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Breaking the Dysfunctional Budget Cycle

Friday January 17th, 2014   •   Posted by Craig Eyermann at 4:14pm PST   •  

budget hero By law, the U.S. President is supposed to present a budget proposal for the federal government no later than the first Monday in February each year. In 2014, it would be due on Monday, February 3.

President Obama has failed to comply with that legal requirement in four of the five years he has been in office. Actually, make that five out of six, because he’s going to fail to meet that requirement again. Congressional Quarterly reports that will once again be the case for the President’s budget for Fiscal Year 2015 (a version of the CQ article that doesn’t require registration is available here):

The White House is said to be at least a month behind its own schedule for developing a FY2015 budget, which by statute is supposed to be submitted to Congress on the first Monday in February. That will slow work on next year’s spending bills, even though the budget accord negotiated by Senate Budget Chairwoman Patty Murray (D-WA) and House Budget Chairman Paul Ryan (R-WI) established overall discretionary spending levels.

The Ryan-Murray agreement set the discretionary top line at $1.014 trillion for FY2015, which begins October 1, 2014. Overall, the measure raises discretionary spending by almost $19 billion next year, replacing previously scheduled sequester cuts with a mix of user fees and changes in mandatory spending programs designed to save $85 billion over a decade.

There is no penalty for a late presidential budget submission, but appropriators cannot hold hearings until they have a chance to review the administration’s proposals. Last year, Obama’s budget was released two months late, in early April, a delay that factored into Congress’ failure to clear any FY2014 spending bills this past year.

That’s unfortunately timing on the President’s part, because the issue of raising the nation’s debt ceiling will be up for negotiation once again very soon. The U.S. Treasury will once again hit the limit on its authority to borrow money as early as February 7, 2014. That’s just four days after the President chalks up a new failure for his fiscal stewardship in office.

Since the Ryan-Murray spending compromise from December 2013, which was introduced as a bill on Monday, January 13, 2014, has already set the total level of spending for the federal government for FY2015, there’s little point in putting the federal government through another partial shut down as happened in October 2013, which was in many ways a last-ditch attempt to prevent the economic damage that would come from the implementation of the Affordable Care Act (a.k.a. “Obamacare”). The partial shut down at that time failed to achieve that objective and the implementation of Obamacare has since gone on to be every bit of the train wreck that its opponents anticipated.

Instead, we would suggest that advocates of fiscal responsibility use the opportunity to tie increases in the national debt ceiling to the major milestones of the federal government’s budget process. Unless and until the various political players in Washington D.C. meet their obligations for producing the federal budget each year under the law, the national debt ceiling should be automatically frozen in place until they get their act together and satisfy their obligations under the law.

The biggest problem with the status quo as it is today is that it allows politicians to disregard the nation’s statutes for mandating some degree of budgetary discipline, which begins by following a simple schedule. Today, they exploit the law’s lack of any penalty for evading these responsibilities, with the consequence to the American people that the government is continually veering from one budget crisis to the next. All without any pain to the people most responsible for producing the federal government’s budget: the politicians themselves.

By linking increases in the nation’s debt ceiling to those statutory budget milestones however, failing to meet those deadlines will suddenly have a real cost to the politicians – the operation of the federal government would be disrupted whenever the U.S. Treasury hits its credit limit for a prolonged period of time. The fault of the politicians who are responsible for that disruption will be plainly evident, and because of that factor, far less likely to occur.

Of course, there is an easy way out for politicians who don’t want to ever face that kind of situation. They could simply reduce the federal government’s spending to be permanently less than its revenue – so that the U.S. Treasury never maxes out its figurative credit card. But, one small step at a time….

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January 2014