camp of preferring a major overhaul because 

I think that is how big of a change we need to meet the challenges 

of today. 

That said, I quite honestly do not think that Congress is ready 

for the kind of big choices that will be necessary in that. So I am 

very encouraged by the ideas of some of the incremental steps that 

would show we can make improvements, work together, and it is 

really important that they be done in a bipartisan way because 

budget reform or budget process is about creating rules that people 

think are fair and, therefore, they will stick to them. 

In the incremental reforms camp, I would certainly put the automatic continuing resolutions, which is something that, Senator, you 

have put forth, and there are a couple of ideas about that. And I 

think that would go a long way to helping address the issues that 

we are confronting in the budgeting process right now. 

I would also add to that other ideas like biennial budgeting, joint 

budget resolutions, which would all address some of the problems 

that are going on. 

In terms of stronger incentives or larger punishments, there are 

a lot of ideas that have been put out there: no budget, no pay; canceling congressional recesses; prohibiting consideration of bills that 

have fiscal impacts until a budget has been passed; and compelling 

the Senate to be in session in the chamber if the government has 

shut down. 

Finally, there is the approach of a major overhaul. We find when 

we study budget process, we find that rules do not actually succeed 

as well in forcing action as they do in enforcing action that has already been put in place. 

The Peterson-Pew Commission and the Better Budget Process 

Initiative, which Ed Lorenzen ran for us, has come up with a lot 

of different recommendations, but basically they center around a 

major overhaul that would focus on picking a fiscal goal, putting 

in place a multiyear budget that would achieve those fiscal goals, 

and much stronger enforcement techniques to keep that budget on 

track. 

This would also include budgeting for entitlements and tax expenditures, and I think all of these changes would make coming to 

agreements in the front end much more difficult, but it would 

greatly improve the fiscal outcomes. 

I know that our country can do better than we are doing currently in terms of budgeting. I think that is one thing we can all 

agree on, and I am very encouraged about focusing on budget process as a place to begin this process. So thanks so much for having 

us today. 

Senator PAUL. Thank you, Ms. MacGuineas. 

Our final witness is well known in budget circles and beyond. Dr. 

Alice Rivlin is a Senior Fellow at Brookings Institute and a Visiting Professor, Public Policy at George Washington. She has a sto-
11 

1The prepared statement of Dr. Rivlin appears in the Appendix on page 59. 

ried background in Federal budgeting, going back to the inception 

of the Congressional Budget Act. She served as the first Congressional Budget Office (CBO) Director from 1975 to 1983, as the Office of Management and Budget (OMB) Director during the Clinton 

Administration, and has been a big part of various groups whose 

aim is to reform and improve the budget process. 

Dr. Rivlin holds a Ph.D. from Harvard, a bachelor’s degree from 

Bryn Mawr, both in economics. 

Dr. Rivlin, thank you for joining us. 

TESTIMONY OF ALICE M. RIVLIN, Ph.D.,1 SENIOR FELLOW IN 

ECONOMIC STUDIES, THE BROOKINGS INSTITUTION 

Ms. RIVLIN. Thank you, Chairman Paul and Ranking Member 

Peters and Members of the Committee. 

I am grateful to this Subcommittee for holding this hearing to 

call attention to the total breakdown of the Federal budgetary policymaking process. I believe this breakdown is a serious threat to 

our democracy and to America’s future prosperity. 

I would like to emphasize three points. First, the major cost of 

failure to agree on a budget for the current fiscal year is not the 

short-term cost of uncertainty and inability to plan for efficient 

spending, although these costs are real, as the GAO and others 

have pointed out. Rather, preoccupation with short-term budget 

warfare makes it impossible for the Congress to face up to the longrun challenges ahead and adopt policies to deal with them. 

These challenges are daunting. We have an aging population 

combined with high health costs. We have slow productivity growth 

and lagging wages. We are facing climate change and rising frequency of natural disasters. We have had huge increases in inequality of wealth and income and rapidly growing national debt 

combined with rising interest rates. As Maya and others have emphasized, these are very serious problems, especially the debt. 

These are tough problems to manage individually and collectively. They require consensus building and bipartisan deliberation. 

No one party has all the answers, but blaming and bickering over 

short-run CRs or converting them to omnibus bills has eclipsed serious efforts to craft long-run budget policy and economic policy. 

Second, the biggest obstacle to constructive economic policymaking, I think, is extreme partisanship and the rejection of the 

once-honored art of consensus building and bipartisan negotiation. 

The Framers of our Constitution bequeathed us a policymaking 

system that requires compromise and consensus at every stage of 

legislating. If we forget that and pretend we have a winner-takeall parliamentary system in which the majority party calls all the 

shots, we will be doomed to gridlock and wild swings in policy. 

Major tax and spending legislation, including health care, that 

affects millions of people’s lives must have bipartisan buy-in to 

avoid the other party demonizing the policy and trying to reverse 

it after the next election. 

Moreover, differences among us are not as stark as they appear. 

Crafting tax and spending policy that can command broad public 

support involves a pragmatic balancing of competing interests and 
12 

values, negotiating modest changes along a continuum, and not 

scaring a public that is generally afraid of radical change. 

Bipartisan negotiation and consensus building must become, 

again, a normal part of congressional decisionmaking, not a desperate response to artificial deadlines if the American democratic 

process is to regain the confidence of voters and the respect of 

countries that look to us for leadership. 

And finally, although budget process changes are, as all of us 

have emphasized, not a substitute for bipartisan will to solve problems together, they could help to make the task easier. 

The late Senator Pete Domenici and I, under the auspices of the 

Bipartisan Policy Center, made a proposal in July 2015 that I believe encapsulates the main elements of a more workable budgetary process. The proposal had three main themes. One, the budget process should include all Federal spending and revenues. It 

should not leave out the huge spending on entitlements and other 

mandatory programs or spending through the Tax Code that together now dominate the Federal budget. 

Second, the budget should be transparent, and the process 

should contain strong incentives for on-time completion, including, 

I think, an automatic CR with some penalties, as you proposed, Mr. 

Chairman. 

The budget should also have buy-in from the President and leadership of both houses. 

I also believe that Congress would benefit greatly from simplifying the Committee and Subcommittee structure to reduce overlapping jurisdictions. Simplifying the budget itself by drastically reducing the number of budget accounts would also facilitate more 

timely decisionmaking. 

But no process or structural change will help Congress and the 

Executive Branch make decisions on the budget or resolve other 

major issues facing the country unless elected officials recognize 

that the public desperately wants you to get out of partisan attack 

mode and start working together to find solutions. 

Thank you, Mr. Chairman and Members of the Committee. 

Senator PAUL. Thank you, Dr. Rivlin. 

At this point, we will open it up for questions, and I know Senator Peters has a conflict, and so we are going to let him go first. 

He may have to leave us for another committee. 

Senator PETERS. Thank you, Mr. Chairman. I thank you for the 

opportunity to ask the first questions. Again, thank you for this 

hearing. 

I also want to recognize Senator Jones, who I think is joining us 

for the first time, so welcome to the Subcommittee. I am sure you 

will enjoy it. It is good to have you here. 

Well, I certainly appreciate the testimony of all four of you. It 

clearly highlights the pickle that we find ourselves in and the fact 

that we have to fix this system. 

One way in which Congress has dealt with this issue in addition 

to CRs are the omnibus spending bills which, as you know, just 

lump everything all together in one year. And all of us who are not 

part of that process basically get one vote to fund this incredibly 

large enterprise called the Federal Government of the United 

States. 
13 

We are looking for some ways to get more involvement, where 

members have an opportunity to deal with some of the issues that 

you brought up. 

So I am going to bring up a proposal that my colleague, Senator 

Lankford, has actually raised. He is not with us here today. He had 

another commitment, but I wanted to bring up his idea, which 

would give members the opportunity to consider alternative approaches and be involved in the appropriations process. His proposal would have us work on each appropriation bill, as we normally would through the Committee, have that regular order process, and then strike a deal to have not one omnibus but perhaps 

several omnibus to put some of these budgets together, so three or 

four separate minibus appropriation bills. Rather than push 

through a formal change in the rules, we would consider each bill 

with a set time agreement and number of amendments, so members could actively engage in this process and offer amendments 

through these smaller, presumably more manageable, minibuses. 

It seems to be an alternative idea, but I wanted to hear from Dr. 

Rivlin. Ms. MacGuineas, maybe if you would not mind commenting 

on whether you would see that as a positive step forward, or do we 

need to do something different? 

Ms. RIVLIN. I would see it as a positive step forward in the sense 

that three or four minibuses seems better than one omnibus. 

Senator PETERS. Right. 

Ms. RIVLIN. It still is going to be a large bill, and the amendment 

process seems crucial. Also the hearing process, which is in the appropriations committees, which seems to have fallen a bit into disuse, but that seems to me an improvement. But you could go further. 

Senator PETERS. Right. Ms. MacGuineas. 

Ms. MACGUINEAS. Yes. So I would share that. I think that is an 

improvement for sure. I do not think it would be the bigger kinds 

of overhauls that I am kind of drawn to, and when I think about 

budgeting, I think you want to make sure every step of budgeting, 

you are going through the basic process of what is the objective, 

what are the different options for achieving it and what are the 

pros and cons of those, how are you going to finance it, and how 

are things working, the evaluation process. 

I think a lot of those big-picture things are lost in the appropriations process, but I certainly think this is an improvement because 

I think bills where you have more of a chance to understand the 

details and more people are involved in being engaged in that is 

clearly important because appropriations is just kind of this foreign 

area to so many people where they do not understand what is 

going on in there, and so drawing more people into the process at 

a greater level of detail is definitely a plus. 

Senator PETERS. Great. Thank you. 

The other issue that I have with CRs is one shared by folks in 

the military in particular—I serve on the Armed Services Committee and actually have Secretary Mattis testifying before us 

today on our National Security Strategy—is the fact that it is very 

difficult for the military to make any long-term plans in a CR process. 
14 

Ms. Krause, I would like you to elaborate a little further on how 

you see continuing resolutions impacting the military and its readiness. That would be helpful for us to understand why relying on 

CRs is such a bad idea. 

Ms. KRAUSE. Sure. We have not done work looking specifically on 

the military issues in terms of CRs, but certainly, in looking at 

other agencies that deal with contracting, which Department of Defense (DOD) obviously does, they will delay contracts until they 

know the amount of money they may have at the end of the year. 

They will put that off. They delay hiring when dealing with CRs. 

Compressing those processes can sometimes reduce the quality of 

the competition of contracts. There are a number of inefficiencies 

that come from managing within CRs. 

Senator PETERS. Anybody want to add anything related to Department of Defense? Mr. Brass. 

Mr. BRASS. Just that my colleague at CRS, Lynn Williams, has 

a couple reports on the subject that I am sure she would be happy 

to talk with you and your staff about. 

Senator PETERS. Great. We would like that. 

Ms. MacGuineas, I am interested in your thoughts about the deficit. You are the deficit attorney. Is that what I heard? 

Ms. MACGUINEAS. The anti-deficit warrior. 

Senator PETERS. Anti-deficit warrior. 

Ms. MACGUINEAS. It was not my Halloween costume, though. 

[Laughter.] 

Senator PETERS. You said that is not your Halloween costume? 

She did. 

Ms. MACGUINEAS. Someone else dressed up as the debt. 

Senator PETERS. Oh, OK. Well, it is—— 

Ms. MACGUINEAS. Anti-deficit warrior. 

Senator PETERS. I would be curious as to your thoughts on longterm effects. You mentioned some of that in your testimony—and, 

Dr. Rivlin, you did as well—as to how do we deal with these longterm, fundamental, structural problems that we have with our deficit when we are in the process of using these CRs. It complicates 

things immensely. Would you just further elaborate on that? 

Ms. MACGUINEAS. Yes. It complicates things immensely, and as 

Alice said, it takes all of the oxygen away from solving the real 

problems that we need to on the fiscal front. 

So the first thing is that budget deficits, balancing the budget, 

they are not an ends in and of themselves. They are part of a comprehensive economic strategy, which is critical for the country right 

now, particularly right now, because we have this aging of the population. Growth is going to be slower than it has been before. We 

need to do everything that we can to help promote growth but 

share broadly, and a key piece of that is sustainable fiscal policy. 

We all know anybody who reads CBO reports or looks at these 

numbers knows that the big drivers right now are the aging of our 

population, health care costs, interest payments that are growing 

faster than the economy writ large, and revenues that are not sufficient to pay for the level of spending that we have decided to 

spend. If we do not spend our time focusing on that, what it does 

is it leaves us in a situation where it harms us economically. High 

levels, excessively high levels of debt slow economic growth. It 
15 

means that interest payments are pushing out whether you care 

about tax cuts or spending increases. If you are spending more on 

interest payments, it is not going to those things. It leaves us completely vulnerable to the next economic downtown or national disasters when they come along because we are not able to borrow for 

the things that we would, and at some point, there is a potential 

that there would be a fiscal crisis. 

I do not think, because this country is the safe haven, that is 

likely to happen soon, but it could. And why are we trying to test 

the boundaries of when it would? 

So you want to have a sound fiscal policy, which means your debt 

is not growing faster than the economy. We do not have that, and 

we know there is no way to fix that without dealing with the drivers, meaning entitlement reform and tax reform that is ultimately 

going to generate more revenue. We just made that more difficult. 

We have to really go with the big drivers of the debt and get the 

debt. It is twice relative to the economy what it has been historically. We have to get it so it is not growing faster than the economy. 

Senator PETERS. Well, I want to pick up on what you said, because I think it is important as we are looking at dealing with the 

deficit to understand that this is probably a three-legged stool. 

One, you have to grow the economy, but also you have to deal with, 

two, revenue and, three, cost. We are focusing on the spending side 

of it right now, but revenue is a piece as well. 

And given all of the challenges that you just outlined, which I 

agree with, and as we continue to be on an unsustainable fiscal 

course, this Congress just passed a tax cut that is going to add $1.5 

trillion to the deficit. How should that have been done differently, 

perhaps, so that we do not just keep digging a deeper and deeper 

hole, which we just did a few weeks ago? 

Ms. MACGUINEAS. So we desperately needed tax reform. There 

was no question that our Tax Code was anticompetitive, 

antigrowth, and we are taxing the wrong things. 

Revenue-neutral tax reform or tax reform that ultimately raised 

more revenue would have been better for us fiscally. 

There were arguments out there that the tax cuts will pay for 

themselves. They will not, just as spending programs will not pay 

for themselves. 

Tax reform that is not debt financed actually grows the economy 

more than tax reform that is. 

So it seemed very unwise to me to add to the debt through tax 

reform, just as it would through spending increases, and we are 

going to either need to figure out how to do a lot of the base broadening that we should have done as part of tax reform. 

Before this bill, we had $1.6 trillion in tax breaks in the Tax 

Code a year. The whole point of tax reform is to get rid of as many 

of them as possible and bring rates down. We did not get rid of basically any of them, so we need to broaden that tax base to generate more revenue, and I think ultimately, we are going to have 

to consider other revenue increases, but I also do not want to take 

the eyes off the picture of entitlement reform, which has disappeared completely from the conversation. And there is no way to 
16 

get that fiscal situation under control without looking at both those 

sides of the budget of mandatory spending and revenues. 

Senator PETERS. All right. Thank you. 

Senator PAUL. In an attempt to reward attendance at Subcommittee Committee meetings, I am going to our newest Senator, 

Senator Jones. 

OPENING STATEMENT OF SENATOR JONES 

Senator JONES. Thank you, Mr. Chairman, and thank you, panelists, for being here. 

I have to tell you, as the new kid on the block here, I do not 

know where to begin because I came into this with the same concerns, almost with my hair on fire, with the same concerns that 

you have expressed. 

Ms. MacGuineas, during my campaign, I had the same concerns 

about the tax bill. I talked more about the fact that we were increasing the deficit by $1.5 trillion. Of course, when I questioned 

the Treasury Secretary about that the other day, he said, ‘‘No, no, 

no. We disagree with that.’’ I think he is the only one. 

But I would like to go back to something you said about the political will because having just come off of the campaign trail, I did 

not see out there among the public, the same kind of concerns 

about the deficit that I have. 

Having grown up with a Senator, Howell Heflin, who was a balanced budget fiend, I just did not see that. As I get here to the 

Congress, I am not seeing a whole lot of people who are willing to 

step out there to be a candidate for the Profiles and Courage 

Award with regard to deficits. 

So one of the questions I have is how do we get this message 

across. What do we do? Because in order to develop the political 

will in this climate, so much has to bubble up from people who are 

actually going to vote, and they have to express concerns. People 

who are getting these tax cuts, even though they may be very modest tax cuts, they are still important to those folks. So how do we 

do that? 

I would like to hear all of you to talk about how we can engender 

the public to understand and know what we are going through and 

what this future holds. 

Ms. RIVLIN. I think that is a very good question, Senator, and 

welcome to Washington. 

Senator JONES. Thank you. 

Ms. RIVLIN. I think that we have to do several things at once. 

There is no substitute for leadership, both in the Congress and in 

the White House. 

I am a veteran of the period in which President Bill Clinton and 

Speaker Newt Gingrich—‘‘worked together’’ is perhaps not the 

right word. It was not all that friendly, but it was a negotiation toward the same goal, and both of them were articulating the goal 

of getting to a balanced budget, and in fact, as a result of that negotiation, we got beyond a balanced budget. We had a surplus at 

the end of the last century, which was the result of bipartisan cooperation to do some things that neither side really wanted to do, 

but which got us to a balanced budget. 
17 

I think we have to get the leadership of both parties cooperating, 

and they will not want to get there in the same way. We know 

that. But if we are going to get to a lower growth in our debt, 

which is a rather modest objective compared to balancing the budget, we have to get there with both parties being willing to give 

something and to say, ‘‘OK. We do not get everything we want, but 

we will get part of it,’’ and it will result in slower growth of debt. 

Senator JONES. Ms. MacGuineas. 

Ms. MACGUINEAS. Yes. Also, welcome to Washington. 

Senator JONES. Thank you. 

Ms. MACGUINEAS. It is a really important question, and we have 

spent so much time grappling with this. And the bottom line is this 

will not be a grassroots issue that starts at the grassroots. There 

will not be Million People Marches about the debt, as much as I 

wish there were. 

But it is an issue that the grassroots understand when people go 

and talk to them. So things will change either from the bottom up 

or top down. This is going to have to start with political leadership. 

It is going to have to start. The President is going to have to be 

a part of it, and it is going to have to be bipartisan political leadership for people to believe it. 

But then people find that if they go talk to voters, they do understand the issue. You have to talk to them not just about this is a 

problem and why and because it is so shortsighted and it harms 

our economic sustainability, but you also have to let them know 

that the solutions are not easy because the problem is nobody 

wants higher revenue or lower spending. 

In fact, Republicans do not even want to cut spending, and 

Democrats do not even want to really raise taxes. That is the dirty 

little secret that nobody wants to do the hard choices on either 

side. 

I think where you start is you talk about a shared fiscal goal. It 

used to be reaching balance. The sad situation is that our fiscal situation is so bad, we probably cannot reach balance as quickly as 

we would like to, but we certainly should get the debt back down 

to sustainable levels. 

Then there are ways to take people through the exercise of looking at how you get there. We and other groups have budget simulators. We will go to do town halls with Members of Congress and 

take them through the budget exercise of the different ways to fix 

the debt, and that is very educational for voters. We do that a lot. 

They learn a lot. They start to understand the real parameters. 

Ultimately, I think they tend to come to the conclusion you cannot do this without compromising and doing things you would not 

want to, but that the final goal of achieving something like that is 

worth it. And so I think it is a big issue of education from the top 

down, and the coalition of strange bedfellows, doing it with other 

members who you do not agree with, but you share this goal, helps 

people believe that it is important. 

Senator JONES. All right. Mr. Brass and Ms. Krause, do you want 

to add in? My time is about running out, but that is fine. If you 

would like to add something, please do. 

Mr. BRASS. I will just add that one suite of options that Congress 

might consider in this context is how to engage with the public in 
18 

sharing information about the tradeoffs that may be implicit and 

choices. A former colleague of mine, Wendy Ginsberg and I did a 

paper where we looked at the past century of how Congress has 

embedded public participation and additional transparency into 

multiple aspects of how the Federal Government operates, and 

there might be creative ways to engage the public in those conversations. 

Senator JONES. All right. Ms. Krause? 

Ms. KRAUSE. Just very briefly, we now do an annual report on 

the fiscal health of the Federal Government, and that has been a 

good communication tool in terms of helping explain the issue. 

Senator JONES. All right. Great. 

I think my time is up. Mr. Chairman, thank you. 

Senator PAUL. Thank you. 

Well, I think we all can agree, the panel seems to agree, both 

sides of the aisle seem to agree that continuing resolutions, shutdowns, and even omnibuses are not the idea way to do this, and 

that they do lead to problems. 

The problem becomes, now that we all agree, how come we cannot figure out a solution if we all agree, and so we all agree there 

is a problem. We tend to all say, well, we ought to pass the 12 appropriations bills, and everybody will say, ‘‘This is the last one I 

am voting for. This is the last CR I am voting for. We are going 

to fix it,’’ and yet it does not get fixed. 

