全球智库信息集成服务系统

Tax legislation enacted by the 115th Congress, commonly referred to as the Tax Cuts and Jobs Act (TCJA) of 2017, exposed significant problems in Congress’ deliberative mechanisms. The far-reaching tax changes were rushed through Congress in a matter of weeks under the special fast-track budget reconciliation process, straining procedures that had been designed to ensure deliberative and inclusive consideration of fiscal policy.

The legislation’s proponents relied on budgetary gimmicks and deceptive economic arguments that were unsupported by any serious analysis. The majority in Congress chose to disregard the budget impact estimates of the Joint Committee on Taxation (JCT) and the Congressional Budget Office (CBO), while the Treasury Department produced no public revenue or distributional analysis of the bill.¹

The process itself was also rushed and closed: Congress held no hearings on the legislation where it could have heard from tax experts, affected communities, or the general public; it conducted key negotiations behind closed doors; and it made numerous, consequential changes at the last minute before critical votes, without providing sufficient time for the public or even most members to understand the effects of those changes.² It is essential to restore rationality and basic norms to the budget process in order to ensure that this approach does not set a new and dangerous precedent for the nation.

The current budget process was established by the landmark Congressional Budget and Impoundment Control Act of 1974, also called the Congressional Budget Act (CBA). Understanding the successes and failures of the CBA can inform a way forward toward achieving a more effective budget process. The CBA established new institutions in Congress, including the CBO and the Budget Committees in the House and Senate. It dramatically curtailed the power of the president to withhold federal funds once Congress has appropriated them. It improved the availability of information to inform decision-making and established an annual process for developing and approving the federal budget.

The results of the 1974 CBA have been mixed, however, in terms of both its stated goals and the budget process that evolved. In hindsight, it succeeded most where it improved the information and analytical capacity available to Congress and enhanced congressional authority over the budget. It has been less successful in ensuring that Congress enacts timely budgets. While the budget process at first worked largely as intended, adherence in Congress to the CBA’s processes and deadlines has eroded, and today, the budget process has been warped by brinkmanship and partisan posturing, as members of Congress increasingly use budget chokepoints to try to extract policy concessions from the other side.

This report examines the major reforms enacted as part of the CBA and assesses what is working and where the current budget process has gone astray.³ The report recommends several reforms, including that Congress should increase transparency and access to information by strengthening nonpartisan institutions such as the CBO and creating neutrality between tax and budget processes. It also recommends that Congress take steps to address the brinkmanship and partisan posturing in the current budget process by eliminating the debt ceiling and streamlining the budget resolution process.

These concrete measures will not solve all the woes of the current budget process, but they will help halt the erosion of the norms and processes that support an informed and coherent fiscal policy, as well as help put in place an improved framework for policymaking that allows for more effective management of the federal budget.

The Congressional Budget Act achieved four main reforms to the federal budget process. It established the Congressional Budget Office and the House and Senate Budget Committees, it ended the practice of impoundments, and it established an annual process for developing and approving the federal budget. Each is detailed in the following sections.

Establishing the congressional Budget Committees and the CBO

In order to create a more efficient process for drafting a yearly budget, the CBA established Budget Committees in the Senate and the House. The primary responsibilities of these committees include monitoring and enforcing rules relating to government spending and revenue, as well as drafting the annual budget resolution.⁹

The CBA also created the CBO to produce independent analyses of budgetary and economic issues to better inform Congress’ deliberations.¹⁰ To ensure impartiality, the CBO is required to be both objective and nonpartisan. While the CBO provides assessment of fiscal and economic impacts of budgetary decisions for Congress and the public, it does not give policy recommendations.¹¹ Creating the CBO addressed a critical congressional information deficit by breaking the administration’s monopoly over budget and economic information. It is widely regarded as a success: The CBO’s reputation for providing nonpartisan research and technical assistance to legislators is unparalleled, and many experts credit the CBO with helping protect checks and balances and legislative independence.¹²

Under the CBA, the CBO is required to produce annual economic and budgetary projections that cover a minimum of five fiscal years. The CBO typically provides a 10-year budget and economic outlook, as well as a long-term budget outlook covering at least 25 years. The CBO also provides cost estimates—or budget scores—for proposed legislation. Each year, CBO staff undertake between 500 and 700 cost estimates, providing a nonpartisan view for Congress and the public of the budgetary impact of proposed legislation. In addition, the CBO analyzes the economic impact of broader policy issues; recent examples include reforms to immigration and incarceration policies.¹³

While policymakers and outside critics have challenged the CBO’s assumptions and methods, as well as the accuracy of its projections, in specific instances,¹⁴ the CBO has maintained strong bipartisan support and a reputation for integrity, even-handedness, professionalism, and commitment to empiricism. The nonpartisan staff members of the Joint Committee on Taxation, which dates back to 1926, play a similar role for revenue legislation and are similarly highly regarded.

Eliminating the executive power of impoundment

The third major accomplishment of the CBA was the elimination of impoundments. As early as Thomas Jefferson,¹⁵ presidents had asserted this privilege of withholding funds from congressionally appropriated programs. This power was rolled back by the CBA in an effort to re-establish the congressional power of the purse and return budget authority to Congress.¹⁶ The CBA required the president to seek congressional approval in canceling appropriated funds, through a process known as rescission.

Under the act, if the president wishes to deny funds for congressionally approved activities, he may request that Congress rescind the funds. However, if Congress does not approve this request or fails to take any action within 45 days, these funds are required to be released.¹⁷ The elimination of impoundments successfully shifted an important budget authority from the executive branch to the legislative branch.

Establishing the budget process and timeline

In addition to establishing new institutions and authorities within Congress, the CBA also put in place major reforms to the process and timeline for establishing the federal budget.¹⁸ These included setting up processes for budget resolutions, budget reconciliation, and establishing new timetables for Congress to conduct its work.