So there has to be something that has to change, and I agree 

with you that we can have these process changes, which I am for 

and I proposed some of them, but really it is also political will. People have to have the will to actually do the right thing because in 

the past, we have tried process changes. We have a PAYGO rule, 

which is a great idea. I think it was passed actually with the Democrat majority in 2010 the last time, and yet I think we have 

evaded it 30 times at least at last count. So we set up rules, and 

then we disobey our own rules. 

The sequester turned out to be the best thing to slow down the 

rate of growth of government in a long time, and it actually 

worked. We actually did reduce overall spending for a year or two, 

and we were heading in the right direction. Yet the compromise we 

have in Washington is both parties want to exceed the sequester 

caps now. Republicans loudly want more military spending. The 

Democrats say, ‘‘Well, we will give you that as long as you give us 

ours.’’ Everybody gets a little bit. So we have the reverse of the 

compromise that is needed. We continue to increase all spending. 

And then others will say, well, that is the discretionary spending. 

It is really the mandatory spending, which is growing at about six 

percent. 

So I think if you want to see how bad the picture is, you can 

eliminate all the discretionary spending, and you do not balance 

your budget. So you really do have to look at the growth of mandatory spending, but it becomes more difficult when we look at things 

that people have expectations for. But you cannot grow at six percent. There is no way, that and the demographics. There is just no 

way you can continue that. So we look at some of the ways to do 

it, and I think there has to be some sort of punishment. 
19 

Now, we could have continuing resolutions instead of shutdowns, 

but if we just did that, have we really fixed or helped the problem? 

It may be better than having a shutdown, but then we would be 

just stuck with continuing resolutions that would roll on and on, 

and we would have eliminated one problem, a shutdown. 

So really what I have proposed and what I would like to hear 

sort of each of you comment on is we have proposed a punishment, 

a hammer, and the hammer is basically spending goes down by one 

percent. And we know both sides do not want spending to go down. 

They are all for more spending. So maybe they would say, ‘‘Oh, my 

goodness. All the special interests who want this money will be 

knocking on our door and yelling and screaming,’’ so then they 

would do it on time. 

I frankly think it is not too much to expect to do 12 appropriation 

bills. You could have a couple of months, two or three months of 

committee hearings and then nine months, take a couple of weeks, 

take three weeks for each bill. Three weeks would be an enormous 

amount. We rarely spend more than a week on a bill, and we rarely have amendments. Do three weeks for each of the 12 appropriations bills and three months’ worth of hearings, and this is our 

main job, spending the money. 

But, anyway, I would like to hear what your thoughts are on my 

proposal, the Government Shutdown Prevention Act, which would 

at the end of the fiscal year, after 12 months, if there is not an appropriation bill done, then you get a one percent across-the-board 

cut every 90 days until Congress does its job. 

Why do we not just start with Dr. Rivlin, and we will work our 

way down. 

Ms. RIVLIN. I am for it, Mr. Chairman. I think that would help. 

Let me suggest one other thing, which sounded gimmicky to me 

when I first heard about it, but it would be no recess until you pass 

a budget resolution. That gives you a framework for the appropriations bills, and I think that might work. 

Senator PAUL. Yes. I like the no recess idea, and I think actually 

it might work. You would be surprised how often people want to 

either go home or go somewhere else besides Washington, and that 

might help. Ms. MacGuineas. 

Ms. MACGUINEAS. Yes. I also support it. When you are thinking 

about triggers or defaults, you have two models, either ones that 

are so awful that you will never let them hit—that is what the sequester was supposed to be, and it turned out we let it hit. And 

like you said, it actually ended up controlling spending, though I 

would say on the part of—the less problematic part of the budget— 

or you have defaults of policies that you would want, and you let 

them go in place automatically if Congress is not going to do its 

job. 

So I think the automatic CR is an important idea. I think your 

idea of including things that would incentivize people to come to 

the table is also very important. 

I will share with you that when we did the Peterson-Pew Commission a number of years ago, our Republican members actually 

said we should not have the triggers be just spending cuts because 

enough of our colleagues will actually like them. We should also 

have some revenue increases. So there are different models that 
20 

you could think, which is would both sides dislike it enough. I 

think it is important to have something that would bring everyone 

to the table and realize that what they need to do is their job. 

Senator PAUL. I think you made a good point in the beginning, 

talking about extending the sequester instead—that people complain just in the discretionary. You are right—— 

Ms. MACGUINEAS. Yes. 

Senator PAUL [continuing]. If we had the sequester across the 

whole thing, one, it takes pressure off of military spending. It takes 

pressure off of the other domestic spending, and it spreads it 

across. You would really fix government actually if you had an 

automatic sequester. 

The other thing is that with the sequester, I have also advocated 

that people complain that it is every department across the board, 

that let the departments move their money around a little bit to 

deal with the sequester, and I think that could have overcome some 

of the objections. But yes, sequester across the board would have 

actually fixed government, but they do not want to sequester at all. 

Just a handful of people are for any restraints or budget caps at 

all anymore, and you are going to find out this week, they are 

going to blow through all of the budgetary caps. Mr. Brass. 

Mr. BRASS. I have not studied your legislation in depth, but I do 

have colleagues who focus on the topic of automatic continuing resolutions. As you know, CRS does not take positions on pending legislation, and so as a consequence, we oftentimes go through perceived strengths and weaknesses of different approaches from a variety of points of view. It could be an action-forcing mechanism. It 

could be a way to avoid disruptions in government operations, but 

on the other hand, it could create winners and losers in policy 

terms. So when looking at those various considerations, it becomes 

a complicated topic to look at, certainly. 

Senator PAUL. Ms. Krause. 

Ms. KRAUSE. Similarly, ultimately, it is up to Congress to decide 

whether to alter appropriations process. 

I think just through our work one of the considerations that 

comes up is not only do shutdowns, as we have found, start and 

stop the work and create inefficiencies. Even if there is not a shutdown and there is a possibility of a shutdown, there is a lot of planning and time that can go into that, so having something like this 

could address some of those issues. 

However, some of the details can be very important. I think some 

of the other panel members have mentioned the incentive to bring 

people to the table and be willing to still negotiate and come to a 

final agreement. Then also Congress sometimes uses anomalies 

within the CR to address specific issues for agencies, so that is 

something that may need to be considered. 

Also, our work on sequesters gives a little more insight into this 

issue as well. On the one hand, across the board-cuts give fiscal 

discipline when we fund with a sequester, but on the other hand, 

it can equally cut good and bad programs, and so you are not shifting around to what is more effective. These are just some considerations. 

Senator PAUL. Yes. I personally think if you had leadership that 

at the beginning of the year had all 100 Senators sit down in the 
21 

chamber and said, ‘‘Look, we are going to do all of the appropriation bills, and we are going to spend three weeks on each appropriation bill, and there will be as many amendments as you want. 

And as a consequence, the only thing I am asking you to do, so we 

can get to that, is to not filibuster going to these bills. 

And even myself, who probably would not like the spending level 

and might vote no on the spending level, I could agree not to filibuster to simply get to the bill, but no one has ever asked that. No 

one has ever come forward and said, ‘‘We are going to do this, and 

we are going to get through them.’’ Although the House did, I 

think, all 12 appropriation bills last year, so it can be done and 

really is the main thing we should be doing. It is spending the 

money and deciding how the money is going to be spent. 

We talked a little bit about a sort of punishment to try to get 

it done, decreasing spending or increasing taxes. 

The other idea that was mentioned earlier was biennial budgeting. How much of the problem would be fixed by spreading it out 

so we had a little bit more time, I guess, basically? 

And why do we not start with Dr. Rivlin again and go down. 

Ms. RIVLIN. I think a biennial budget would be a good idea, and 

I would not spread it—the danger would be that you would take 

the whole two years to make a budget. [Laughter.] 

The concept of the proposal that I have been part of is you do 

get the budget done for two years in the first nine months of the 

year, so you start on the fiscal year on October 1st. 

I do not think it is a panacea, but I think it would free up some 

time to do other things. It would allow agencies to plan better if 

they could get an appropriation for two years. 

Now, admittedly, things happen. You have fires and wars and 

whatever, and you would have to do a supplemental in the second 

year, but you would not be reviewing the whole budget. So I think 

it is a good thing. 

Senator PAUL. Yes. And I think from the Constitution, I think 

Defense would have to be done every year, but the rest of them 

could be biennial. I think you have to appropriate Defense every 

year, according to the Constitution. 

Ms. RIVLIN. That could be, but the Defense Department actually 

was the leader in doing a two year appropriation in—I forget when. 

The Congress did not like it. They liked to do it annually. 

Senator PAUL. Even if only one department had to be done every 

year, it would still be, I think, a good idea. Ms. MacGuineas. 

Ms. MACGUINEAS. We support it. We do not think it would make 

major differences. We do support it for a couple of reasons. One, 

I think the additional focus on oversight and evaluation is a lot of 

where the emphasis should be. 

Two, there is a lot of support for it, and if we could get something done and some changes, we think success, to get more success, it would be good in that way. 

I am a procrastinator. I very much worry that Congress—OK. 

Congress is a procrastinator. 

Senator PAUL. We have a history of that. 

Ms. MACGUINEAS. Yes. There is nothing that gets done until your 

back is against the wall these days, so I definitely worry it is not 

the moment where this would be a big overhaul that would work. 
22 

But I think passing something and changing the budget process 

right now is really in order. And so I would like to see part of a 

package. 

Senator PAUL. Not pro or con on the legislation, but pros and 

cons of a single versus a biennial budget. If you have a comment, 

feel free. 

Mr. BRASS. Yes. We have that constraint in how we look at 

things and discuss things. 

My other panelists mentioned some of the potential pros that 

come along with the biennial budgeting process. It could create 

extra time for oversight in a second year. 

It could also shift power relationships, in particular, between the 

Legislative Branch and the Executive Branch. 

One aspect of the annual budget process that we have is that 

when appropriations committees put concerns or warnings or exhortations in report language to agencies, agencies know that the 

following year, folks in Congress are going to be looking at whether 

agencies complied or listened closely. If budgeting is done every 

two years, it might decrease by 50 percent the opportunities then 

for Congress to come in and say, ‘‘Well, wait a minute. You guys 

did not do what you said you were going to do,’’ and so there might 

be some changes in behavioral incentives with agencies. 

Senator PAUL. Ms. Krause, do you have a comment? 

Ms. KRAUSE. Sure. The only other consideration, as we have already talked about the opportunity for increased oversight, is 

also—it increases the planning timeline for agencies, so it increases 

up to 30 months when you are trying to look out that far. So sometimes with forecasting, that can be very challenging. 

Senator PAUL. I think one of the ironies of the way we spend 

money is you will find, Senator Jones, that a lot of your day is occupied by people who come up here advocating for something they 

want money for, but the interesting thing is I have never, ever 

voted for any specific project or even for a group of projects because 

I have never voted for anything other than everything all at once 

or not. 

So somebody comes up here and they want more money for legal 

aid or they want more money for this, I never have a vote on that. 

I do not even have a vote remotely close to that. So we have all 

these people advocating for stuff that we are not even paying any 

attention to. 

On the one side, we are not paying attention to what we fund 

or how much. We are not paying attention to whether it works or 

does not work, and then we are never ferreting out misappropriated funds or funds that are going toward wasteful things. 

To me, it is sort of a sad state of affairs, and that is why I think 

the accumulation of waste, we do not ever ferret any of it out, so 

it just keeps accumulating year after year after year because we 

just keep voting on continuing spending. 

But I think if you think about it this way, if we were to vote— 

let us say we only passed five appropriations bills. That is fivetwelfths of government that would not close down when we have 

a shutdown sort of debate, and so if you passed 11 out of 12, one, 

it gets rid of the leverage of shutting the government down too. So 

you really do not have much leverage, and I think it would get us 
23 

away from using the leverage of shutting down the government if 

we had already passed several of the appropriation bills. 

So I think we have to do something, but I think ultimately, it is 

political will. It means electing people who care, and frankly, neither side cares, and that is a problem. Whether or not the public 

cares, I think they actually do. I think if you were to do a large 

survey of the American people and ask them should the government operate the way your family budget does, should you spend 

what comes in, I think, largely, they would. When you ask the public whether they are for a balanced budget amendment, 75 or 80 

percent. But there is a lot of issues like that where 80 percent of 

the public is for something, and then 80 percent of Washington is 

on the opposite side of things. There is a disconnect in how we represent our people. 

But I do appreciate you all coming. 

Senator Jones, did you have any other questions you would like 

to ask? 

Senator JONES. Just one, very brief. One, Mr. Chairman, I am intrigued by the one percent penalty, so to speak. I think that is a 

great idea. 

I will say, Dr. Rivlin, for somebody from Alabama to shutdown, 

not have any recess during college football season is a little harsh 

for me. [Laughter.] 

OK. I just wanted to get that on the record. 

Briefly, Ms. MacGuineas, you mentioned entitlement reform. 

Could you give me just a brief idea of the type? I mean, my State 

gets a lot of dollars from what is referred to as entitlement. Can 

you give me a brief idea, not take a whole lot of time, but some 

of the ideas that you had on an entitlement reform? 

Ms. MACGUINEAS. Sure. So first off, the term that I have learned, 

that a lot of people do not like entitlement reform—‘‘entitlement,’’ 

the term. I mean as mandatory spending, which is the part of the 

budget that is on automatic pilot. It does not go through the appropriations process, and so if you qualify for something, you get it. 

We know that the growth of mandatory programs is what is driving the increase in spending, and like I said before, the biggest 

pieces of it are from the aging of the population and health care. 

It seems to me that if we start with the biggest programs, which 

are Social Security, Medicare, and Medicaid, and figure out how to 

make them solvent, that will go a long way to strengthening those 

programs and alleviating a lot of the pressure that is on the budget. 

Just as an example, Social Security. When it started, the retirement age was 65, and life expectancy was 62. Today, the age is 

gradually going up to 67, and we are living much longer. We are 

not able to have reasonable discussions about reforming these programs. It is very political. If you start talking about it, you will see 

that you get a lot of pushback. 

But there is no avoiding these issues. My personal belief is that 

we have to look at all parts. Take some of that Social Security. You 

have to look at the retirement age. You have to look at slowing the 

growth of benefits for people who do not depend on the program so 

that we can protect it for people who do. You have to look at the 

payroll tax gap. You have to look at it all. There is about five or 
24 

six levers that you move, but the sooner that we do it, the easier 

it is because right now baby boomers are moving into retirement 

every single day. That means it is becoming much more costly. 

These delays are costly. 

Figuring out health care cost is much more difficult. Alice is one 

of the leading experts in the country on how to control health care 

cost, that is a part of Medicare Medicaid. 

But what we do is we demagogue these issues, and we pretend 

we do not have to fix them. By not fixing them, they were making 

the people who depend on them increasingly vulnerable. And bearing our head in the stand is just not the right approach. 

Senator JONES. Well, thank you very much, and thank you, Mr. 

Chairman. I am looking forward to working with you on this. 

Senator PAUL. I think you hit the name on the head. We demagogue these issues. One part is going to push grandma off the cliff. 

One part does not care about old people, and really these are actuarial problems. We are living longer, and you are right. When Social Security was started, there was no need for pensions hardly because most people were not surviving beyond the retirement age. 

But you can fix them. You can gradually raise the retirement 

age. You can means test. If we do nothing, though, when the cliff 

comes and when we run out of money, then it is everybody. Can 

you imagine somebody who lives on $600 a month who gets a 25 

percent cut in their Social Security? That is not going to be tenable. 

If we were to look at it now, the wealthier among us, including 

most Members of Congress, could agree to take some less in Social 

Security and be done gradually, and it really would not even be the 

whole check. 

When we looked at this a couple of years ago, we looked at 

gradually raising the age to 70 over, I think, a 20-year period, a 

couple of months every year, and then means testing the benefits. 

Really, the means testing was not that draconian. A lot of people 

had to go through it, but really those who made—I think the top 

is $2,200 a month for Social Security. We took them to $1,900, and 

those are for people who made over $100,000 a year, but it had to 

come pretty far down. You had to means test all the way down to 

people who had a salary, maybe 50,000 or $60,000 a year, but you 

could do that through means testing, a little bit less Social Security 

and raising the age. You can fix them. 

Health care is harder. When we looked at health care, raising 

the age and means testing it fixed about a third of the problem, 

and so health care is an enormous problem. From my mind, what 

you have to have is you really have to have competition, but a lot 

of people do not realize that health care in our country, over 50 

percent of it is non-market based, really probably more than that 

because even most private insurance in a way is not market based 

in the sense that the price is not mobile, and you do not have different people offering a different price. That is what capitalism is. 

You have to have a mobile price and different people offering a different price. 

But I do cataract surgery. Every surgeon in the country gets paid 

the same by Medicare, so there is no price competition in cataract 

surgery. Even in private practice with private insurance, Blue 

Cross pays all the doctors in my community the same. Aetna pays 
25 

them the same. United pays them the same. So nobody chooses 

their doctor based on price, and because that happens, there really 

is no competition and no capitalism really in health care. 

So you would have to reinstitute that, but you have two sides up 

here in the debate. We have one side that really just thinks maybe 

government should be more involved, but if you do, then you have 

fixed prices, fixed distribution, and you will have to ration it and 

tell people they cannot get certain thing done. And they do that in 

other countries, but what we had before was not capitalism either 

and did not work either. So the old system of health care did not 

work. The new system does not work, and we still had this question of which direction to go, but Medicare is not easy to fix. 

Thank you all for your testimony. Thank you for coming to this 

hearing, and thank you for your participation. 

Ms. MACGUINEAS. Thank you. 

Ms. RIVLIN. Thank you. 

[Whereupon, at 3:41 p.m., the Subcommittee was adjourned.] 

(27) 

A P P E N D I X 
28 

How can Congress do proper oversight of spending when we throw everything 

into one giant trillion dollar bill? 

Congress is supposed to take a close look at 12 appropriations bills, funding 

specific areas of government and debate and amend them. 

Until Congress does its job, wasteful, deficit spending will continue and 

government shutdowns will continue to threaten us. 

Nobody likes a government shutdown, but what amazes me is that even though 

about 85 percent of federal spending continues in a shutdown, it is less efficiently spent 

than under normal conditions -which results in more cost. 

To prevent shutdowns, I have introduced the Shutdown Prevention Act, which 

says at the end of the fiscal year, anything still not funded will automatically be funded 

at 99% of its previous budget. 

What should make this a win-win for everyone is that agencies will have at least 

a minimum level of certainty about their full year funding, something they don't have 

hopping from CR to CR. And these modest cuts will incentivize Congress, to avoid 

them by doing their our job on time. 

So I think this is an important and timely hearing; and I thank Senator Peters for 

working with our office to set this up. With that, I'll recognize the Ranking Member for 

his opening statement. 
29 

U.S. Senate Homeland Security and Governmental Affairs Committee 

Subcommittee on Federal Spending Oversight and Emergency Management 

"Terrible, No Good, Very Bad Ways of Funding Government: Exploring the 

Cost to Taxpayers of Spending Uncertainty Caused by Governing through 

Continuing Resolutions, Giant Omnibus Spending Bills, and Shutdown 

Crises" 

February 6, 2018 

Senator Gary C. Peters, Ranking Member 

Opening Statement 

I'd like to extend a sincere thank you to Chairman Paul for providing a forum to 

engage on this topic today in a collaborative, bipartisan manner. 

The conversation we are having today goes to the heart of how Congress functions 

as an institution. One of our most fundamental responsibilities is to pass a budget 

and fund the government. This is our most basic job, and the American people 

expect us to get it done. 

The way we budget and fund the government is dysfunctional. It's a problem that 

has gone on for so long that we have become accustomed to it. It's become the 

new normal. The purpose oftoday's hearing is to say enough-this is no way to 

govern. 

This broken process, filled with last-minute deadlines, continuing resolutions, and 

even government shutdowns, is wasteful, inefficient, and harmful to the American 

people. 

That is why our esteemed panel of witnesses is here today. We appreciate your 

expertise, your experience, and your time. Your testimony today is critical to 

helping us diagnose the severity of our budgeting problem, and how it impacts 

government services and wastes tax dollars. I hope you can help us explore 

potential constructive solutions. 

Our broken budget process needlessly shortchanges the effectiveness of federal 

programs through a never-ending cycle of short-term continuing resolutions and 
30 

omnibus spending bills that create budget crises and keep the government 

perpetually at the edge of a shutdown. That threat occasionally comes to pass, as 

we saw just a few weeks ago. 

Though Congress designed a clear budget process in the 1974 Congressional 

Budget Act to establish our own funding priorities and a set time line for enacting 

them into law, we have failed time and time again to live up to our own standards. 

In fact, Congress has only managed to enact all twelve required appropriations bills 

on time in four out of the past forty years. 

Instead, this body has passed an average of four CRs every year. And the 

frequency has only increased in recent years since 20 11, we've passed 34 

separate CRs. 

Sometimes these CRs fund the government for as little as one day at a time. As a 

result, the majority of sitting members of Congress have never seen this body pass 

a budget through "regular order." 

We can and we must do better. First, I'm hopeful that this hearing will offer a 

candid discussion of the facts and emphasize the true costs and consequences of 

governing through short-term CRs. We lurch from crisis to crisis, wasting 

countless hours across the federal government as employees prepare for shutdowns 

or draft detailed, comprehensive yearly budget documents that are completely 

disregarded. 

Most significantly, this dysfunctional pattern needlessly threatens our national and 

economic security. Without a long-term budget outlook, our military is unable to 

plan ahead and effectively conduct their critical mission to protect the American 

people and American interests abroad. 

Instead of thoroughly evaluating spending priorities or conducting meaningful 

oversight of government programs, Congress kicks the can down the road and lets 

taxpayers foot the bill. 

And in the event of a shutdown, hundreds of thousands of federal workers are 

furloughed from their jobs and Americans of all walks of life lose access to 

important public services they count on. 
31 

To offer a better sense of the real impact this has on the federal workforce, I ask 

unanimous consent to enter into the record a letter I received today from the 

American Federation of Government Employees. 

Last week during a hearing in the Commerce Committee, I asked the Director of 

the National Science Foundation about the impact of continuing resolutions and 

shutdowns on her agency. Not only did the NSF have to cancel a whole slate of 

important meetings, including with several Nobel Prize laureates, the Director also 

told me, quote, that "everybody just basically stops work in order to gear up" for a 

shutdown. 

That's a lot of time and tax dollars wasted preparing for a shutdown that wouldn't 

happen if Congress simply did its job. 

I look forward to hearing a robust discussion from today's witnesses about 

potential reforms and solutions that will help break this harmful cycle and restore 

regular order to the congressional budget and appropriations process. 

We must work together in a bipartisan way to reduce our reliance on short-term 

CRs, mitigate the harmful effects of this uncertainty on federal agencies, and 

minimize the costs of this broken process to taxpayers. I'm sure the Chairman 

would join me in saying that we are eager to hear your ideas. 

So let's get to work. Thank you very much, and I look forward to today's 

testimony. 
32 

GA0-18-368T 

loc·tin-lnn,u Before the Subcommittee on 

)\lo,rci,Nht and 

Continuing Resolutions 

Budget 

Present 

Challenges 

Statement of Heather Krause, Director, Strategic Issues 
33 

Why GAO Did This Study 

BUDGET ISSUES 

Continuing Resolutions and Other Budget 

Uncertainties Present Management Challenges 

What GAO Found 

ln appropriations leading to government 

shutdowns create other management challenges for agencies. 

In 2009 and 2014, GAO identified instances of reduced government services and 

productivity and increased costs resulting from CRs and shutdowns, including: 

~&JEX!lliilll!L\!B!i~l\L\ill!lJBi,Some agency officials reported delaying 

for grants while under a CR, which could 

agencies provide, increase costs, and adversely 

of grant submissions. For example. in 2009, officials at the 

Bureau estimated that delaying a contract for a prison facility had 

prevented them from in lower prices and resulted in about $5A 

million in additional costs. 2013 shutdown, which lasted 16 calendar 

also clinical trials, at the agencies 

staff. 

estimated that the 

by 0.3 percentage 

of furloughed workers 

economic effects at 

authorities and agency actions may mitigate challenges associated 

managing during CRs and shutdowns. These include: 

===""""""' Agencies can also take actions to mitigate budget 

have the ability to shift contract and 

are less likely to be under a 

of services. 

------------- United Stat-es Government Accountability Office 
34 

Chairman Paul, Ranking Member Peters, and Members of the 

Subcommittee: 

Thank you for the opportunity to discuss our work on the effects of and 

agency responses to budget uncertainties and disruptions. As you know, 

Congress annually faces difficult decisions on what to fund among 

competing priorities and interests, and often postpones final funding 

decisions to allow additional time for deliberations. In all but 4 of the last 

40 fiscal years-including this year-Congress has enacted continuing 

resolutions allowing agencies to continue operating until agreement 

is reached on appropriation bills. When regular appropriations 

or CRs are not passed, the resulting lapse in appropriations-a funding 

gap-causes the government to shut down. Last month the government 

partially shut down for three days after the CR in place expired. Other 

shutdowns have lasted longer-16 calendar days in October 2013 and 21 

calendar days in December 1995 through January 1996. 

Budget uncertainty and disruptions create management challenges for 

For example, under a CR, agencies can continue to operate, 

the funding expires on a certain date and therefore creates 

uncertainty about both when final appropriations will be enacted and the 

level of funding that will ultimately be available. In addition, when there is 

a possibility of a funding gap, agencies must prepare for an orderly 

shutdown of government operations, even if a shutdown is ultimately 

averted. In response to these uncertainties, our prior work has found that 

agency officials have taken a variety of actions and leveraged available 

authorities to execute their budgets and carry out their missions. 

This statement will focus on the effects of CRs and shutdowns, and 

(2) legislative authorities agency actions that assist in managing such 

budget uncertainty and disruptions. This statement is based primarily on 

our reports examining the effects of CRs and the 2013 government 

including their effects on selected agency operations. 1 The 

examples we use in this statement illustrate the types of management 

challenges may encounter under these conditions even today. 

We used methodologies to develop the findings and conclusions 

Pagc1 
35 

Continuing 

Resolutions and 

Government 

Shutdowns Create 

Inefficiencies and 

Other Management 

Challenges for 

Agencies 

for these prior products. A more detailed discussion of the prior reports' 

objectives, scope, and methodologies, including our assessment of data 

reliability, is available in the reports cited throughout this statement. 

This testimony is based on work we conducted in accordance with 

generally accepted government auditing standards. Those standards 

that we plan and perform the audit to obtain sufficient, appropriate 

to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on 

our audit objectives. 

year 1999, CRs have varied greatly in their number and 

duration. As shown in figure 1, the duration of CRs has ranged from 1 to 

1 87 days. The number of CRs enacted in each year also varied 

considerably, ranging from 2 to 2 F 

Page 2 

there have been four CRs in fiscal year 2018. Final 

determined 

GA0-18-368T 
36 

Figure 1: Duration and Number of Continuing Resolutions {fiscal Year 1999- January 2018) 

10/1 

Duration 

11/1 12/1 111 211 311 

Notes: Modified from 

411 511 

!08-185, amended the orfglna! CR with substantive provisions but did not extend 

for the remainder of the 

Page3 GA0-18~36BT 
37 

In 2009, we reported that agency officials operating under a CR reported 

that they often limited or delayed their spending earlier in the fiscal year 

because final appropriations may be less than anticipated. 3 For example: 

Delayed contracts and grants. Some agency officials reported 

delaying contracts during the CR period, which could reduce the level 

of services provide. Officials said that longer CRs resulted in 

contracting that affected their ability to fully compete and 

award contracts the limited time remaining in the fiscal year after 

the agency had received its regular appropriation. These contracting 

delays resulted in increased costs from agencies' inability to lock in 

lower prices for contracts, as well as those related to additional time 

and resources involved in having to solicit bids a second time or have 

environmental and other analyses redone. For example, in 2009, 

officials at the Bureau of Prisons (BOP) reported delaying contract 

awards for new BOP prisons and renovations to existing facilities 

prevented the agency from locking in prices and resulted in higher 

construction costs. BOP estimated a delay in awarding a contract for 

a prison facility resulted in about $5.4 million in additional costs. 

Officials at two agencies reported that longer CRs compressed the 

application time available for discretionary grants, and one agency 

said that this compressed time period had adversely affectad the 

quality of submitted applications. 

Delayed hiring. Officials at the agencies we examined said that they 

had delayed hiring due to CRs. They told us that, had they not been 

operating under a CR, they would have hired staff sooner for 

government services such as grant processing and oversight, food 

and drug inspections, and intelligence analysis. Hiring delays may 

affect agency services. For example, in 2009, a Food and Drug 

Administration (FDA) official told us that deferring the hiring and 

training of staff during a CR affected the agency's ability to conduct 

the targeted number of inspections negotiated with FDA's product 

centers in areas such as food and medical devices. In addition, 

agency officials said it was particularly difficult to fill positions by the 

end of the fiscal year after a longer CR period. Consequently, agency 

Page 4 GA0·18·368T 
38 

officials said that if the agency does not have enough time to spend its 

funding on high-priority needs (such as hiring new staff) because of a 

lengthy CR, the agency ultimately may spend funds on lower-priority 

items that can be procured quickly. 

Officials from the selected agencies reviewed also said that managing 

within the constraints of a CR had created additional work-potentially 

resulting in lost productivity. Shorter and more numerous CRs can lead to 

more repetittve work. The most common type of additional work agencies 

cited was having to enter into shorter term contracts or grants multiple 

times to refiect the duration of the CR. Agencies often made contract or 

grant awards monthly or in direct proportion to the amount and timing of 

funds provided by the CR. Officials at all agencies also reported having to 

perform a variety of administrative tasks multiple times, including issuing 

guidance to various programs and offices and creating, disseminating, 

and revising spending plans. 

In 2009 we also reported that management challenges caused by CRs 

continued even after the agencies we reviewed had received their full 

year appropriations. In general, we found that longer CRs can make it 

more difficult for agencies to implement unexpected changes in their 

regular appropriations, because agencies have a limited time to do so. In 

addition, longer CRs can contribute to distortions in agencies' rates of 

spending as agencies rush to obligate funds late in the fiscal year. 

In addition to CRs, lapses in agency appropriations leading to a 

government shutdown also create management challenges. Our 

examination of the 2013 shutdown found that it had affected some 

operations and services at the three departments we reviewed. 4 For 

example, the three departments faced delays and disruptions in activities 

such as clinical trials due to furloughed staff and lack of access to 

information technology systems, among other things. Whether or not a 

federal contract was allowed to continue during the shutdown depended 

on a number of variables, including the availability of funds and the extent 

to which contract employees required supervision by federal employees 

or access to federal facilities to conduct their work. 

Government shutdowns can also have an effect on the country's 

economy due to the furloughing of federal workers and their lost 

Energy, Health and Human Services, and 

Page 5 GA0·18·368T 
39 

Legislative Authorities 

and Agency Actions 

May Mitigate 

Challenges 

Associated with 

Managing Budget 

Uncertainty Related 

to CRs and 

Shutdowns 

productivity. For the 2013 shutdown, we reported on the effects of the 

shutdown on economic growth, as determined by the Bureau of Economic 

Analysis (BEA). BEA, the agency who national economic statistics 

provide a comprehensive view of the U.S. economy in the form of 

summary measures such as gross domestic product (GDP), estimated 

the direct effect of the shutdown on the real GDP growth in the fourth 

quarter of 2013-the time of the shutdown-to be a reduction of 0.3 

percentage points. BEA estimates that this decline in real GDP growth is 

based on the lost productivity of the furloughed workers during the time of 

the 2013 shutdown. Economic forecasters we interviewed for our report 

on the 2013 shutdown believed the other economic effects from the 

shutdown to be minimal at the economy-wide level. 

Agency officials we interviewed for our prior work identified certain 

authorities that can help mitigate the challenges associated with 

managing during a CR period and a government shutdown. These 

include: 

Legislative anomalies. Congress generally includes standard 

provisions in CRs that require most agencies to operate similarly to 

the prior year, but to spend conservatively and without starting new 

activities. Congress may include specific exceptions, called 

"legislative anomalies," that provide different funding or direction 

under a CR. Programs that have previously received a specific or 

additional amount of funding under a CR have included wildfire 

management, veterans healthcare and benefits, imd disaster relief. 

CRs also have extended the authority to collect and obligate fees, 

such as for mining, or to collect certain copayments from veterans for 

medications. 

Multiyear funding. Officials at the agencies we reviewed as part of 

our 2009 report on CRs told us that having multiyear budget 

authority-funds that are available for more than one fiscal year-was 

helpful for managing funds in the compressed time period after 

regular appropriations were enacted. 5 For example, having the 

authority to carry over funds into the next fiscal year can be useful in 

years with lengthy CRs because there is less pressure to obligate 

funds at the end of the year, thus reducing the incentive to spend 

funds on lower priority items that can be procured more quickly. 

Page 6 GA0·18·368T 
40 

Similarly, having multiyear or no-year appropriations may also be 

useful in managing through a shutdown, as these funds may be 

available to agencies to continue some activities. 6 

Agencies can take actions to mitigate challenges associated with CRs 

and shutdowns. For example: 

Adjusting contract and grant cycles: To reduce the amount of 

additional work required to modify contracts and award grants in 

multiple installments, two of the six agencies we examined for our 

2009 report on CRs reported shifting contract and grant cycles to later 

in the fiscal year when they are less likely to be under a CR. 7 An 

agency's ability to shift its contract cycle depends on a number of 

factors, including the type of services being acquired. For example, 

over the last 30 years, Congress has enacted laws that authorize 

federal agencies to enter into 1-year contracts for services that are 

recurring in nature, such as janitorial services, and that cross fiscal 

so long as the contract does not exceed 1 year and agencies 

sufficient funds to enter into the annual contract. Using this 

contract flexibility, an agency can shift its contract cycle so that annual 

contracts for these services are executed in the third and fourth 

quarters of the fiscal year when agencies are less likely to be under a 

CR. 

Agency guidance and communication. Agencies' contingency 

plans provide guidance on how agencies are to manage shutdown 

activities. Agency officials we interviewed as part of our examination 

of the 2013 shutdown told us that employees were familiar with 

contingency plans and other guidance and procedures from previous 

potential shutdown preparations and from planning for operating 

under a CR and in other periods of budgetary uncertainty" 

Additionally, agency officials commented that communication within 

their departments and with the Office of Management and Budget 

(OMB) and the Office of Personnel Management was very important 

for preparing for and implementing the shutdown. 

In our report on the effects of the 2013 shutdown we recommended that 

OMB instruct agencies to document lessons learned in planning for and 

implementing a shutdown, as well as resuming activities following a 

6

No-year appropriations are ones available without fiscal year !imitation_ 

Page 7 GA0-18-368T 
41 

GAO Contact and 

Staff 

Acknowledgments 

{102575} 

shutdown, should a funding gap last longer than five days, OMB 

implemented this recommendation by revising its Circular A-11 guidance 

to direct agencies, in updating their contingency plans, to note any 

changes made to their plans in light of their experiences during any 

recent lapses in appropriations, Having such information in agency 

contingency plans may help inform planning and implementation efforts in 

the event of future shutdowns, 

Additionally, OMB has also helped agencies manage during CRs by 

providing more than the automatic apportionment in some 

circumstances, 9 OMB recognizes that some programs may need more of 

their apportionment at the beginning of the fiscal year during a CR 

Chairman Paul, Ranking Member Peters, and members of the 

Subcommittee, this concludes my prepared remarks, I look forward to 

answering any questions you may have. 

about this statement, please contact me at (202) 512-6806 

Klctu:oemwuau"uuv. Contact points for our Offices of Congressional 

may be found on the last page of this 

Individuals making key contributions to this testimony were 

Janice Latimer and Carol Henn, Assistant Directors, Alexandra Edwards, 

Kathleen Padulchick, Lauren Sherman, and Erik Shive, 

Page 8 GA0-18-368T 
42 

Statement of 

Clinton T. Brass 

Specialist in Government nnr:>ni'7:>1-inn and Management 

Before 

Committee on Homeland and Governmental Affairs 

Subcommittee on Federal Spending Oversight and Emergency 

U.S. Senate 

Hearing on 

"Terrible, No Good, Very Bad Ways of 

Funding Government: Exploring the Cost to 

Taxpayers of Spending Uncertainty Caused by 

Governing Through Continuing Resolutions, 

Giant Omnibus Spending Bills, and 

Shutdown Crises" 

February 6. 2018 

Congressional Research Service 

7-5700 

www.crs.gov 
43 

Introduction 

Chairman PauL Ranking Member Peters, and Isu.ng.tm;neumembers of the subcommittee, my name is 

Clint Brass. I am a Specialist in Government urgaJHZanonand Management at the Congressional 

Research Service (CRS). Thank you for CRS to testifY on the topic of"Terrible, No Good, Very 

Bad Ways of Funding Government: Cost to of Spending Caused by 

Governing Thro11gh Continuing Bills, and Shutdown 

As requested, this statement focuses on the 

purposes and potentia! effects, and related 

shutdowns of the federal government I 

former CRS colleagues in producing related analysis and 

statement benefits. 

In serving Congress with nonpartisan and objective 

recommendations or take positions on the advisability 

assist the subcommittee in its evaluation of these topics 

options for legislation, oversight, and study. 

Background 

The Federal Budget Process 

As discussed in another CRS pmduct, 1 the 

and research, CRS does not make 

options. Rather, CRS is available to 

the strengths and weaknesses of related 

is a legislative power. The Constitution 

lists the power to lay and collect taxes and 

Constitution provides that funds may be drawn 

to as powers ofCongrcss. Further, the 

by law. The Constitution does not state how these 

expressly provide for the President to have a role in 

Over time, the process of federal 

the President, and as they resnmiUeu 

practiced in recent is highly complex. 

the Treasury only pursuaut to appropriations made 

powers are to be exercised, nor does it 

management of the nation's finances. 

considcml>lv through actions taken by Congress, 

The federal budget process as 

• The process entails many sub-processes and procedures under the Constitution, statutory 

pmvisions, House and Senate rules, and the use of discretion within these constraints. 

Many actors are involved, including Members of Congress, amxooriatiot 

authorizing committees, congressional leaders, the President, 

and Budget (OMB) in the Executive Oflicc of the President. 

and agency career civil servants, not to mention stakeholders the public who pursue 

!heir right to "petition the Government for a redress of grievances.''' 

If problems are perceived to reside with specific aspects of the overall it may be fruitful 

to look not only at the speciiic aspects, but also how they relate to the budget process. An 

observer may evaluate how the part and the whole tit together in Jaw and practice. Notably, changes to the 

federal budget process may affect power relationships and influence policy outcomes. Proposals for 

1 This paragraph draws on CRS Report 98~ 72 L Introduction w the Federal/Judge! Prck·ess, coordinated by James V. Saturno. 1 U.S. Constitution, Amendment L available at http://www.crs.gov/conan/constitutionannotatcd. 
44 

change or for retaining current processes 

perceive ditTerent problems or support 

therefore become controversial if di!Terent observers 

priorities. 

Annual Budget Negotiations and Choices3 

The federal fiscal year begins on October I. For and programs that rely on discretionary funding 

through annual appropriations acts, Congress President must enact interim or full-year 

appropriations by this date if many governmental activities are to operating in the absence of 

such acts 4 Yet, it has been said that "conflict is endemic to budgeting. If cont1ict within Congress or 

between Congress and the President impedes the timely enactment of annual appropriations acts or 

enactment of temporary, stopgap funding through a CR, a government shutdown may occur. 

Along these lines, several options may present to Congress and the President during highstakes negotiations over annual appropriations measures. The options include 

coming to agreement on regular appropriations acts by October l, the beginning of a new 

!!seal year; 

• using one or more interim CRs to extend funding beginning of a 

fiscal year tor those that are not enacted, until a point in time 

when negotiators make about full-year funding levels; or 

not on one or more full-year acts or interim funding in a CR, 

t"'""'"'''rv funding gap a corresponding shutdown of affected federal 

government 

If Congress and the President the second or third options. they may agree on 

appropriations after the of the fiscal These agreements on full-year 

funds through regular 

commonly, through a 

acl:s--stnf!lv or combined together in omnibus lcg:islation 

3 This section drav.,s on CRS Rcp01i RL34680. Shutdown of the Federal Government: Causes, Process·cs, and ~f}Ccts. 

coordinated by Clinton T. Brass. 

5 Irene S. Rubin, ·'Understanding the Role ofContlict in Budgeting:· in Roy T. Meyers, C(L l!andbook of Government Budgeting 

(San Frandsco. CA: Josscy~l3ass, 1999), p. 30. 

(·For discussion of the annual see CRS Report R42J8lt Jhe Congressional Appropriations Process. An 

Brass. 

9 For discussion of omnibus amoroori<ltiom 

Overview of Recent Practices, 

CRs. see CRS Report R42647, 

V. Satumo: and CRS Report RL34700.lnterim 

Clinton T. Brass. 

by James V. Satumo. For 

Processes. and !:jfects, 

sec CRS Report RL32473~ Omnibus Appropriations ActS.' 
45 

Congress and the President f,."""'""''" 

impasse. On other occasions, 

or interim fi.mding without coming to an 

the President not come to an accommodation in 

time to a temporary funding 

the f1rst, ti.lll calendar 

are complex. 

does not appear likely to 

begins a 

by a shutdown 

To elaborate on these matters. the sections below highlight selected aspects of CRs and shutdowns. 

Components of an Interim CR and Potential Effects 

CRs are commonplace in the modern federal process. 10 During the 25 flscal 

FYI952-FY1976, one or more CRs were enacted all but one fiscal year 

present, all of the regular appropriations acts were •·An,_.,,P,'Pn before the start oft he 

instances-FYl977, FYl989, FYl995, and FYl997. 

recent practice in the past 20 years." 

Main Components of an Interim CR 

in four 

of more 

Congress has used interim CRs to 

guiding activities in 

its prerogative to set full-year ihnding levels by restricting and 

ways. ln recent practice, CRs typically include as many as six main 

components. 

Coverage. CRs provide 

reference lo the prior or current 

as the CR 's coverage. 

for certain activities, which are 

year's appropriations acts. 

Duration. CRs provide budget authority for a specified duration of lime. 15 For an 

with 

"interim CR." this duration be as short as a single day or as long as several weeks or 

months. !fa CR extends for the remainder of the tiscal year (i.e., until September 30), 

it may be referred to as a "full-year CR." 

Funding rate. CRs tn,Tmdo.tv•·,p approach that provides 

budget authority at a pace over time but nor amount. This method of 

providing budget authority is commonly referred to as rate, also known as a 

rate .for operations. Under a funding rate, the amount authority for most 

ln high~stakcs negotiations on matters of strong 

Sec. e.g .. G. Richard Shell, 

!999). pp. 89-!14. 

11 The structure and mechanics ofCRs have evolved over timl.'. For related discussion, sec CRS Report R42647, Continuing 

Resolutions: OrervietF of Components and Recent Practices. by James V. Saturno. 

"Ibid. 

u For recent histmy, see the CRS Appropriations Status Table, at http;//\\"\Vw.crs.gov/AppropriationsStatusTahlc!lndcx. 

14 This enumeration draws in part on CRS Report 

Practices, James V. Satumo: and CRS Report 

Operations, Clinton T. Brass. 

1.~ ;\s noted earlier, appropriations hills provide 

law to enter into contracts or other Hnancia! 

interchangeably. 

federal 

pp. 
46 

point 

accounts 16 is calculated as the total amount of budget authority annually available--based 

on a reference level (usually a dollar amount or calcu!ation}-multiplied the fraction 

of the tlscal year t<w which the funds are made available in the CR. 17 This in contrast 

to regular and supplemental appropriations acts, which generally provide specific 

amounts for each account 

Prohibition on new activities. The authority provided in a CR typically is 

prohibited for use in new activities. ""'p0 ;,c;,.ollu an interim CR may prohibit an 

th1m initiating or or for which funds were not 

the previous fiscal stated, the CR may prohibit what are sometimes 

called "new sta11s. 

Anomalies. The duration and amount of funds in the CR, and the purposes tor which 

they may be used for specified activities, be adjusted through so-called anomalies. 

Congress, the President, and for the inclusion of these 

anomalies. or exceptions, to 

they perceive as needed exceptions for an 

typically are included to prevent what some or stakeholders and parties to CR 

negotiations perceive as major programmatic, operational, or management that 

would be caused if an otherwise '"cookie cutter" approach were used to 

at a uniform rate and with uniform restrictions. However, when 

typical coverage of interim CRs, anomalies tend to be rare. 

Legislative provisions. CRs do not necessarily provide only stopgap or full-year 

funding. Some interim and full-year CRs have included "substantive" legislative 

prorisions-tbat is, provisions under the jurisdiction of committees other than the House 

and Senate Appropriations Committees--covering a wide range of subjects. These 

provisions may create, amend, or extend other laws. CRs become attractive vehicles 

for such provisions, because they are considered must-pass on which Congress 

and the President eventually will reach agreement. 19 

"For example, see Section 104 oi'I'.L 110-92 (121 SiaL 990). 

Rul~s: XXI, clause 2, and XXIL clause 5. probihit legislative provisions or unauthorized "'""m";,,dn<>< 

nm>rmor;,,,;o;n< measures, hut these restrictions do not to The 

amcndmc11ts to 
47 

referred to as a "clean" CR. 

anomalies and more likelv to viewed as clean. However. an may 

CR inclndes a limited nut;1hcr of such that the observer views as acceptable. The level of 

cleanliness of a CR, therefore, is in the eye of the beholder. 

Potential Purposes and Effects 

Interim CRs may be considered and enacted in the context of ongoing and high-stakes budget 

negotiations within Congress and between Congress and the President. In general, interim CRs typically 

are intended to simultaneously ( 1) preserve congressional prerogatives to make tina! decisions on tu11-

year funding levels and (2) prevent a gap and shutdown during 

negotiations within Congress and between and the Consequently. interim CRs 

provide relatively restrictive funding levels for agencies. 

Moreover, an interim CR may be structured as Jess than optimal from the perspective of 

many stakeholders, in order to retain sufficient negotiating parties to come to an accord for 

final decisions." Participants in a negotiation also may find it necessary to compromise, purposefully 

accepting what they perceive as some undesirable impacts in an interim CR constraints 

on funding) in order to achieve what they as more important, 

achievement of budget policy goals or of a shutdown). some 

effects of interim CRs may be a product concessions and compromises in negotiations, in 

order to achieve other impacts. 

Aller enactment of an interim CR, OMB detailed directions to executive 

availability of funds and how to proceed budget execution, typically in a 

includes an announcement of an "automatic apportionment" of funds that will be made available for 

obligation, as a percentage of the annualized amount provided the CR. 24 1n an interim CR, Congress 

also may provide authority for OMB to mitigate furloughs employees by apportioning funds for 

( ... continued) 

James V. Saturno. 

:;o CRS Report RL34700, lnt(!rim Continuing Resolutions {CRsr· Potential Impacts on Agency Operations, by Clinton T. Brass . 

... high enough to let 

questions about this report). 

provide some flexibility on the timing requirements 

990). 
48 

personnel compensation and benefits at a higher rate for operations, albeit with some restrictions. 25 An 

interim CR typically also directs that for that would otherwise have high rates of operation at 

the beginning of a fiscal year (e.g., of funding to states, foreign countries, grantees, etc.), 

such high initial rates of operation shall not be made that would impinge on iinal funding prerogatives. 

Apart from preserving congressional and preventing shutdowns, CRs 

significant effects. 1 f impacts were general categories, an interim CR might 

having several, general types of potential impacts on the operations of agencies. 

have other 

characterized as 

• First, the restriclivefunding level of an interim CR may have an impact upon an agency's 

activities, compared to receiving full-year appropriations. For example, agency personnel 

may reduce or delay a variety of actions, including hiring, awarding contracts and grants, 

and authorizing traveL 

Second, an agency funded by an interim CR may experience some unceJ•taintv 

what its final funding level will be. Uncertainty may cause an 

operations, rates of spending, and 

effects for internal management 

may affect, for example, an 

authorizing traveL For 

Bureau when gearing up 

levels may affect planning and future operations. 

and 

• Third, because an interim CR imposes tight restrictions on the obligation oftimds for its 

entire duration, an interim CR may have an on an agency's administrative work 

burden. As one study ofthe impacts CRs on the Department of 

Defense (DOD) "[t]he most visible effect" of a short-term is its impact 

on the lime and paperwork necessary to manage the distribution of funds. 

Fom1h, a prohibition on 

ability to undertake planned or be nimble in responding to 

circumstances. For agencies with little need to engage in ''new starts," prohibition 

not be significant in its implications. For agencies that typically engage in new 

or change their funding priorities fi·om year to year, however, the prohihilion 

have more significant impacts on operations. 

In 2008-2009, CRS and the Government Accountability (GAO) each explored speci11c examples of 

the potential and reported etTeets of interim CRs on agencies. GAO also identitled factors that may 

intluence how agencies manage during CRs and what agencies take to the effects of 

uncertainty. While some common themes emerged across analyses, the reported impacts 

Stat. 991) and OMB Bulletin No. 07-05, p. •1 \"""""'"""· funds at, a daily rate. as the of time covered 

Congress may require that tJ1e under this section not be used until 

taken all necessary actions to reduce administrutivc ~xpenses" {Section 

For example, sec P.L 115-56, Division D. Scctionl09 (131 Stat. 1141). 

For discussion, s~c CRS R~port R44788, The Decennial Census: !ssuesjhr 2020, by JcnnitCr D. 'Williams. 

zs CRS Report 89~579, Short-Tam Continuing Resolutions: ?he Department qfDeji?n.re by Alice C Maroni 

(archived and available upon request). 2

" CRS Congressional Distribution Memorandum, 

Federal Goven1ment. 

"''.'WJ/<nnm .. l)ncertaintv 

The CRS mcn;orandum wa..'l 

RL34700, Interim Continuing Resolutions (C'Rs): 
49 

varied considerably among expect from with highly 

Philip Joyce 

additional perspectives on effects of CRs, 

CRs may influence expenditure patterns of federal agencies. 

Processes and Potential Effects of a Funding Gap and Government 

Shutdown 

When federal agencies and programs lack 

appropriations, the agencies and programs e~1ner·1e11cc 

in time to continue operations (i.e., during the 

and guidance, an agency must cease operations, 

continued The criteria that flow from law for 

shutting down which personnel are "e''cent,•d" 

of a shutdown vary considerably among 

Selected Processes 

and Department of Justice (DOJ) 

shutdowns have occurred in recent decades. 

Section 9 of the Constitution states Money shall be drawn from the 

of Appropriations made by Law." Federal employees and contractors cannot be 

appropriations in the first place have not been enacted. Nevertheless, it would appear 

Constitution for the federal to award contracts or make other obligations 

pay for these commitments. The Anti deficiency Act generally prevents this, however. The act prohibits 

federal oftlcials obligating funds before an appropriations measure has been enacted, 

authorized by The act also prohibits acceptance of voluntary services and employment 

services exceeding what has been authorized by law.35 Therefore, the Antideficiency Act 

prohibits agencies tl·om continued operation in the absence of appropriations. Failure to comply 

act result in criminal sanctions, fines, and removal. The act permits exceptions for "emergencies 

the safety of human life or the protection of properly." 

)0 

for the 

i1npact-latc~appropriations. 

"Jl U.S.C. §1342: sec also §1515. 

RL3Q795, General 

act, at 
50 

leading up to 1980, many federal 

"rrdnimi7ilnP all nonessential operations and that 

down," while waiting for the enactment appropriations acts or continuing 

resolutions. ln 1980 and !981, however, U.S. Attorney General Benjamin R. Civiletti issued two 

opinions that more interpreted the Antideficiency Act, with the law's exceptions, in the 

context of a funding gap. The General's opinions with some exceptions, the head of 

an agency could avoid violating Act the agency's operations until 

the enactment of an appropriation. Generally the subsequent 

developments and marked a significant change and the eflect of CRs 

in preventing shutdowns. 

Potential Effects of a Shutdown 

Effects of a shutdown may occur at various times, including iu anticipation of a potential funding gap 

an actual (e.g., and curtailed and afterwards 

such lasted 21 days during FY 1 996, 

December 16, !995, to January 6, after a shorter shutdown in November 1995. More recently, a 

funding gap commenced on October I, 2013, the llrst day ofFY2014, atler funding for the previous fiscal 

year expired. Because did not resume on October 1, allected to cease operations 

and furlough personnel that A 16-tu!l-day shutdown ensued, the to occur over 17 

fi.mding gap commenced FY20 18, on 20, 2018, after the expiration interim 

CR. Funding resumed on January 22, 8. atlcr a tunding gap and three-day shutdown.'9 

Insights into the effects of the most recent FY2018 shutdown are still emerging. 

experiences ofFYl996 and FY20l4 illustrate what occur with to 

a shutdown 

were authorized to be 

did not avoid furloughs 

paid, their work was 

of the FY 1996 and 

1981, pp. i, 2, at 

16, 1981 ), The Clvi!ctti are Included in a 

i '""' .fP,.,,,.,.,'/,7P Federal Government PAD~8l ~31, 

discussion of exceptions to lhc Antideficiency /\ct. sec 

!I, pp. 6-146-6-159. 

mcmo,·aiulun M-!8-07. January in the 

fctlcral ngcndcs \vould have closed although funding 

most agencies' nOJN~xcepted activities were enectivcl) lhr the day. 

in t 980~ 1981 and 1995, were limited to three or fc\ver full days of 

short duration compared 

CRS Report RL34680, Shutdmvn (~{the Federal Government: Causes. Processes, and IU)i.•cts, coordinated by Clinton T. Brass. 
51 

FY2014 shutdowns, OMB issued statements about the impacts of the shutdowns in categories that ranged 

from effects employees to effects on government services, individuals in the public, and the 

u.s. 

Potential Issues 

Looking across these subjects, several illustrative questions and potential issues for Congress might be 

identified. 

Congressional access to information. ln anticipation of a CR. especially one that may 

be in effect for an extended period of weeks or months, agencies typically send proposed 

anomalies to OMB. which the President or may not propose to Congress for 

inclusion in legislation. To what extent may be an issue for Congress and committees 

of jurisdiction in the annual appropriations process? 

Agency planning for, and operations during, CRs and shutdowns. When CRs or a 

shutdown appear to be possible or likely, how well are agencies planning for these 

circumstances? Is there a role for legislation in helping agencies structure their programs 

and operations to accommodate interim CRs, through anomalies in CRs or through 

changes in authorizing statutes? Is there a role for oversight in bringing attention to these 

issues? 

Budget pmcess changes. Would budget process 

shutdowns? To what extent are the root causes 

based? Would changes in the 

or between Congress and the 

address root causes for CRs and 

rather than political and policypower relationships within Congress 

This concludes my statement. Thank you again for the opportunity to testify, and I will be pleased to 

respond to any questions the subcommittee may have. 
52 

MITCH DANIElS 

LEONPANEHA 

T!MPEN!'N 

MAYA MACGUI0l£AS 

DIRECTORS 

BARRY Al\:TIERSON 

ERSKINE Bowtr .. <;; 

CHARLES BOWSHER 

Kn;-;rCONRAn 

DANCR!PPE!\T 

VIC FAZIO 

W!LLJS GRAD!SON 

W!!.LlAM HOAGLAND 

J!MJONES 

Lou KERR 

]lMKOUW 

DAVE McCURDY 

fAI\.·!ES MCll'l'TYRE, JR, 

DAVIDMJNGE 

MARNE 0BERNAUER, JR, 

)UNEO'NElLL 

PAULO'Nf!LL 

BOB PACKWOOD 

RUDOLPH PENNER 

PETER PETER<;QN 

ROBERT RElSCI-lAUER 

ALICERlVLIN 

0-IAJu.us Rom> 

ALAN K SIMPSON 

]OHN5l'RATI' 

0IAR1Jl: STENHOL\-1 

GENE STEUERLE 

DAVJVSTOCKMAN 

}UHNTA\INER 

TOMTAL;KE 

LAURA TYSO."J 

GEO){(;E VOINOVICH 

PAUL VOLtKER 

CAROL COX WAIT 

DAVID M, WALKER 

jOSEPH WRIGHT, ]It 

1'100~1 

Testimony of Maya MacGuineas 

Committee for a Responsible Federal Budget 

Hearing before the Senate Subcommittee on Federal Spending Oversight 

and Emergency Management: 

Terrible, /Vo Good, Very Bad Ways of Funding Government: Exploring the 

Cost to Taxpayers of Spending Uncertainty caused by Governing through 

Continuing Resolutions, Giant Omnibus Spending Bills, ond Shutdown Crise! 

February 6, 2018 

Chairman Paul, Ranking Member Peters, and Members of the Subcommittee, than!· 

you so much for invitiug me here today to discuss the challenges in the current way' 

we fund the government and govern through continuing resolutions (CRs) anc 

omnibuses. The way we budget, in practice, is very broken, and some form of budge 

process reform is nect.~ssary and long overdue. 

I mn tv1aya MacGuineas,. President o{ the Committee for Responsible Federa 

Budget. The Committee for a Responsible Federal Budget is a non-partisar 

organization dedicated to educating the public about and working wit)· 

policymakers on fiscal policy issues. Our co-chairs are Purdue University Fresidenl 

and former OM!l Director Mitch Daniels, former Secretary of Defense and former 

OMB Director Leon Panetta, aud fonner Congressman Tim Penny. Our board 

indmlPs past directors and chairs of the Office of Management and Budget, the 

Congressional Budget Office, the Jlcderal Reserve System, the Treasury Department, 

and the Budget CormTlittees. Our partner organization~ Fix the Debt is a non-partisar 

coalition that supports "grand bargain" to help deal with the debt. The group io 

chaired by Senator Judd Gregg and Governor Ed Rendell. 

f will touch on several main points today: 

1. Budgeting is one of the most basic functions of governing, and we are failing. 

2. CRs and on1nibuses represent a failure of the budget process. 

3. Our fiscal situation is approaching dangerous territory, and \Ve are not only 

failing to address it we are making it worse. 

4. There are multiple ways to improve the budget process. None can replace 

political will. 

10 Phone: 
53 

Page 2 

Budgeting is one of the most basic functions of governing, and we are failing 

Budgeting is central to governing. It is the opportunity to agree to national goals, contemplate the 

policies to achieve them, and lay out the means of financing them. Our budget reflects our values, 

our priorities, and our game plan, not to mention our shared purpose. No business would 

consider operating without a thoughtfully-designed budget. Neither should a country. 

And yet, the way we budget now represents how broken our process of governing has become. 

We have one budget process on paper and another in reality. 1he process suffers from a lack of 

transparency (including confusing baselines, overlapping budget categories, spending through 

the tax code, increases that are called cuts, etc.); a lack of accountability (missed deadlines, 

budget resolutions that aren't followed, circumvented enforcement mechanisms); a focus on the 

short-term; an abundance of gimmicks (no more pension smoothing and Roth IRAs 

auto-pilot spending and auto-pilot tax expenditures; and increasingly terrible fiscal outcomes. 

The fact that shutdowns and defaults have become budget terms (with many not knowing 

there is a difference) is utterly alarming. 

Where has all this gotten us? Deficits 

a virtual fiscal free-for-all. 

$1 trillion during an expanding economy and 

CRs and omnibuses represent failure of the budget process 

The breakdown of the budget process has caused policyma kers to bounce from one selfimposed crisis to the next, keeping the government open (if at all) through the use of continuing 

resolutions and massive omnibus spending bills. This is most certainly a symptom of how 

broken our budget process is. 

CRs generally maintain program funding at existing levels. While appropriators sometimes 

include slight adjustments to spending in CRs, the type of funding changes that reflect shifting 

priorities within agencies are much less likely to result from a CR than from the regular, full-year 

appropriations process. 

Almost every fiscal year has with at least a partial CR. 

The last year where no CR Wils necessary because all appropriations bills were before the 

fiscal year began was over two decades ago in FY 1997. But even then the bills weren't passed 

individually as intended. 

More appropriations bills are omnibus The 

last year that with all appropriations bills and on time was FY 1995. 

Congress has enacted omnibus appropriations legislation during nine of the past 10 fiscal years. 

Omnibus laws do not have to include all12 bills, and full-year funding for certain programs can 

N\\' • Snite 
54 

Page 3 

get paired with CRs. In FY 2017, for example, appropriators attached a full-year spending bill for 

military construction and Veterans Affairs to a short-term CR at the beginning of the fiscal year. 

Problematically, CRs and omnibuses waste resources and can end up increasing the 

government's costs. 

Under a continuing resolution, agencies are generally limited to operational expenditures and 

prohibited from beginning new projects, undermining long-term planning. For instance, the 

Pentagon identified more than 70 programs hobbled by a CR, including 56 programs that would 

have been started and 26 that needed to be increased. 

The thousands of hours agencies spend on budget planning are wasted when Congress simply 

bypasses the regular appropriations process and uses a CR. Operating under a CR also means 

that projects that have been idmtified as wasteful or unnecessary or that have been scheduled to 

be shuttered arc instead continued. These and other costs of relying on CRs are significant. 

""'''""'''"'''u" to Navy Secretary Richard Spencer, inefficiencies arising from continuing resolutions 

have caused the Navy to waste $4 billion since 201 L 

By not passing appropriations bills on time and relying on CRs to fund the government, 

lawmakers set up must-pass legislation later in the year. These situations have often led to bad 

fiscal outcomes since they often use deficit-increasing policies to grease the wheels for passage. If 

lawmakers completed appropriations bills well ahead of the funding deadline, it would eliminate 

the scramble for votes. 

Scrambling for votes often creates "Christmas tree" legislation in order to attract the votes for 

passage. This is especially likely if a funding deadline coincides with other policy deadlines like 

reauthorizations or sunsets. 

The most recent example came just a few weeks ago in the CR ending the brief shutdown. That 

bill contained a two-year delay of the Cadillac tax, a one-year suspension of the health insurer 

tax, and a two-year suspension of the medical device tax. These delays cost $3'1 billion over ten 

years, a cost that could balloon to over $300 billion if they are repealed permanently. 

Resolution 

$15 billion $105 billion 

$13 billion $185 billion 

$4 billion $20 billion 

Sources: Joint Committee on Taxation, Congressional Budget Office, and CRFB calculations. 

Generally, omnibuses are better for governing than a CR because they at least allow Congress to 

update spending levels for new priorities and the totals for the current fiscal year. However, 

bundling appropriations measures (and on occasion other, totally unrelated legislation) together 
55 

Page 4 

into one must-pass bill obscures important tradeoffs inherent in budgeting. Instead of reviewing 

individual bills in committee and then on the floor, with the opportunity to hold hearings and 

propose amendments, Members are given little time to review massive bills and remove 

extraneous or wasteful provisions. 

Yet for all the faults of CRs and omnibuses, government shutdowns are worse. There have been 

13lapses in appropriations since 1980. Three of the funding lapses (in 1995, 1996, and 2013) were 

"true" shutdowns, and lasted several days. The other 10 lapses in appropriations were three days 

or less, and mostly spanned weekends, similar to the shutdown that just ended. 

These shutdowns not only undermine confidence in our leaders, but they can be costly 

and inefficient. vVhile estimates vary, most evidence suggests that shutdowns tend to cost, not 

save, money. For one, putting contingency plans in place has a real cost. The uncertainty of 

whether or not the government will be funded can also cause federal contractors to include risk 

premiums in their bids to account for the possibility of not being paid. User fees and other charges 

often go uncollected during a shutdown, and while many fed era 1 employees are forced to be idle, 

they ha~e historically received back pay. 

is approaching dangerous territory and we are not only failing to address it, 

weare 

Year after year after year of to responsibly, make choices, and confront tradeoffs 

has left our fiscal situation in very bad shape. 

Our national debt held by the public was already at a post-World War record of 77 percent of 

GDP. It now appears that deficits may reach $1 trillion next fiscal year an inauspiCIOUS 

benchmark that is the result of poor policy choices rather than an economic downturn. 

What is even more troubling is where we arc headed in the longer term. The debt was already 

projected to reach 91 percent of GDP in a decade in CBO's June projection, but it now is likely to 

reach 98 percent due to the tax cuts and other recent legislation, and possibly as much as 100 

percent if the sunsets and other gimmicks in the tax bill are done away with. 

Despite recent fights over appropriations, discretionary spending is not the main driver of our 

debt problem. Mandatory spending and interest will account for 89 percent of nominal spending 

growth through 2027. The aging population and growing medical costs will cause Social Security 

and major health programs to each grow by roughly 75 percent by 2027 while interest payments 

on the debt are the fastest-growing part of the 

This situation should cause concern for a number of reasons. Excessively debt slows 

economic growth. Since growing our economy should be one of the nation's primary economic 

continuing to allow the debt to grow on an unsustainable path stands in the way of 

19111) Street N\\' 
56 

Page 5 

that objective. Adding to debt- as the tax bill did and as Congress is on course to in the coming 

weeks- makes the challenges to getting faster sustained growth even worse. 

It also leaves us vulnerable to the next economic downturn or emergency. Before the last 

recession, debt was half of where it is today relative to the economy. Now it seems we borrow in 

bad times and we borrow in good times, increasingly risking our ability to effectively borrow in 

bad times. We need to be smarter about following the model of pairing borrowing for downturns 

and emergencies with measures to get the debt under control in the medium and longer term. 

Just as the broken appropriations process worsens our fiscal situation by encouraging deficitincreasing policies, lawmakers' continued unwillingness to deal with our fiscal situation only 

amplifies the dysfunction of the appropriations process. The deep "sequester" cuts that have been 

the center of recent budget battles were put into place because the 2011 "Super Committee" could 

not agree to a balanced package of entitlement reforms and tax increases. The growing costs of 

mandatory programs and interest payments threaten to put even more pressure on the 

discretionary side of the budget 

To enact enough savings to replace the sequester and make long-term debt sustainable, 

lawmakers will need to look for savings across the budget. This means reforming entitlement 

programs like Social Security and Medicare that are the true drivers of debt, raising revenue 

through base-broadening or new forms of revenue. It also means working to grow the economy 

in a sustained manner, which is not achieved through debt-financed policies. 

There are multiple ways to improve the budget process. None can replace political 

There are few defenders of how the current budget process is working, and there are a variety of 

approaches for improvement. 

First, we have to recognize smart reforms have potential to improve the way we make decisions, 

but they are not a panacea and cannot replace the political will to make responsible choices. 

I would break possible reforms into three basic categories: incremental reforms, stronger 

incentives and/or punishments, and major overhauls. 

My preference is for a major overhaul, but given how hard it is to make progress on pretty much 

anything these days these changes should most be bipartisan since they are about 

setting up fair rules of the game- starting smaller may make more sense. 
57 

Page 6 

1. Incremental reforms: 

Automatic Continuing Resolutions- We could avoid shutdowns all together if default funding 

went into place when the appropriations process broke down. Some type of auto-CR has the 

important benefit of avoiding a shutdown or even the threat of one and the subsequent mustpass legislation - though it would still have the shortcomings of CRs. Chairman Paul 

recently proposed a bill of this kind, and Senator Portman (R-OH) has had a bill of this type for 

many years. I support this type of approach but any automatic changes (such as cuts) 

should be chosen carefully to either promote sound policies or to discourage the use of the autoCR. I tend to like including small policy changes that neither side would fa\·or but which would 

improve the overall fiscal situation. 

Biennial budgeting We could expand the budget to a two-year process to allow more time to 

consider and pass appropriations. This would also allow more time to evaluate the effectiveness 

of policies, which doesn't currently get as much consideration as it could. I think there arc 

potential benefits to this change, though if continues to wait until the last minute as it 

has in recent years, the change might not be meaningful and instead result in longer periods of 

procrastination. 

Make the budget resolution into a law - We could change to using a joint budget resolution. 

This would make the upfront decisions between Congress and the President potentially much 

more difficult but would strengthen the process making the budget an enforceable law. 

2. Stronger incentives: 

Punishments for failure to meet deadline -We could employ punishments for to meet 

budget deadlines. A number of suggestions have been developed including No Budget, No Pay; 

prohibiting paying Members on Congress during a shutdown (Ranking Member Peters' has cosponsored a bill); canceling August recess if appropriations are not yet completed; or compelling 

the Senate to be in session in the chamber if the government has shutdown (Senators Bennet (DCO) and Gardner (R-CO) have such a proposal). 

3. Real overhaul 

Fiscal goals and longer-term budgets The Better Budget Process Initiative at the Committee for 

a Responsible Federal Budget fillill!,Q§.t<::ll an option to divide the budget resolution into two parts: 

fiscal goals and an enforceable legislative framework. A pie-in-the-sky budget is not always 

effective. Separating the governing documents from the incredibly important work of setting a 

fiscal goal could reduce partisanship in the appropriations process. 

l<iiiO~l 
58 

Page 7 

The Peterson-Pew Commission on Budget Reform JS!£;Q]Ji}]JJ!£Dsk9 

Create a multi-year budget with annual fiscal targets that Congress would need to meet; 

Use multi-year budgets that would remain in place until the next budget is passed, which 

could be every year but might not for many years at a time; 

Create a medium-term trigger for enforcement of the multi-year budget that includes both 

spending and revenues if Congress falls short of the fiscal goals; 

Include in the process budgeting for entitlements and tax expenditures. This would make 

coming to an agreement much more difficult but would likely improve the fiscal situation. 

Finally, l am a member of Convergence's a Better Budget Process, a multi-stakeholder 

group that has reached consensus on of budget reform recommendations it will be 

releasing in the next few weeks, many of which will be helpful in addressing these ch<lllE~ng;es. 

Lurching from shutdown to shutdown is a terrible way to govern. While it is good to avoid 

shutdowns, it is not much better to rely on continuing resolutions to fund the government for 

months, then finally set levels months into the fiscal year. Omnibuses are better but still 

represent an abdication of oversight that often leave individual Members without the 

opportcmi,tv for comment 

Budget process reforms are no substitute for the tough choices needed to restrain or 

increase revenues in order to reduce the debt. That said, properly structured reforms to the CR 

process can be a valuable to end the cycle of waste created by continual shutdown planning, 

rebuild public confidence in Congress being able to fulfill its most basic function, and E>nd the 

cycle of lurching from crisis to crisis, 

l thank the committee for this hearing today and would be delighted to work with you 

on any of these issues. Thank you. 
59 

"The High Cost of Budgetary Paralysis" 

Testimony of Alice M. Rivlin1 

Subcommittee on Federal Spending Oversight and Emergency Management 

Senate Committee on Homeland Security and Government Affairs 

Tuesday, February 6, 2018 

Mr. Chairman, Ranking Member Peters, and members of the Subcommittee: I am grateful to 

the Subcommittee for holding this hearing to call attention to the total breakdown of federal 

budgetary policy-making. 1 believe this breakdown is a serious threat to our democracy and 

America's future prosperity. 

Budget Paralysis is Costly 

It is both frightening and embarrassing that the world's most experienced democracy is 

currently unable to carry out even the basic responsibility of funding the services that 

Americans are expecting from their government in the current fiscal year. limping from one 

short-term continuing resolution to another, combining individual appropriations bills into 

unwieldy omnibus bills that no one is able to study or even read, and threatening to close the 

government (or default on the debt) if certain conditions are not met are all symptoms of a 

deeply broken decision-making process. 

The costs of budgetary dysfunction are high and rising, although not easy to quantify. Federal 

agencies, including the Department of Defense, cannot make plans that enable them to spend 

money efficiently. Recipients of federal funding-states and localities, contractors, universities, 

non-profits and other service providers-cannot hire needed workers or plan their activities 

effectively. The morale of the workers we count on to serve the public is understandably 

eroding and confidence in Congress and the executive is at a low ebb. 

The most worrisome cost of the Congress's seemingly-endless wrangling over near-term federal 

funding is that it crowds out serious discussions of the daunting longer-term challenges that 

face the nation's economy. If policy-makers want to protect American prosperity in the long 

term and ensure that future gains are broadly shared, they must confront serious obstacles, 

including an aging population with rising health costs, lagging wages and productivity growth, 

extreme increases in inequality of income and wealth, climate change and costly natural 

1 Alice M. Rivlin is a Senior Fellow in Economic Studies at the Brookings Institution, former Director ofthe Office of 

Management and Budget, and the Founding Director of the Congressional Budget Office. The views expressed are 

my own and do not necessarily reflect those of staff members, officers, or trustees of the Brookings Institution. 

1 
60 

disasters, and rapid projected increases in national debt. These are all manageable challengesproblems that proven policies could at least mitigate-but economic policy-makers in Congress 

and the executive are currently so obsessed with sniping at each other over short-term 

government funding that they are not engaging in the hard work of crafting solutions to these 

serious problems that loom ahead. 

Partisan Warfare is the Problem 

The principal obstacle to budget action and constructive economic policy-making is the extreme 

partisan warfare that has paralyzed Washington. Instead of working together to solve 

problems, each party is blaming and demonizing the other in hopes of winning the next 

election, while respectful deliberation over alternative policies has ground to a halt. 

All group decision-making takes negotiation and compromise, especially in a big, diverse 

country like the United States, with a wide spectrum of views about what the federal 

government should do and how to pay for it. The framers of the Constitution understood that 

national policy making would be extremely difficult in such a diverse country and bequeathed 

us a framework for federal decision-making that requires negotiation and compromise at every 

stage of legislation-within the House and the Senate, between the two chambers, between 

the congress and the president, and sometimes with the courts. 

But the art of political compromise and consensus building, once deemed an essential element 

of governance, has fallen into disrepute. Concepts like "compromise," "consensus," and 

"bipartisanship" are seen as evidence of a weak will or even worse-weak principles. Partisan 

leaders are acting as though the United States had a parliamentary system in which a cohesive 

majority party can simply write all the rules until rejected by the voters. This style of 

governance is incompatible with our constitutional system. In fact, when one party chooses to 

impose its will on the other in an attempt to avoid compromise, it all but guarantees gridlock, 

destructive swings in policy, or both. 

I believe Congress and the executive cannot function effectively to make national policy until 

they begin working together again across partisan, ideological and geographic divides and 

restore political compromise to a place of honor in the list of skills needed for retaining public 

trust. 

Moreover, I perceive that finding common ground may not be as difficult in tax and spending 

matters as in some other arenas. Although partisan rhetoric would lead you to believe there are 

stark differences in the economic philosophies of the two parties (Republicans for minimal 

government, free markets, and personal responsibility; Democrats for active government, 

regulated markets, and public responsibility), in practice the differences are not so sharp. 

Crafting pragmatic solutions that command broad public support involves negotiating modest 

changes along a continuum, balancing competing interests, and not scaring a public that is 

generally afraid of radical change. Forging consensus policy takes patience and hard work. As 

long as the parties prefer blaming each other for dysfunctional outcomes to working together 

2 
61 

on constructive solutions, though, consensus policies will continue to elude us and Americahs 

will suffer as a result. 

1 believe the first step in restoring a functional budget process is to find a way to deescalate 

warfare between the parties. Currently, small groups of moderates in both parties are working 

hard to craft solutions to tough problems, including immigration policy, that can command 

broad consensus in Congress and the public. They deserve gratitude and support. Bipartisan 

negotiation and consensus-building must become a normal part of congressional decisionmaking again-not a desperate response to an artificial dead-line-if the American democratic 

process is to regain the confidence of voters and the respect of countries that look to us for 

leadership. 

Budget Process Reform Could Help 

Structural changes to the budget process can also help. The current budget process is totally 

broken-as evidenced by the chaotic reliance on CRs and omnibus bills that occasioned this 

hearing. However, a nostalgic return to "regular order" is not the answer if it means trying to 

restore the complex, multi-layered budget process that evolved under the 1974 Budget Act. 

That process was always cumbersome and over-focused on discretionary spending at the 

expense of mandatory spending and spending through the tax code, which have come to 

dominate the modern federal budget. Reform of the budget process must reflect these current 

budget realities. 

There are many of proposals for budget process reform and many experts and organizations 

eager to offer advice. The late Senator Pete Domenici and I, under the auspices of the 

Bipartisan Policy Center, made a proposal in July 2015 that I believe encapsulates the main 

elements of a more workable budget process. 2 The proposal had three major themes: 

"1) The budget process should include all federal spending and revenues. It should not leave 

entitlement spending or tax expenditures on automatic pilot, as they are now, but should allow 

Congress and the president to agree on all spending and revenues and review their decisions on 

a regular schedule. 

2) The process should be transparent and completed on time. The current complexity should be 

reduced and incentives put in place to finish the budget before the start of the fiscal year. 

3) The budget should have buy-in from the president and the leadership of both houses of 

Congress. The budget process is the forum in which differences between the branches on fiscal 

priorities must be addressed, debated, and resolved. It requires the active participation of 

executive and legislative leadership." 

2

https:Uwww.brookings.edu/wp-content/uploads/2016/06/Economy-proposal-for-improving·thecongressional-budget-process.pdf 

3 
62 

We offered ten specific recommendations designed to reinforce these themes, which are 

detailed in the attached report. 

Budget process reform could help Congress deal more easily with budget decisions and, indeed, 

is long overdue. I also believe that Congress would benefit greatly from simplifying the 

committee and subcommittee structure to reduce overlapping jurisdictions. Simplifying the 

budget itself and drastically reducing the number of budget accounts would also facilitate more 

timely decision-making. But no process or structural change will help Congress and the 

executive branch make decisions on the budget or resolve other major issues facing the country 

unless elected officials recognize that the public desperately wants you to get out of partisan 

attack mode and start working together to find common ground. 

Thank you for this opportunity to share these thoughts. 

4 
63 

Proposal for Improving the 

Congressional Budget Process 

July2015 

Written by, Alice M. Rivlin and Pete Domenici 

BIPARTISAN POLICY CENTER 
64 

Authors 

Pete V. Domenici 

Former Senator from New Mexico, BPC Senior Fellow 

Alice M. Rivlin, Ph.D 

Former Director ol the Office of Management and Budget 

and the Congressional Budget Office 

Staff 

G. William Hoagland 

Senior Vice President 

ACKNOWLEDGMENTS 

This report would not have been possible without the insights and hard work of BPG Senior Vice President G. William Hoagland. Bill's 

knowledge and experience with the budget process are legendary. We are both deeply grateful for Bill's loyalty, wisdom, and friendship 

over many years. as well as his major contributions to this report." -Alice M. Rivlin and Pete Domenici 

This paper was also produced with oversight from the Bipartisan Policy Center's Economic Policy Project, Democracy Project, and the 

Bipartisan Policy Center Advocacy Network. The authors would like to thank Barry Anderson. Len Burman, Stuart Butler, Richard Cogan, 

Jim Dyer, Alan Frumin, Scott Gudes, Jim Hearn, Phil Joyce, Brett Loper. Donald Marron. Joe Minarik, Jim Morhard, Rudolph Penner, 

William Pitt, Paul Posner, Robert Reischauer, Peter Robin, and John Sullivan for their comments and suggestions. The authors also wish 

to acknowledge those congressional staff who also provided early input into issues surrounding the congressional budget process. 

Ultimately. however, the recommendations herein are those of the authors, and those who provided input into the development of this 

paper may not support many individual recommendations herein. 

DISCLAIMER 

The findings and recommendations expressed herein do not necessarily represent the views or opinions of the Bipartisan Policy Center's 

founders or its board of directors. 
65 

Table of Contents 

Executive Summary 

Proposal lor Improving the Congressional Budget Process 

Perspectives on the 1974 Act 

limitations of Process Reform 

10 Three Key Elements in Reform 

12 filling in the Details 

12 Element #l: All Spending and Revenues 

16 Element #2, Transparency and Timelines 

18 Element #l Leadership 

23 Conclusion 

24 Appendix 
66 

Executive Summary 

Tile Congressional Budget Act of 1974 was a major reform designed another and kept the government running by means of continuing 

to enhance legislative power by giving Congress an orderly process resolutions and massive omnibus appropriations bills. They have 

for deciding on tile government's spending priorities and llow to pay sought to force themselves to make decisions by resorting to 

for them. The Budget Act established the House and Senate Budget special, sometimes bizarre devices, including the super committee, 

Committees, the Congressional Budget Office. and a demanding set the fiscal cliff, and sequestration. 

of procedures for deciding on spending, revenues, and deficits. 

After more than 40 years, the process has broken down and 

urgently needs repair. Indeed, the process specified in the 

Act-which calls for agreement on a budget resolution early in 

each congressional session. followed by passage of individual 

appropriations bills to be signed by the president before the fiscal 

year begins-has rarely been followed in recent years. In the face 

of increasing partisan polarization and frequent gridlock, Congress 

and the executive branch have lurched from one budget crisis to 

The current Congress should be commended for having recently 

adopted a conference agreement for the upcoming 2016 budget 

year-the first time since Apri12009. However, in recent yearsand this Congress is no exception-both the White House and 

congressional budget blueprints have been increasingly used 

as a political-messaging device. In a polttical town, there is 

nothing wrong with messaging tools, but authors of the Budget 

Act envisioned that a congressional budget would be more than 

a party-platform statement They believed the process would 
67 

heighten debate of the fiscal challenges confronting the nation 

and set in motion real negotiations, trade-offs and fundamental 

legislative reforms toward the goal of fiscal sustainability, 

Leaders in both parties also call for a return to "regular order," but 

the parameters of the federal budget have changed so dramatically 

since 197 4 that the old "regular order" is no longer appropriate. 

Mandatory spending for the major entitlement programs, such as 

Medicare and Social Security, has grown rapidly and is now far 

larger than annual appropriations. Spending through the tax code 

has escalated, The national debt has soared in relation to the size 

of the economy and is projected to rise further in the future. It is 

time to rethink the objectives of the budget process and redesign 

"regular order" to deal with the budget situation Congress faces 

now and in the future. 

The two of us have held leadership roles in the federal budget 

process over four decades. We have seen the strengths and 

weaknesses of the process frorn multiple angles and thought hard 

about how to improve it We belong to different political parties, 

but we share a commitment to orderly budget process and fiscal 

responsibility. We are saddened by the demise of the process from 

its original goals. Out of our shared experience, we offer a set of 

proposals that we hope will help Congress shape a new budget 

process--{)ne that will advance its original goals and assist elected 

officials in dealing with inherently tough choices on spending, 

taxing, and borrowing. 

We are under no illusion that improving the federal budget process 

will transform the political and legislative atmosphere or erase 

current tensions. Reforming the budget process will not by itself 

eliminate partisan polarization, establish collegiality, or restore 

civil discourse. Difficult political decisions, such as controlling 

entitlement spending and balancing desired spending with 

adequate revenues, require more than new budget tools. They 

require the political will to apply current available and new tools to 

achieve agreed-on fiscal goals. Nevertheless, we believe improving 

the budget process can help, 

Three themes dominate our proposals: 

1) The budget process should include all federal spending and 

revenues. It should not leave entitlement spending or tax 

expenditures on automatic pilot, as they are now, but should 

allow Congress and the president to agree on all spending and 

revenues and review their decisions on a regular schedule. 

2) The process should be transparent and completed on time. 

The current complexity should be reduced and incentives put in 

place to finish the budget before the start of the fiscal year. 

3) The budget should have buy-in from the president and the 

leadership of both houses of Congress. The budget process is 

the forum in which differences between the branches on fiscal 

priorities must be addressed, debated, and resolved. It requires 

tile active participation of executive and legislative leadership. 

On the following pages we offer ten specific recommendations that 

reflect these themes. Some will find our proposals too drastic to be 

feasible and others will find them too incrementaL We have tried 

to pick a middle ground that builds on the strengths of the existing 

budget process and that proposes the changes we deem most 

needed to deal with current challenges. 
68 

10 Recommendations for Reforming the 

federal Budget Process: 

Recommendation 1: The budget resolution should set caps on 

discretionary spending, as it does now. Program expenditures 

currently defined as outside the discretionary caps (60 percent of 

spending) should be subject to intense review and, as appropriate, 

placed under the discretionary spending caps. Adjustments 

for emergencies, disasters, and national security risks should 

continue. but Congress and the administration should review 

federal disaster-mitigation programs to reduce federal and 

private-sector exposure to disaster risks. 

Recommendation 2: Enact explicit long-term budgets lor 

Medicare, Medicaid. and Social Security as well as other 

mandatory programs that have not been put under the 

discretionary caps. For each of these programs set limits 

on automatic spending growth. Enforce spending limits by 

reestablishing and simplifying pay-as-you-go rules for these 

mandatory spending programs. Establish similar treatment 

for expiring mandatory and tax revenue provisions in statutory 

baseline projections. In other words, expansions or extensions of 

mandatory spending or tax revenue provisions would be required 

to be paid for with either reductions in other mandatory spending 

or increases in revenues. 

Recommendation 3: Establish a periodic review of federal tax 

expenditures either (a) by creating a baseline projection of tax 

expenditures and an automatic review of all tax expenditures 

when baseline projections are exceeded, or (b) by requiring all tax 

expenditures to sunset and be subject to an independent review on 

an eight-year rotating cycle. 

Recommendation 4: In combination with the first three 

recommendations, establish in law a specified debt-held-by-thebudget and all appropriation bills in the first session (oddnumbered years) and frees up time in the second session for 

authorization. Supplemental and emergency appropriations 

could occur as needed in either session. General oversight by 

authorizing committees would not be limited to any period. 

Recommendation 6: Upon the adoption of a biennial budget 

resolution that reflects the estimated debt that is subject to limit at 

the end of the second biennial year, Congress will then be deemed 

to have enacted and sent to the president for approval (or veto) 

an increase in the statutory debt limit that is consistent with the 

assumptions in the adopted biennial budget 

Recommendation 7: Failure to adopt a conference agreement 

on a biennial budget resolution in the first session of Congress by 

Aprill5 would require the cancelation of all planned congressional 

recesses until a conference agreement is adopted. 

Recommendation 8: Failure to adopt a biennial appropriation bill 

(one or all) before the beginning of the first session of the biennial 

budget cycle would result in automatic funding of government 

programs and agencies at the previous year's leveL 

Recommendation 9: (a) Modify membership of budget committees 

to include chairs and ranking members of the major fiscaL tax, and 

economic committees (or their designees); (b) adjust term limits 

on the House Budget Committee; (c) collapse the Joint Committee 

on Taxation into the Tax Analysis Division of the Congressional 

Budget Office; (d) establish clear procedures lor appointing a 

Congressional Budget Office director: (e) eliminate "vote-a-rama": 

(f) place nomination of the director and deputy director of the Office 

of Management and Budget solely within the jurisdiction of the 

Senate Budget Committee rather than tnday's joint jurisdiction with 

Homeland Security and Governmental Affairs; (g) make out-oforder the consideration of both deficit-neutral and spending-neutral 

public goal to be achieved by a fixed date to guide policy decisions. reserve funds in drafting budget resolutions: and (h) eliminate 

Recommendation 5: Enact legislation to establish a biennial 

budgeting cycle that would ensure that Congress adopts a 

restriction on consideration of Social Security changes when 

considering a budget resolution or reconciliation legislation. 
69 

Recommendation 10: Establish a presidential/congressional 

commission on budget concepts, which will report to the 

Office of Management and Budget and to the Congress on 

recommended accounting and budget-concepts changes, 

including (but not limited toL 

• Federal credit program accounting adjustments (e.g., 

fair-value, expected-returns). 

• Review current distinctions between on- and off-budget 

entities (e.g., Postal Service and Social Security). 

• Macroeconomic scoring of tax and investment policies 

(e.g., "dynamic scoring"). 

• Reexamine and readjust functional budget categories. 

• Equitable treatment of expiring mandatory spending and 

tax provisions in baseline projections. 

• Treatment of offsetting receipts as revenues. 

• Regulatory cost analysis. executive and legislative 

branch procedures. 

• Capital budgeting. 

• Preventive health care investments. 
70 

Proposal for Improving the Congressional Budget 

'·Through the thicket of budget provisions, piled helter skelteratop one 

another, from the Budget Act of197 4 to Gramm-Rudman to the Omnibus 

Budget Reconciliation Act of 1.990 ( OBRA), there comes the recognizable 

outline of old disputes that hat<e pitted institutions in the budgetary process 

against each{ltheras far back as anyone can remember.~ 

-Aaron Wildavsky, Public Administration, November/December 1992 

Perspectives on the 1974 Act 

While the U.S. Constitution gives the power of the purse to the 

legislature, Congress did not have an orderly process for exercising 

that power before 197 4. It acted on spending and taxing bills 

separately, but never on the budget as a whole. It never voted to 

approve total spending or the size of the deficit or surplus. This 

fragmented congressional process effectively ceded power to the 

executive branch, which had evolved a centralized process for 

preparing and defending the president's budget proposal and which 

controlled most budget information and analysis. The Act laid out 

a sequence of decisions for agreeing on a budget framework and 

then filling in the details. For the first time, Congress was called on 

to vote on a budget resolution specifying total spending by major 

categories, total revenues, and the resulting deficit or surplus. 

The Act also created budget committees to guide the process 

and keep it on track and a Congressional Budget Office (CBO) to 

give Congress its own source of budget information and analysis. 

The Act also attempted to ensure that budget actions would be 

completed before the fiscal year by shifting the start of the fiscal 

year from July 1 to October L 

As one of his last actions before returning to California, President 
71 

Richard Nixon signed the legislation into law on July 12, 1974. 

Scholars will debate its legacy: had the president not been 

weakened by Watergate, would he have signed the legislation 

knowing that it was designed to arrest the power of the executive 

branch and return Congress to co-equal status in setting federal 

fiscal policy? 

Senator Sam Ervin, who chaired the Committee on Government 

Operations, which played the key role in bringing the Act to 

fruition, wrote in December of that year: "I have no doubt the 

Congressional Budget and Impoundment Control Act ol1974 will 

stand as a monument to the 93rd Congress and its devotion to 

our constitutional system of government"' Twenty Congresses 

later, many members of Congress, the public, and policy 

analysts would seriously question whether the Act lived up to tile 

chairman's high expectations. 

The most obvious objective of the Act was to restore congressional 

authority over the budget-a goal shared across the political 

which introduced sequestration, was a largely unsuccessful effort 

to rein in deficits. But the Budget Enforcement Act of 1990 (BEA), 

which introduced caps on discretionary spending and pay-asyou-go rules to mandate offsetting the deficit impact ot mandatory 

spending increases and tax cuts, was more successfuL President 

Bill Clinton and both Democratic and Republican congresses (aided 

by a strong economy) used BEA tools to bring the budget into 

substantial surplus by the end of the 1990s. 

More recently, Congress has used spending caps aggressively to 

reduce discretionary spending. Those programs that require annual 

appropriations-including national security-as a share ot the 

economy (GOP) have declined over the last 40 years, from 9.3 

percent in 1974 to less than 7 percent today, and are projected 

to fall farther. Domestic discretionary spending, which constitutes 

much of what Americans tl1ink of when they think of government 

programs-research, education, training, science, transportation, 

border security, etc.-is on a path to being at its lowest level 

as a share ot GOP in decades. One can question whether these spectrum. In this respect, the Act succeeded. There is no longer reductions in domestic discretionary spending are wise or doubt that Congress controls fiscal decisions (subject to negotiation sustainable, but there is no question the tools of the Budget Act with the executive and presidential veto, of course) and has 

substantial capacity tor fiscal analysis. CBO and the budget have enabled Congress to cut this form of spending. 

committee staffs have given Congress its own budgetary expertise By contrast, those programs often referred to as "mandatory" 

and reduced congressional dependence on the executive branch for have nearly doubled-from 7.4 percent in 197 4 to 13.5 percent 

budget information and projections. With respect to finishing budget today--and, if current policies are not altered, are projected to 

actions in a timely manner, however, the Act has failed. Although expand to nearly 21 percent of GOP by 2039. Although Chairman 

the Act allowed three additional months for budget deliberations, Ervin expressed the hope that the Act would provide for the control 

the complexity of the process and the fierce contentiousness of of "backdoor spending" (an unfortunate term: today such spending 

budget decisions continue to defeat efforts to make a budget before is referred to as "mandatory spending"), it has never been actively 

the beginning of the fiscal year applied to mandatory spending. Such spending does not require 

With respect to fiscal goals, the record is mixed. The original annual appropriations-spending continues until Congress acts 

to change the statute that authorizes it Mandatory spending is the 

most difficult tor elected officials to address because of the direct 

legislation was neutral with respect to the size of spending, deficits, 

and debt It was designed to give Congress the ability to vote 

benefits provided to their constituents in the form of Social Security, explicitly on these magnitudes, not to predetermine fiscal policy. But 

Medicare, Medicaid, unemployment insurance, veterans' support, mounting deficits in the 1980s spurred bipartisan efforts to bring food assistance, and other direct transfers. deficits under controL The Gramm-Rudman-Hollings Act of 1986, 
72 

Since most mandatory spending reflects benefits for older people. 

such spending has increased as the population aged and is on 

track to rise faster as the large baby-boom generation retires and 

becomes eligible for benefits. Rapid increases in per-capita health 

spending reinforce the upward trajectory of entitlement spending. 

Although the increase in per-capita cost of federal health programs 

has slowed recently, this slowing may not be sustainable, and, in 

any case, the number of aging "capitas" will continue to increase. 

Revenues are about the same percentage of GOP that they were 

when the Budget Act was passed-about 18 percent in 1974 (a 

recession year) and about 17 percent in 2014, although there have 

been some variations in between. Revenues are reduced by the 

large number of exemptions. exclusions, and special provisions 

in the tax code, many of which are essentially spending programs 

run through the tax code. These tax expenditures, like entitlement 

polarization, establish collegiality, or restore civil discourse. But 

reforms to the budget process should also not make the perfect the 

enemy of the good. The failure to control entitlement spending or to 

balance current spending with current revenues lies not with the 

Act itself, but with the lack of political will to apply available tools to 

achieve agreed-on fiscal goals. 

This lack of political will comes from both parties' inability to 

work toward bipartisan goals and is reflected in the Act's long 

history. Over lour decades, Congress has failed nine times to do its 

most basic responsibility: to adopt a budget. Governing requires 

budgeting, and budgeting is governing. This has occurred three 

times when Republicans controlled both chambers. and one time 

when Democrats were in control of Congress. However, five of 

those nine times have occurred the last live years straight, when 

Congress was divided with Republicans in control of the House 

spending, are essentially on autopilot. They are not reviewed as part of Representatives and Democrats in control of the Senate. (See 

of the budget process. Appendix.) The breakdown in the process has also been reflected in 

The most dramatic change in the budget situation in recent years is 

the rise in federal debt in relation to the size of the economy. Under 

the impact of the Great Recession and the fiscal measures taken 

to help the economy recover, debt held by the public has doubled 

as a percent of GOP. Public debt. which was just 23 percent of the 

the appropriation process. Only two times in the last 40 years have 

a\113 (now 12) individual appropriation bills been completed on 

time, the last being in 1994.' Further, lor the last five years (20 10 

to 2015), no regular appropriation bill has been enacted before the 

beginning of the new fiscal year. 

annual U.S. economy in 1974 and was 35 percent as recently as Proposals to change the Act by adopting the recommendations of 

2007, has risen to more than 74 percent in 2014, and it is projected this paper are critical and worthy of lull debate. But much as the 

to rise to more than 106 percent in just 25 years (2039),' reaching process needs a good tune-up after 40 years, no such process 

levels not seen since the end of World War II. The increase in debt 

highlights the importance of bringing mandatory spending and tax 

expenditures into the budget process so that Congress can consider 

all the options available to put the budget back on a sustainable 

track and reduce the ratio of debt-to-GOP. 

Limitations of Process Reform 

Reforming the federal budget process will not by itself reprise 

the past or address current failings of the legislative process. 

Reforming the budget process will not by itself eliminate partisan 

changes can reinstate the Madisonian concept embedded in the 

Constitution-compromise-when no will exists to do so. 

Chairman Ervin believed that for 40 years before the passage of 

the Budget Act, Congress had contributed to and acquiesced in the 

growth of the power of the executive branch. F01ty years on under 

the Budget Act, can it get over its midlife crisis, lind compromise. 

and return to its basic function of governing and budgeting? 

'In 1996,forliscalyea!lS97.13regu!al appronrrat:onttllswereenactedbeloreOctoberl (the 

begmn:ng ol the !:sea! year) but !hiS was accom~lish€ct by comb1n1ng SIX regular acts to form an 

nmnihusappropnatinnsac!andthenenactmgthenthersevenbillsmdiVidually. 
73 

Three Key Elements of Reform 

An overhaul of the budget process should have 

at least three elements. 

First Element: The process should include all federal spending 

and revenues. As envisioned in the original Act, the budget should 

be "comprehensive," tabulating all expenditures and all revenues 

and receipts. However, in practice, the budget process has focusing 

primarily on ''discretionary" annually appropriated spending. Such a 

focus leaves out the nearly two-thirds of all spending that is running 

revenue priorities·-under such circumstances. 

Second Element: The budget process should be easy to 

understand and completed on lime. The understanding 

should not be limited only to members of Congress and their 

staffs, but to the general public also. To be sure, the 1974 Act 

was a much-needed step forward in creating a more open and 

transparent system of budgeting and accounting. Unfortunately. 

the new process, with two new committees, was layered on 

on autopilot Congress has the power to review this spending but does top of an already complex and dizzying array of authorizing and 

not do so on any regularly scheduled timetable. Further, Congress appropriations committees, with yet more layers of subcommittees 

does not regularly review the huge volume of tax expenditures that beneath them. The result was a process too complicated to 

permeate the tax code and that by any other accounting could easily execute in a timely fashion even when partisan hostility was lower 

be considered mandatory spending. It is impossible for Congress to than now. 

achieve the stated goal of the budget process-setting spending and 

10 
74 

Indeed, within a few years of its passage, the requirement that 

there be a first and second concurrent resolution-with the option 

of the second resolution establishing reconciliation procedures--

was dropped as too time-consuming and confusing. Further, 

procedural restrictions brought about by innumerable points-oforder have blossomed over the course of the Act's history. Some 

points-of-order are found in the original legislative language 

of the Act; others followed amendments to the Act. In addition 

taxing committees. Such changes to an individual committee's 

makeup would require the concurrence of party caucus committee 

rules. Addressing broadly the congressional committee structure 

is beyond the scope of this paper. However, simplifying the 

committee and subcommittee structure could be an integral part of 

improving both budgeting and governing in the U.S. Congress. 

While reform of the congressional budget process is the focus of 

the recommendations to follow. leadership in the executive budget 

process is also essential. The president should be an active 

to the legislated points-of-order, others result from the rulemaking authority of each chamber's adoption of, or deeming of, a and direct participant in the congressional budget deliberations, concurrent budget resolution. In the Senate, some of the points-of- making the administration's views clear through Statements orders can be waived with a simple majority vote; others require a 

supermajority (60 votes). of Administration Positions and in meetings with congressional 

leadership. Providing presidential leadership while respecting 

Besides creating confusion and time-consuming votes to either the prerogatives of the Congress and maintaining the balance of 

waive or affirm a point-of-order, some existing restrictions do 

not reflect the long-term fiscal challenges facing the country. 

As an example, a supermajority point-of-order prohibits the 

consideration of reconciliation legislation that contains any 

changes to the Social Security program. Finally, while some 

well-intended points-of-order provide the tools for enforcing 

agreed-on budget decisions, the effects of others result 

in a gridlock of the legislative and fiscal decision-making 

processes. Most dangerously, the public observes these 

complex proceedings witl1out comprehension and concludes 

that their government is dysfunctional. 

Third Element: Budget decisions should have the active 

participation of the congressional leadership and the 

president. Too often, the budget deliberation process has become 

a simple extension of a political par(y's platform agenda or an 

individual's campaign promises, with "gotcha" votes having 

no substantive impact on the final actual spending or revenue 

decisions. Removing the "campaign" element of the budget 

process from the system. and focusing on governing, will require 

modifying the membership structure of the two budget committees 

to better incorporate the top leadership of the major spending and 

11 

powers between the two branches of government takes political 

skill at both ends of Pennsylvania Avenue. 

The congressional budget process begins with the executive 

submitting a budget to the Congress for consideration. Making 

the president's budget submission timely and transparent is the 

first step in executive involvement. While congressional oversight 

is necessary, the executive is bound to know in more detail the 

operational nature of individual agencies and programs. Therefore, 

consolidating and streamlining executive agencies and programs 

within an agency to increase both their effectiveness and 

efficiency is a priority that should be respected by the Congress. 

But executive agencies must also establish clear, accountable, and 

measureable goals and results for funding requests to fully inform 

congressional budget decision-makers. Incorporating more directly 

the impact of executive rule-making decisions and their budgetary 

impacts into the congressional funding procedures would increase 

the accuracy and credibility of aggregate spending and revenue 

estimates. 
75 

Filling in the Details 

Element #1: All Spending and Revenues Discretionary spending caps were first created in 1987 and have 

Spending subject to ann11al appropriations-discretionary caps become an integral component in maintaining fiscal discipline 

Recommendation 1: 

The Budget Resolution should set caps on discretionary 

spending as it does now. Program expenditures currently 

defined as outside the discretionary caps (60 percent of 

spending) should be subject to intense review and, as 

appropriate, placed under the discretionary spending caps. 

Adjustments for emergencies, disasters, and national security 

risks should continue, but Congress and the administration 

should review federal disaster-mitigation programs to reduce 

federal and private-sector exposure to disaster risks. 

in this segment of federal spending. The SEA established in 

law discretionary spending limits, placing limits on annual on 

appropriations. For 1991 through 1993, BEA established separate 

budget authority and outlay limits for defense. international, 

and domestic spending. Subsequent amendments collapsed all 

discretionary spending into one cap and applied the cap only to 

budget authority. Spending in excess of the caps results in acrossthe-board spending reductions (sequestration) to bring spending 

back in line with the statutory cap. 

Today budget-authority spending caps established in 2011 (as 

amended) apply only to defense and nondefense spending through 

2022. Confusingly, in 2013, spending caps were defined to apply 

12 
76 

to "security" and "non-security" funding. 

Further, over the years, adjustments to the spending limits have 

been provided for emergencies, disaster relief, program-integrity 

initiatives, wildfire-suppression operations, and overseas 

contingency operations. In 2014, these adjustments increased 

spending authority by nearly $100 billion (with $86 billion for 

overseas contingency operations). 

Total discretiona!)i spending, including adjustments outside the 

statuto!)i caps, represented approximately 33 percent of all federal 

spending in 2014. Should discretionary spending adhere to the 

adjusted caps through their expiration in 2021, that spending will 

increase by less than 1.4 percent annually or, when adjusted for 

inflation, a negative 0.5 percent. Meanwhile, non-discretionary, 

non-interest expenditures are expected to increase at an annual 

Majm- mandatory program spending limits. 

Recommendation 2: 

Enact explicit long-term budgets for Medicare, Medicaid, 

and Social Security as well as other mandatory programs 

that have not been put under the discretionary caps. For 

each of these programs, set limits on automatic spending 

growth. Enforce spending limits by reestablishing and 

simplifying pay-as-you-go rules for these mandatory 

spending programs. Establish similar treatment for 

expiring mandatory and tax revenue provisions in 

statutory baseline projections. 

Over the next decade, the three major direct-spending 

rate of 6.! percent. Current estimates over this same period expect programs-Medicare, Medicaid, and Social Security-will 

inflation to exceed 2.2 percent annually. These differential growth 

rates suggest an urgent need to include all spending in the budget 

process, as originally intended. 

expend nearly $23 trillion and represent 80 percent of all 

expected mandatory spending over this period. Expenditures will 

grow at an annual rate for all three programs (-6.0 percent), 

exceeding the estimated growth in the overall economy over the 

period (4.4 percent). 

limits on Discretionary Budget Authority, FY 2014 to 2021 (Billions of Dollars). 

Source: Fisca/Sequestrian Report for PY 201-r CrmgressitmalBudgetOff'ice, Jmmary2015. 

13 
77 

Importantly. an aging population drives these programs' growth. 

While reversing the aging cycle is not possible, with the programs' 

growth exceeding the economy's growth, other public expenditures 

necessary for national security and long-term economic growth 

could be restricted. 

By establishing clear spending targets for these three programs 

and an annual review to ensure targets are met, Congress can 

begin to budget more directly for them in the future. Those 

targets could be the current growth rates or rates agreed to 

be desirable. However, should targets be exceeded, the first 

line of control would be to offset the breach by requiring the 

enforcement of past pay-as-you-go rules. Similarly, should 

target growth rates be adjusted upward from current estimates, 

increases would also have to be offset 

Finally, many major mandatory spending programs whose 

authorizations are set to expire are nevertheless currently 

assumed to be continuing in the congressional baseline estimates 

(Section 257, BBA 1985). However, non-trust-fund revenue 

provisions that expire under current law are assumed to expire 

review on an eight-year rotating cycle. 

The Budget Act defines tax expenditures as "those revenue losses 

attributable to provisions of the Federal tax laws which allow a 

special exclusion, exemption. or deduction from gross income 

or which provide a special credit, a preferential rate of tax, or a 

deferral of tax liability."' Tax expenditures are not examined or 

scrutinized on a consistent or regular basis. 

Any periodic review of tax expenditures triggered by estimates 

exceeding a baseline projection would require the administration 

and congressional experts to provide decision-makers with 

information on the incidence and efficiency of the tax expenditures 

compared with alternative direct-spending policies. 

On the basis of estimates prepared by the CBO and the Joint 

Committee on Taxation (JCT), there are more than200 tax 

expenditures in the individual and corporate tax system that in 

2014 totaled nearly $1.4 trillion. The majority of tax expenditures 

are more similar to mandatory spending programs than to 

discretionary spending programs. Modifying, adjusting, or repealing 

individual tax expenditures would not have a direct dollar-for- in the baseline. This disparate treatment is one of the primary dollar impact on revenues due to the interaction of the provision arguments against pay-as-you-go rules, since expiring tax cuts are with other components of the tax system. Therefore, a simple cap disadvantaged relative to major mandatory spending programs. 

The budget baseline rules should be amended to treat spending 

and revenue equally and to assume their continuation in the 

baseline regardless of statutory expiration. 

Tax expendittlre revie-w. 

R.ecomntendation 3: 

Establish a periodic review of federal tax expenditures either 

(a) by creating a baseline projection of tax expenditures 

and an automatic review of all tax expenditures when 

baseline projections are exceeded, or (b) by requiring all 

tax expenditures to sunset and be subject to an independent 

on tax expenditures is methodologically difficult to construct 

One suggested approach to developing a workable tax expenditure 

cap would be to first define a tax base (e.g., Haig-Simmons, 

Fisher') and then to compare this base with actual revenues 

(separated between corporate and individual) to arrive at an 

aggregate tax expenditure. The difference would then serve as 

the basis for determining a "tax expenditure baseline." Increases 

above the baseline, determined retroactively, would require 

automatic review of either corporate or individual tax rates to 

offset the increase, revise the baseline, or target legislative action 

to offset the breach of the cap. 

An alternative approach to reviewing tax expenditures proposed by 

the Minnesota Department of Revenue in 2011 could be applied 

14 
78 

The Accumulation of Public Debt (Exceeds 100% of Economy in 2038). 

at the federal level.' This approach would require that all tax 

expenditures have a set expiration date. Barring legislation to the 

contrary, any tax expenditure that sunset would be offset by an 

automatic decrease in tax rates to maintain revenue neutrality 

(e.g., corporate/business rates for business tax expenditures 

and individual rates for individual tax expendituresJ.In addition, 

an independent commission would complete a comprehensive 

evaluation of all tax expenditures on a rotating eight-year cycle. 

The rotation of expenditures reviewed would be coordinated with 

the following recommendation (Recommendation #5) to establish 

a biennial budget and appropriation process. 

Set debt-held-by-public ta•·get. 

RecommendatW-n 4: 

In combination with the first three recommendations, 

establish in law a specified debt-held-by-the-public goal to 

be achieved by a fixed date to guide policy decisions. 

By establishing clear long-term goals for the level of discretionary 

spending, major mandatory spending, tax revenues, and tax 

expenditures, policymakers can establish the level of national debt 

15 

and debt held by the public to be incurred. 

Current projections estimate that the country's gross federal debt 

will increase steadily over the next decade, reaching more than 

$26 trillion by 2024, 100 percent of GOP in that year. Economists, 

however, tend to focus only on that portion of the national debt 

that is held by the public, excluding intergovernmental debt held 

in federal trust-funded programs. On that score, debt held by the 

public is also expected to increase steadily throughout the next 

decade--to $20.6 trillion, or 77 percent of GD~ 

At the end of 2008, federal debt held by the public was 39 percent 

of GOP, close to the average of the preceding several decades. 

The Great Recession and measures designed to mitigate it carried 

the debt well over 70 percent of GOP-ratios not seen since 

shortly after the end of World War II. Over the next decade, debt 

is estimated to grow faster than that of the economy. Further, by 

maintaining current revenue and spending paths, CBO estimates 

this level of debt to exceed 106 percent of GOP by 2039. As this 

occurs, investors may question the government's willingness 

to honor its obligations without receiving a higher rate of return 

on their investments. To service higher-interest expenses. 

policymakers would need to increase revenues or reduce spending, 
79 

or a combination of the two. in order to avoid the spiraling of debt 

into the future. 

Setting a clear goal now that lowers the estimated debt level from 

its current unsustainable path should be a fundamental goal of 

any budget-process reform legislation. Past reform proposals have 

established a goal of debt-to-GOP at 60 percent The appropriate 

level can be debated. but at a minimum, fiscal policy should seek 

to keep the debt level steady over the long-term horizon. 

Element#2: 

Transparency and Timeliness 

Enact a biennial budget attd appropriation process. 

Recommendation 5: 

Enact legislation to establish a biennial budgeting cycle 

that would ensure that Congress adopts a budget and all 

appropriation bills in the first session (odd-numbered years) 

and frees up time in the second session lor authorization. 

Supplemental and emergency appropriations could occur as 

needed in either session. General oversight by authorizing 

committees would not be limited to any period. 

This widely supported bipartisan proposal has been advanced over 

the years, allowing Congress to prioritize its work, to devote more 

time to program oversight and reauthorizations, to establish more 

certainty in the budget and appropriation process, and to increase 

the performance of the federal government Most recently, the 

Bipartisan Policy Center's Commission on Political Refom1 advanced 

this recommendation as a responsible way of managing the nation's 

finances and improving the efficiency of government-run programs' 

Congressman Leon Panetta authored the first biennial reform 

bill introduced in 1977. Later, as secretary of defense in 2012. 

he again expressed his support for a biennial budget and 

appropriation process as a basis for better government planning 

and execution. The biennial budget has been supported by the 

Ronald Regan, George H.W. Bush, Bill Clinton, and George W. Bush 

administrations. The recommendation builds on Congress's recent 

enactment of the Bipartisan Budget Act of 2013 (Rl. 113-67), 

which provided a budget framework for two fiscal years. finally, as 

of 2011, 19 states now operate on a biennial budget system. 

No government default: automatic increase in staNttary debt. 

Recomin.elidation 6: 

Upon the adoption of a biennial budget resolution that 

reflects the estimated debt that is subject to limit at the 

end of the second biennial year, Congress will then be 

deemed to have enacted and sent to the president for 

approval (or veto) an increase in the statutory debt limit 

that is consistent with the assumptions in the adopted 

biennial budget 

The Congressional Budget Act (CBAJ requires that the content of a 

budget resolution include. among other items, for at least five years. 

a public-debt estimate for each year covered by the resolution.~ The 

House of Representatives, from 1979 until1995. operated under the 

"Gephardt Rule" to address raising the statutory debt limit Upon 

adoption of the budget resolution (conference agreement) during 

those periods, the House was deemed to have also passed a debtlimit bill consistent with the adopted budget resolution's calculated 

debt limit. The U.S. Senate, without the benefit of such a rule, 

therefore. was required to take two votes-nne on the conference 

agreement and one on the debt-limit bill. Frustration by some 

senators that the House had to take only one vote (the passage of 

the conference agreement) often led to the House debt-limit bill 

being amended so as to guarantee a second vote in tile House. 

In recent years, some members of Congress have leveraged the 

debt-limit bill, bringing the country to near default For a third time 

16 
80 

in a short 12 months in 2013 and 2014, the count!)' was brought 

back from the brink of default with the president's signature on 

legislation, most recently on Februal)' 15, 2014, with the enactment 

of the Temporal)' Debt Limit Extension Act, which included an 

extension through March 2015. 

Fail11re to adopt a biennial budgf.'t 1.m:mld still require action on a 

separate debt-limit bill as needed. 

Recommendation 7: 

Failure to adopt a conference agreement on a biennial budget 

resolution in the first session of Congress by April15 would 

require the cancelation of all planned congressional recesses 

until a conference agreement is adopted, 

One of the basic functions of a government is to establish a budget 

Members of Congress are elected; they have a contract with the 

American public to carl)' out the laws of the count!)'. In the private 

sector, non-performance of a contract results in non-payment for 

work not performed, Failure by elected officials to adopt a budget 

breaks that contract with the American public. The American 

taxpayer has the right to demand that their elected officials perform 

the duties to which they are elected and to require them to remain on 

their jobs until completed. 

Consistent with the existing statute that makes it out of order 

to consider any resolution in the House of Representatives that 

No goventment shutdowns: automatic continuing resolution. 

Recommendation 8: 

Failure to adopt a biennial appropriation bill (one or all) 

before the beginning of the first session of the biennial 

budget cycle, would result in automatic funding of 

government programs and agencies at the previous 

year's level. 

As described earlier, only two times in the last 40 years have all 

13 (now 12) individual appropriation bills been completed on time, 

the last being in 1994. During those 40 years, a budget resolution 

conference agreement was reached in all but nine years. Further, for 

the last five years (2010 to 2014) no regular appropriation bill has 

been enacted before the beginning of the new fiscal year. No budget 

resolution conference agreement was reached in four of those five 

years. A total of 116 days of government shutdowns has occurred 

over the life of the Budget Act 

Congress passed the Consolidated and Further Continuing 

Appropriations Act in December 2014 just hours before expiration 

of the existing continuing resolution. This bill, also known as the 

"Cromnibus," was composed of 11 FY 2015 appropriations bills-a 

total of $1.014 trillion in discretional)' budget authority-and a 

continuing resolution that set up another political showdown around 

Homeland Security funding in early 2015. 

provides for an adjournment period of more than three calendar days This recommendation would avoid the threat of government 

(during the month of July) unless they have completed action on shutdowns for failure to adopt biennial appropriation bills by the 

a directed reconciliation bill for the upcoming fiscal year, a similar 

prohibition for all months could apply to both the Senate and the 

House for failure to adopt a conference agreement on a biennial 

budget resolution. 

17 

beginning of the first fiscal year, or the threat of a presidential veto 

of a biennial appropriation bill at the beginning of the fiscal year. It 

would establish an automatic funding of all programs at the lower 

of the previous year's appropriated level or at the annualized level 

provided in the most recent automatic continuing resolution if the 

regular bill did not become law. The automatic continuing resolution 

would be for the full two biennial years. 
81 

Element # 3 Leadership 

Organizational restructuring and streamlining-budget 

committees, CBO, JCf, a-nd budget resolutian consideration. 

Recommendation 9: 

(a) Modify membership of budget committees to include 

chairs and ranking members of the major fiscal, tax, and 

economic committees (or their designees); (b) adjust term 

limits on the House Budget Committee; (c) collapse the Joint 

Committee on Taxation into the Tax Analysis Division of the 

Congressional Budget Office; (d) establish clear procedures 

for appointing a Congressional Budget Office director; (e) 

eliminate "vote-a-rama"; (f) place nomination of the director 

and deputy director of the Office of Management and Budget 

solely within the jurisdiction of the Senate Budget Committee 

rather than today's joint jurisdiction with Homeland Security 

and Governmental Affairs; (g) make out-of-order the 

consideration of both deficit-neutral and spending- neutral 

members of the House Appropriations Committee serve on the 

Budget Committee (currently, comprising three majority and 

two minority representatives from each committee).ln addition, 

one member of the House Rules Committee and one member 

appointed as the speaker's designee serve on the committee. The 

chairman of the Budget Committee is limited to three sessions of 

Congress (six years). 

While the House's rules have strengthened the committee's 

working relationship with other key fiscal House committees, 

similar rules in the Senate are lacking. 

In the Senate, Senate Rule 'tf..V and party conference rules address 

committee assignments. The Budget Committee is considered a 

"B" committee, along with the Rules, Small Business, Veterans 

Affairs, Aging, and Joint Economic committees. A senator 

can serve on no more than two ''A" committees {such as 

Appropriations, Armed Services, Finance, Banking, etc.) but only 

one "B" committee. Further restrictions are placed on membership 

by party caucus rules. As an example, Democratic members are 

prohibited from serving on more than one of the "Super A" or "Big 

reserve funds in drafting budget resolutions; and (h) eliminate Four" committees." 

restriction on consideration of Social Security changes when 

considering a budget resolution or reconciliation legislation. 

A. Membership. In 1972, the Joint Study Committee on Budget 

Control reported its recommendations, which later became the 

CBA of 1974. Of the 32 members of the Joint Study Committee, 

all but four of them served either on the appropriation or taxwriting committee. Analysts have concluded that owing to the 

membership of this committee, Congress intentionally created 

the budget committees such that they would have difficulty 

exercising control over the long-standing money committees8 

The current membership on the budget committees is established 

by the individual rules of each chamber-but primarily by 

leadership's decisions. Rules of the House require that five 

members of the House Ways and Means Committee and five 

The Senate should reclassify the Budget Committee as an "A" 

committee and adjust party caucus rules. Rules then would 

require membership on the Budget Committee of either the 

chair or ranking member (or their designee) of the key "A" fiscal 

committees, with a rotating committee representative in the year 

of a major authorization (e.g., Agriculture). This would increase the 

authority of the Budget Committee and provide linl\age between 

any budget policies developed by the Congress and the major 

committees responsible for implementation of those policies. 

B. Term Limits. In the House of Representatives, only three 

committees have term limits: Budget, Intelligence, and Ethics. 

The restriction set out under House Rules (Clause 5, Rule X) 

requires that members rotate off the committees once they 

'·Appn:mriatwns,AnnedSeiVices,ftnance,andForetgnRe!attons 

18 
82 

have served in four out of six successive sessions of Congress. 

The result of this rule is that members' loyalty to the committee 

is limited and the benefit of expertise developed by members on 

complex budget and accounting procedures is sacrificed. 

Term limits exist in the Senate only as established by party 

caucus rules on the chairmanship. 

C. JCT/CBO. The CBA specifies that for purposes of revenue 

legislation, considered or enacted in any session of Congress, 

the CBO shall exclusively use revenue estimates provided to it 

by the JCllmproved use of limited staff resources, increased 

efficiency in revenue estimating, and improved tax-policy 

analysis could be achieved by streamlining this process. It is 

recommended that the staff of the JCT and its functions be 

subsumed directly into the CBO's Tax Analysis Division. TheJCT 

would not be eliminated, but independent tax analysis would be 

within the CBO's jurisdiction. 

D. CBO Director. The CBA simply states that, after considering 

recommendations received from the two Budget Committees, 

the speaker of the House of Representatives and the president 

pro tempore of the Senate shall appoint the director of the 

!9 

CBO. Once appointed, the director serves a four-year term that 

expires on January 3 of the year preceding each presidential 

election. No restrictions apply to the number of terms a director 

can serve. Of the seven directors who have served over the 

CBO's history, three have served two four-year terms and the 

remainder served one term."' 

Over the organization's history, this somewhat informal process 

has resulted in highly qualified and outstanding public servants 

serving as directors. This informality, however. has evolved into 

an unwritten agreement of rotation of the appointment between 

the House and the Senate leaders. When the two chambers are 

under different party control this can result in a stalemate and a 

delay of the needed appointment Greater clarity and specificity 

in the appointment process should be established in law. 

E. Eliminate "Vote-a-rama." In the Senate, in theory, at the end 

of the statutory time limit on debate of a budget resolution 

(50 hours) or budget reconciliation bill (20 hours), a vote 

should occur on the adoption of the budget resolution or the 

reconciliation bill. However, the time limits set in the CBA. 

whether intentionally or by oversight, limit only the time in 

debate and not overall consideration. As a result, beginning in 

the 1990s, a practice developed known as "vote-a-rama"-

whereby senators could continue to offer amendments after the 

time for debate had expired but not debate the amendment The 

result was a long series of amendments and effectively no end 

to the process. except for exhaustion. 

Reform to this process could be achieved by establishing a 

cloture-like filing deadline for amendments and a time-certain 

for final vote. 

F. Nomination of OMB Director/Deputy Director. Not until 

2006 did the Senate Budget Committee have any involvement 

in the nomination or confirmation process of the director 

and deputy director of the Office of Management and Budget 

(OMS). As a legacy of jurisdiction prior to the enactment of 

the Budget Act, the Senate Governmental Affairs Committee 

had sole jurisdiction over this appointment And even today, 

the Budget Committee and (renamed) Homeland Security and 

Governmental Affairs Committee jointly oversee consideration of 

those nominations. 

In order to streamline the nomination process and to reflect 

a clearer line of oversight to the Budget Committee, the law 

establishing the joint jurisdiction should be amended and 

that responsibility be placed solely within the Senate Budget 

Committee for the consideration of these nominations. 

"Those servmg two terms: Alice Riv!in. Robert Re1~chauer. and Douglas f.lme~dorf. Thostl serving 

oneterr1· Rudolph Penner,JuneO'N~11i, Dan Cnppen.and OongissHo!tz·Eakm 
83 

G. Eliminate Deficit-Neutral/Spending-Neutral Reserve 

Funds. During the consideration of the 2016 budget resolution, 

more than 183 deficit-neutral or spending-neutral reserve 

funds were adopted in the Senate-passed resolution. Reserve 

funds first were adopted on a very limited scale beginning in 

1987 when two reserve funds were created. They have grown 

over the years but never to the scale reached in the 2016 

budget debate. Reserve funds are effectively "Sense of the 

Congress" resolutions that allow tor the chairman of the Budget 

Committee to adjust spending or revenue allocations should 

Congress adopt measures consistent with the stated policies 

of the adopted reserve fund. As such, they allow members 

of Congress to be for a politically popular program or activity 

without addressing how to fund the activity. Budgets should 

force decision-makers to address trade-oils and highlight their 

priorifles. and not circumvent the hard, necessary, and real 

decisions of budgeting. 

H. Social Security Restrictions. Under current law and rules 

established through previous budget resolutions, it is not in 

order to consider any changes to the Social Security program in 

a budget resolution, amendments to the resolution, conference 

reports on the resolution. or a reconciliation bill (Title II of Social 

Security). This restriction in current law (CBA Section 301(1) 

and Section310(g)) and other unnecessary restrictions on the 

budget process should be eliminated. 

Establish a presidential/congressional commission 

on budget concepts, which will report to the Office 

of Management and Budget and to the Congress on 

recommended accounting and budget-concepts changes, 

including (but not limited to): 

Federal credit program accounting adjustments (e.g., fair-value, 

expected-returns). 

• Review current distinctions between on- and off-budget entities 

(e.g., Postal Service and Social Security). 

• Macroeconomic scoring of tax and investment policies (e.g .. 

"dynamic scoring"). 

• Reexamine and readjust functional budget categories. 

• Equitable treatment of expiring mandatory spending and tax 

provisions in baseline projections. 

Treatment of offsetting receipts as revenues. 

• Regulatory cost analysis, executive and legislative branch 

procedures. 

• Capital budgeting. 

• Preventive health care investments. 

Nearly half a century ago, in1967, a commission of highly regarded 

experts presented the president of the United States with a report 

outlining fundamental reforms to the federal budget' Those reforms 

focused on the presentation of the federal budget, its concepts, and 

its practices to increase its "usefulness for decision-making, public 

policy determination, and financial planning."' The commission's 

central recommendation was the creation ot a unified budget 

statement. eliminating in large part the three other budget concepts 

at that time: administrative budget, consolidated cash budget. 

and a national income accounts budget The president's budget 

submitted to Congress in 1969 reflected many of the commission's 

recommendations. which have continued unchanged to this day. 

Forty-seven years later, we recommend that a similar high-level 

presidential and congressional commission be established to revisit 

concepts and procedures used today in deliberations surrounding 

the current federal budget process. This would not only focus on 

the congressional process, as we have done here, but also on the 

roles of the executive branch, independent regulatory agencies, the 

judicial branch, and-increasingly important in the 21st century but 

also controversial-the Federal Reserve on impacting fiscal policy. 

20 
84 

One focus of this commission should be an appropriate accounting 

for federal credit programs and activities creating unfunded longterm liabilities for the federal government. 

Federal Credit Accounting. As an example. CBO recently 

estimated that nearly $3.8 trillion in new obligations or credit 

commitments would be made over the next decade. Federal credit 

programs provide support for housing, commerce. agriculture. 

education, and more. Current federal accounting of these loan 

programs collapses the fiscal effects of these loan programs into 

one number (the net present value of the loan). The Federal Credit 

Reform Act of 1990 (FICRAJ measures the lifetime cost of a loan 

(called its subsidy cost) as the discounted future cash flows of the 

loan to a present value at the date the loan is disbursed. Under 

FICRA rules, the discounting factor is the rate on U.S. Treasury 

securities with similar terms to maturity. 

An alternative accounting mechanism called "fair-value," similarly 

collapses the fiscal effects of a loan into one number, but fair-value 

uses a discounting rate based on market values, which is believed 

to more fully account for the cost of the risk the government takes in 

making the loan. 

The difference in accounting for similar loans is different not only in 

magnitude, but also in sign. It is estimated under FICRA procedures 

that the $3.8 trillion in new obligations or commitments over the 

next decade will have a negative subsidy cost of more than $200 

billion-the government makes money on the loans. However, 

accounting for market risks under fair-value, there would be a cost 

to the government of more than $120 billion. 

In addition to the differences in costs resulting from different 

discounting assumptions, neither FICRA nor fair-value 

accounting that results in "one number" can fully capture the 

budget effect over the budget window, over the loan's life, or as 

a subsidy to the borrowers;' An alternative accounting structure 

for federal credit programs should be developed to better capture 

the risks to the government in making loans while increasing the 

11 

transparency to decision-makers to also capture the impact of 

the loan over the budget window. 

The growth of federal credit programs over recent years and 

increased regulatory activities outside the normal congressional 

budget process necessitate a more fundamental review of these 

programs and of their accounting than what might be achieved by 

the reforms suggested herein. 

On-BudgeVOff-Budget Accounting. In 1967, the President's 

Commission on Budget Concepts called for the budget to include tile 

financial transactions of all the federal government's programs and 

agencies. Despite the commission's strong recommendation, at least 

one federal program or agency has been presented as off-budget as 

a requirement of law. Although there is a legal distinction between 

on-budget and off-budget activities, for all practical purposes there 

is no difference between the two. The federal activities of these offbudget programs are funded by the government and administered by 

the government the same as if they were on-budget 

Largely due to the lobbying efforts of Senator Ernest Hollings, the 

1985 Gramm-Rudman-Hollings law made the Social Security 

programs off-budget (except for purposes of calculating the deficit 

and sequestration). Previous activities that had been declared offbudget by law before 1985 have been reclassified as on-budget. 

But in 1990, the Postal Service was declared off-budget by law. The 

Postal Service has an unfunded liability totaling nearly $100 billion 

today, primarily in unfunded ;etiree health care benefits. Postal 

Service retirees are federal retirees, and their benefits are paid out 

of the U.S. Treasury. This fact alone suggests that the Postal Service 

should not be considered off-budget. Social Security programs 

and the Postal Service programs include accounts further divided 

into mandatory and discretionary funding, adding to confusion and 

unnecessary record-keeping. 

''Foradiscusshmotanalternatlvecred:t-sconngprocedure,see_''ABetterWaytoBudgetfor 

fedmilltendingP1ogmms."DoraldMarron,Seplember2014 
85 

Other Accounting Issues. Questions also should be asked and 

answered as to whether a reconsideration of a capital budget, 

alternative financing mechanisms that might tap the strengths of 

the private-sector investment community, or an investment budget 

would better provide decision-makers with the tools to address 

the challenges of an aging physical infrastructure. How can future 

liabilities be better reflected and addressed in the budget decisionmaking process' Further, is a cash-based accounting system 

the best approach for decision-making when the human capital 

investment may not provide returns to the public until beyond the 

traditional budget window' 

22 
86 

Conclusion 

Since the Congressional Budget Act was passed more than lour collegiality, or restore civil discourse. but it's a good start. Difficult 

decades ago, Congress has !ailed nine times to do its most basic political decisions demand more than new budget tools. They 

responsibility: to adopt a budget. We believe that's unacceptable. require the political will to apply available tools to achieve agreedon fiscal goals. We believe the proposals in this report are critical 

Governing requires budgeting, and budgeting is governing. Because 

and worthy of debate. 

of our shared commitment to an orderly budget process and fiscal 

responsibility. we have offered ten recommendations lor reforming 

this process. 

These recommendations build on three main themes: (1) the 

budget process should include all federal spending and revenues; 

(2) the process should be transparent and completed on time: 

and (3) the budget should have buy-in from the president and the 

leadership of both houses of Congress. We know that reforming 

the process will not eliminate partisan polarization, establish 

23 
87 

Appendix 

Historical Record of the Congressional Budget Process, 1976 - 2013 

14 
88 

Continued 

21 

25 
89 

EndNotes 

1 Preface to the Congressional Budget and Impoundment Control Act of 1974, legislative History, Committee on Government 

Operations, U.S. Senate. December 1974. 

1 The 2014 Long-Term Budget Outlook, Congressional Budget Office, July 2014. 

3 Congressional Budget Act of 1974, Sec. 3 [2 U.S. C. 6221, (3). 

'

1 Available at: En.wikipedia.orglwiki/Haig%E2%80%93Simons. 

'Tax Expenditure Review Report Bringing Tax Expenditures into the Budget Process, Minnesota Department of Revenues, February 

2011 

6 Governing in a Polarized America: A Bipartisan Blueprint to Strengthen our Democracy, Bipartisan Policy Center, 2014. 

7 Congressional Budget Act of 1974, Title II, Section 301(5). 

3 Philip G. Joyce, Strengthening the Budget Committees: Institutional Reforms to Promote Fiscally Responsible Budgeting in 

Congress, paper prepared for the Federal Budget Reform Initiative, Pew Charitable Trusts. January 2011. 

9 Report of the President's Commission on Budget Concepts, Washington, D.C., October 1967. 
90 

BIPARTISAN POLICY CENTER 

Founded in 2007 by former Senate Majority Leaders Howard Baker, Tom Daschle, Bob 

Dole, and George Mitchell, the Bipartisan Policy Center (BPC) is a non-profit organization 

that drives principled solutions through rigorous analysis, reasoned negotiation, and 

respectful dialogue. With projects in multiple issue areas, BPC combines politically 

balanced policymaking with strong, proactive advocacy and outreach. 

bipartisanpolicy.org I 202-204-2400 

1225 Eye Street NW, Suite 1000 I Washington, DC 20005 

'!I @BPC _Bipartisan 

f lacebook.com/BipartisanPolicyCenter 

@ instagram.com/BPC _Bipartisan 

llickr.com/SPC _Bipartisan 

BPC Policy Areas 

Economy 

Energy 

Financial Reform 

Governance 

Health 

Housing 

Immigration 

National Security 
91 

BIPARTISAN POLICY CENTER 

1225 Eye Street NW, Suite 1000 I Washington, DC 20005 

202-204-2400 I brpartisanpolicy.org 
92 

AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO 

Joseph P. Flynn 

National Secretary-Treasurer 

The Honorable Rand Paul 

Chairman 

Federal Spending Oversight and 

Emergency Management Subcommittee, 

Homeland Security and 

Governmental Affairs Committee 

U.S. Senate 

Washington, DC 20510 

J. David Cox. Sr. Augusta Y. Thomas 

National President NVP for Women & Fair Practices 

February 5, 2018 

The Honorable Gary Peters 

Ranking Member 

Federal Spending Oversight and 

Emergency Management Subcommittee, 

Homeland Security and 

Governmental Affairs Committee 

u.s. Senate 

Washington, DC 20510 

Dear Chairman Paul and Ranking Member Peters: 

On behalf of the American Federation of Government Employees, AFL-CIO, which represents over 

700,000 federal employees across the nation, I am writing to express our strong opposition to a federal 

government shutdown, given the terrible costs that shutdowns have on federal employees and the 

American taxpayers. 

As you know, the Trump Administration and Congress are hurtling toward a February 8, 2018, spending 

deadline, when the fourth continuous resolution of FY 2018 expires, with little demonstrable progress 

towards avoiding a federal government shutdown. 

With the prospect of a federal government shutdown becoming more and more possible, President 

Trump and Members of Congress would do well to read "Impacts and Costs of the October 2013 Federal 

Government Shutdown," which the Office of Management and Budget released in November 2013. This 

OMB report explains in detail how the 16-day federal government shutdown in October 2013 adversely 

impacted federal employees, federal government finances, the millions of Americans who rety on critical 

federal programs and services, and the nation's economy. 

(l) Federal employee furloughs 

Federal employees were furloughed for a combined total of 6.6 million work days during the 16-day 

government shutdown in October 2013. About 850,000 federal employees per day were furloughed in 

the immediate aftermath of the lapse in appropriations, or roughly 40 percent of the entire federal 

civilian workforce. 

Those employees that were not furloughed were retained either because they were performing 

activities that were "excepted" under the applicable legal requirements, such as activities necessary to 

maintain the safety of life or the protection of property, or because funding remained available to pay 

their salaries and e•penses during the lapse from sources other than annual appropriations. 

80 F Street, N W, Washmgton DC 2000 I • 202 737 8700 ·Fax 202 639 6490 • www ofge org 

{00376185.00CX · 2} 
93 

(2) Fiscal costs of federnl government shutdown 

The 16-day shutdown cost the federnl government billions of dollars. The payroll cost of furloughed 

employee salaries alone -that is, the lost productivity of furloughed workers- was $2.0 billion. The 

total pay and benefits costs were about 30 percent larger- about $2.5 billion. 

Beyond this, the federal government also incurred other direct costs as a result of the government 

shutdown. These included: 

Uncollected fees.- The National Park Service estimated that it was unable to collect about 

$450,000 per day in revenue from entrance, campground, tours, and special use fees, for a total 

cost of $7 million in lost revenue. In addition, the closing of the Smithsonian Institution resulted 

in an additional $4 million in lost revenues -from lost museum-based revenue from stores and 

theaters, lost revenues from the National Zoo shops and concessions, and lost revenue from 

special events. 

• Suspended program integrity activities.-The shutdown halted most Internal Revenue Service 

{IRS) enforcement activities, which collect an avernge of $1 billion per week. In addition, the 

Social Security Administrntion (SSA) was delayed in completing over 1,600 medical disability 

reviews and over 10,000 Supplemental Security Income {SSI) redeterminations each day. 

Medical disability reviews assess whether beneficiaries are still medically eligible for disability 

benefits, while SSI redeterminations review whether beneficiaries meet SSI's non-medical 

eligibility factors, such as Income and asset limits, and ensure that beneficiaries are paid the 

correct amounts. 

Interest due on late payments.- The federal government is required to pay Interest on 

payments due to third parties when it fails to pay these bills on time, according to the Prompt 

Payment Act and the Cash Management Improvement Act. The federnl government had to pay 

interest on billions of dollars of payments not made on time during the shutdown, ranging from 

IRS refunds to contrnctor payments. 

(3) Adverse impacts on critical programs and services 

The 16-day government shutdown adversely impacted millions of Americans who rely on critical federal 

programs and services. For example, the shutdown affected: 

• Direct Services for Veterans.- The shutdown stalled the Department of Veterans Affairs' weekly 

progress in reducing the veternns' disability claims backlog, which had previously been 

progressing at a rnte of almost 20,000 claims per week; halted or curtailed important services 

that help veterans understand their benefits, Including the education call center, hotllnes, and 

all regional offices' outreach activities; and delayed access for 1,400 military service members to 

workshops designed to help them transition to civilian life and employment. 

Public Heaith and Research. -The shutdown cut back the Center for Disease Control and 

Prevention's (CDC's) flu season surveillance and monitoring; put on hold most federal 

government support for new basic research due to the furloughs of 98 percent of National 

Science Foundation {NSF) employees, nearly three quarters of National Institute of Health 

employees, and two thirds of CDC employees; forced the transition of the NSF's U.S. Antarctic 

{00376185.000<. 2) 
94 

Program into caretaker status, resulting in the cancellation of some research activities for the 

entire 2013-2014 season; and prevented access to the National Institute of Standards and 

Technology's Center for Neutron Research, impacting researchers from academia and industry 

who had scheduled experiments months in advance. 

Environmental Protection and Product Safety.- The shutdown halted the Environmental 

Protection Agency's non-emergency inspections at about 1,200 hazardous waste facilities, and 

drinking water systems; discontinued evaluations of potential health impacts of new industrial 

chemicals; and stopped reviews of pesticides for adverse impacts to health and the 

environment. In addition, the shutdown stopped Consumer Product Safety Commission work 

related to recalls of products that could cause injuries. 

Worker Rights and Safety.- The shutdown suspended almost 1,400 Occupational Safety and 

Health Administration (OSHA) inspections to prevent workplace fatalities and injuries; stopped 

the OSHA Consultation Program from providing free on-site safety and health assistance to 

almost 500 small businesses; stopped nearly all investigations by the Labor Department's Wage 

and Hour DMsion to enforce minimum wage, overtime, child labor bans, and other workplace 

protections; and halted the Chemical Safety Board investigation of the West Texas fertilizer 

plant explosion from April 2013. 

(4) Economic costs of federal government shutdown 

Leading Independent forecasters (Standard and Poor's, Macroeconomic Advisers, Goldman Sachs, and 

Mark Zandl at Moody's) estimated that the 16-day government shutdown would lower 2013's fourth 

quarter real GOP growth by 0.2- 0.6 percentage points, or $2 - $5 billion In lost output. However, most 

of these estimates of the shutdown's economic costs were model-based projections that only took into 

account how the shutdown affected the direct flow of government spending Into the economy. As a 

result, they did not fully capture the direct economic disruptions that resulted from the shutdown of 

government services important to the functioning of the private sector. 

For example, the federal government shutdown: 

Halted permitting and environmental reviews, delaying job-creating transportation and energy 

projects. The Bureau of Land Management was unable to process about 200 Applications for 

Permit to Drill, delaying energy development on federal lands In North Dakota, Wyoming, Utah 

and other states. 

Disrupted private sector lending to individuals and small businesses. During the shutdown, banks 

and other lenders could not access IRS Income and SSA number verification services. Two weeks 

into the shutdown, the IRS had an inventory of 1.2 million verification requests that could not be 

processed, potentially delaying approval of mortgages and loans. 

Halted federal loans to small businesses, homeowners, and housing and health facility 

developers. The Small Business Administration was unable to process about 700 applications for 

$140 million in small business loans, and the Federal Housing Administration was unable to 

process over 500 applications for loans to develop, rehabilitate, or refinance around 80,000 

multifamily rental units. 

{0037618S.OOCX • 2} 
95 

Thank you for your consideration of our views. Would it be possible for our letter to be Included in the 

hearing record of your important hearing on Terrible, No Good, Very Bad Ways of Funding Government: 

Exploring the Cost to Taxpayers of Spending Uncertainty Caused by Governing Through Continuing 

Resolutions, Giant Omnibus Spending Bills, and Shutdown Crises.? 

Sincerely, 

1h \,t'L Thomas S. Kahn 

Director, Legislative Department 

{00376185.DOCX • 2} 
96 

The voice of career federal executives since 1980 

77 K Street N.E., Suite 2600 • Washington, D.C. 20002 • 202.971.3300 • seniorexecs.org 

February 6, 2018 

Senator Rand Paul, Chairman 

Senator Gary Peters, Ranking Member 

Subcommittee on Federal Spending Oversight and Emergency Management 

Washington, DC 20510 

Dear Chairman Paul, Ranking Member Peters, and Members of the Subcommittee: 

On behalf of the Senior Executives Association (SEA}- which represents the interests of career federal 

executives in the Senior Executive Service (SES}, and those in Senior level (SL), Scientific and 

Professional (ST}, and equivalent positions- I write to thank you for holding this important hearing on 

governing by Continuing Resolutions (CRs}, budget crises and giant spending bills. Congressional 

introspection about its own failures occurs far too infrequently and I hope the recent shutdown and 

what will be the fifth CR of this fiscal year will finally spur changes in lawmaker behavior. 

lawmakers and citizens alike frequently express the desire to have an "effective and efficient" 

government. Federal employees, too, want a prudent federal government. The ability of federal 

executives and leaders to deliver effective and efficient government is constantly cut down at the knees 

by the inability of lawmakers to fulfil their most basic and fundamental constitutional duty- managing 

the power of the purse through timely authorization and appropriation of funding. 

We do have an accountability problem in Washington- Congress has only managed to approve all 

appropriations bills, under rules set for itself by itself, by the start of a fiscal year four (4) times in over 

45 years. Congress now averages almost six CRs a year' making every year 'CR hell' inside the 

government and for those who rely upon it2

• 

During the recent government shutdown, many lawmakers and commentators acted as if the shutdown 

wasn't a big deal because it occurred over a weekend and so not much work would be wasted or the 

impact would be limited. The complete disregard for taxpayer dollars associated with this thinking is 

appalling. 

Outside of agencies, American small businesses are especially affected by government shutdowns and 

funding unpredictability.' More importantly, economic markets are riled by political instability and 

gamesmanship. The 2013 government shutdown dramatically hindered the ability of federal agencies to 

1 Congressional Research Service (2016). Continuing Resolutions: Overview of Components and Recent Practices 

https://fas.org/sgp/crs/misc/R42647.pdf. 

'Samuelsohn, Darren. Welcome to CR Hell, POLITICO, October 21, 2015. 

https://www.politico.com/agenda/story/2015/10/congress-federal-budget-continuing-resolution-000270 

3 Burr, Jessie. Continuing resolutions jack up government costs, Federal Times, February 2, 2018. 

https://www.federaltimes.com/management/budget/2018/02/02/continuing-resolutions-jack-up-governmentcosts/. 

1 
97 

deliver their services and imposed total economic costs of over $24 billion and shaved quarterly GDP by 

between 0.2 and 0.6 percentage points•. 

Shutdown or not, not having budgets and constantly coming to the brink of shutdowns imposes both 

hard and soft costs on the government'. While operating under CRs, maintenance is forgone, federal 

agencies cannot recruit or hire new staff, new programs cannot begin, acquisitions are halted, grants are 

delayed, and much more. A Bloomberg analysis found over 70 Pentagon programs hindered by stopgap 

funding6

• Navy Secretary Richard Spencer said in December that the service had wasted $4 billion on 

CRs since 20117

• CRs yield inefficiency and wasted opportunity costs of countless man-hours not 

devoted to mission•. 

A survey of SEA members yielded several anecdotes about the impact of CRs and shutdown crises on 

agency operations: 

Can't hire staff which puts a strain on our ability to conduct oversight. Also travel and training funds are 

held tightly until we receive o budget. This also creates added pressure once the funds are released we 

not only need to complete our oversight work but our staff also need to obtain their professional 

certification hours during the same time period. 

Many of our sustainability contract options ore priced for annual or multi-year ... we simply cannot 

exercise those options when allotments are given in 4 week blocks. Not exercising these options 

adversely effects our nation's preparedness posture and negates over a decade of careful partnership 

building with the pharmaceutical industry. 

Most recently is the challenge with the ability to hire people fast enough ... the Human Resource 

Professionals have to stop focusing on hiring and assisting hiring managers with getting the right talent 

on board and prepare furlough letters and update lists of exempt employees and communicate with 

leaders and staff on what to do. Impacts readiness, morale, and timeliness ond effective public sector 

operations. 

We had personnel ready to fly out of the country on assignment. Due to the shutdown, they were not 

able to use those flights, and when the government reopened we had to buy new flights at the lost 

minute at much higher costs. This was a complete waste. 

I organized and am supposed to chair a meeting of senior officials from dozens of countries to work on 

top risks facing [our profession]. I planned the agenda, arranged for the speakers, and coordinated 

everything to make this a productive meeting. How embarrassing it will be for the US to not even be able 

to attend a meeting that it organized with other countries because our government is shutdown. It will 

be o sod reflection on the state of affairs in the United States. 

4 Office of Management and Budget. Impacts and Costs of the October 2013 Federal Government Shutdown. 

(2013). https://obamawhitehouse.archives.gov/sites/default/files/omb/reports/impacts-and-costs-of-october2013-federal-government-shutdown-report.pdf. 

5 Mazmanian, Adam. 6 hidden costs of continuing resolutions, FCW, August 19, 2015. 

https:l/fcw.com/articles/2015/08/19/hidden-cost-resolutions.aspx. 

6 Tiron, Roxana. More than 70 programs likely hobbled by stopgap bill: Pentagon, Bloomberg, December 22, 2017. 

https://about.bgov.com/blog/70-orograms-likely-hobbled-stopgap-bill-pentagon. 

7 Serbu, Jared. Navy says it's wasted $4 billion on continuing resolutions since 2011, Federal News Radio, 

December 5, 2017. https://federa lnewsradio.com/ defense-main/2017 /12/ navv-says-its-wasted-4-billion-oncontinuing-resolutions-since-2011/. 

8 Joyce, Philip. The Costs of Budget Uncertainty: Analyzing the Impact of Late Appropriations. IBM Center for the 

Business of Government (2012). http:l/www.businessofgovernment.org/report/costs-budget-uncertaintyanalyzing-impact-late-appropriations. 

2 
98 

Æ 

While agencies have become adept at managing Congress' budgeting ineptitude, the status quo should 

not be acceptable and steps must be taken to develop a more stable and predictable budgeting 

schedule to inform agency operations. 

The provision of additional data for the debate may be useful. A nearly decade-old GAO report utilized 

case studies to assess the impacts of budgetary uncertainty on agency operations'. It would add to the 

public record for GAO to reexamine this issue. Specifically, Congress could request a study to inform the 

development of models that determine the hard and soft costs associated with several management 

inefficiencies created by budgetary uncertainty. These models could be combined to develop a day-day 

cost estimation model for taxpayer resources wasted through opportunity cost when governing by CR. 

Examples for major categories would include employee staff time misdirected from mission, contracting 

inefficiencies, delayed construction and incurred interest, to name a few. 

Congress should also provide agencies with additional flexibilities to help manage uncertainty. These 

options have been discussed for many years. Options include no-year or multi-year budgeting authority, 

which some agencies and programs already use to good effect. Combinations of evaluation and 

oversight can ensure effective use of taxpayer dollars over those time periods. Budget process reform 

on Capitol Hill should also continue to be pursued, with biennial budgeting presenting a promising 

option to ensure an appropriate balance of authorization, appropriation, and oversight of execution. 

Federal executives are being asked to lead, innovate, and drive change in their agencies to better serve 

the public with the best use of taxpayer resources. Unfortunately, career federal leaders often do not 

feel supported nor empowered to drive these changes10, and chronic budgetary uncertainty continues 

to be a top challenge for federalleaders11• Congress must do its job so federal career leaders can do 

theirs for the American people. 

Thank you for your consideration of SEA's perspective. Please have your staff contact SEA Executive 

Director Jason Briefel (briefel@seniorexecs.org; 202-971-3300) for further information. 

Sincerely, 

Bill Valdez 

President 

Senior Executives Association 

9 Government Accountability Office. (2009) Continuing Resolutions: Uncertainty limited Management Options and 

Increased Workload in Selected Agencies. https:l/www.gao.gov/products/GA0-09-879. 10 Senior Executives Association & Deloitte (2017) State of Federal Career Senior leadership. 

https://seniorexecs.org/989-survey-of-federal-government-executives. 

11 Association of Government Accountants (2018). Annual CFO Survey: Navigating Disruption. 

https:l/www.flipsnack.com/FCAA7CF569B/cfo-survey·navigating-disruption.html. 

3