Budget resolutions

The act created a new congressional budget process, beginning with submission by the executive branch of the president’s proposed budget to Congress in February.¹⁹ By April 15, both houses of Congress must agree on a concurrent budget resolution that sets spending and revenue levels,²⁰ covering 21 broadly defined functions of government, for the coming fiscal year.²¹ Budget resolutions are internal congressional mechanisms: They do not require signature by the president and are not laws, but they set certain parameters for legislation that Congress subsequently considers. The annual timeline that the CBA set for the budget resolution has largely broken down.²² Since its enactment, there have been only six occurrences where Congress adopted a budget resolution on time.²³ On average, Congress misses the deadline by 36 days, and since 1999, there were nine years in which no budget resolution was adopted at all.²⁴ Yet during those nine years, the government was still funded even without a budget resolution, and more recently, bipartisan budget deals struck well after the formal budget resolution was due have served the functions of the budget resolution.²⁵ This has prompted some analysts to question whether the budget resolution process can be reformed or whether it should be done away with altogether.²⁶

Budget reconciliation

Under the CBA, the budget resolution may contain reconciliation directives for certain committees, providing numerical targets on increasing or decreasing outlays, revenues, or public debt. The reconciliation process was originally designed to ease the politically difficult process of deficit reduction; bills considered under the reconciliation process enjoy fast-track procedures—including, most importantly, that they cannot be filibustered in the Senate, and can therefore be passed with a simple majority.

As a result, in the context of today’s divided government, where the filibuster has been used routinely, the fast-track process of reconciliation is increasingly used to make major policy changes.²⁷ In order to prevent members of Congress from fast-tracking provisions that are unrelated to the reconciliation goals, the Senate adopted the Byrd Rule in 1985, and in 1990 incorporated it into the CBA, thus making it permanent.²⁸ The Byrd Rule allows any senator to raise a point of order to strike provisions that add to the deficit after the budget window—unless those budget effects are offset by other provisions within the same title of the legislation or are otherwise extraneous. Waiving such a point of order requires the vote of three-fifths of the Senate; otherwise, the provision is struck from the underlying legislation.

In explaining the purpose of this amendment, Sen. Robert Byrd (D-WV) cited the abuse of reconciliation’s fast-track process, stating:

[W]e are in the process now of seeing … the Pandora’s box which has been opened to the abuse of the reconciliation process. That process was never meant to be used as it is being used. There are 122 items in the reconciliation bill that are extraneous. Henceforth, if the majority on a committee should wish to include in reconciliation recommendations to the Budget Committee any measure, no matter how controversial, it can be brought to the Senate under an ironclad built-in time agreement that limits debate, plus time on amendments and motions, to no more than 20 hours.

It was never foreseen that the Budget Reform Act would be used in that way. So if the budget reform process is going to be preserved, and more importantly if we are going to preserve the deliberative process in this U.S. Senate—which is the outstanding, unique element with respect to the U.S. Senate, action must be taken now to stop this abuse of the budget process.²⁹

When the CBA was drafted, the expectation was that reconciliation would only be used for deficit reduction. However, the CBA’s text is silent on the matter, and the Byrd Rule’s terms only address reconciliation bills that increase deficits beyond the budget window. In 2001, with President George W. Bush and a Republican-controlled Senate seeking to enact deficit-increasing tax cuts, the Senate parliamentarian—the official appointed by the Senate to serve as its expert on rules and procedures, whose rulings are followed except in rare instances—informally ruled to allow reconciliation bills that increase deficits within the budget window.³⁰ This move by the parliamentarian opened the door for Congress to pass the regressive, deficit-increasing Bush tax cuts through the reconciliation process.³¹

In 2007, to prevent the use of reconciliation to increase deficits, the new Democratic majority in Congress adopted the “Conrad Rule,” requiring 60 votes to overcome a point of order for reconciliation bills that increased the deficit within the budget window. However, Senate Republicans repealed the rule upon reclaiming the majority in 2015, allowing for the deficit-increasing Tax Cuts and Jobs Act to pass two years later with only 51 votes.³²

Changes to budget timetables

The CBA sought to establish a proscriptive budget process in order to force Congress to reach agreement on budget priorities. Budget resolutions and reconciliation were expected to guide committee spending and revenue targets.³³ Once approved by a floor vote, these priorities are sent as concurrent resolutions to the Appropriations Committees, along with a 302(a) allocation table, which distributes among the congressional committees spending totals laid out in the budget resolution. Only then are the Appropriations Committees able to allocate this funding among their 12 respective subcommittees through 302(b) suballocations and to draft the actual spending bills, which must adhere to both of these allocations.³⁴ The complexity of this process required allowing additional time for Congress to develop the nation’s budget. As a result, the CBA also expanded the window for the budget process, shifting the start of the fiscal year from July 1 to October 1,³⁵ allowing Congress more time to respond to the president’s budget request. At the time, Congress believed these formal process improvements would force legislators to agree upon priorities and place more attention on the details of legislation.³⁶ In practice, this timetable change did not streamline decision-making as significantly as originally hoped, and stand-alone appropriations bills are rarely enacted by the start of the fiscal year.³⁷

The legislative history of the Congressional Budget Act demonstrates congressional concern over impasses and a failure to reach consensus.³⁸ While many of the process improvements established by the CBA have not resolved these issues, several clear lessons can be distilled from the CBA.

Better information leads to a better budget process

New institutions, such as the Congressional Budget Office and the Budget Committees, established by the CBA have given Congress greater insight into the consequences of its policies. In the 1970s, congressional committees frequently reported out seemingly technical changes to benefits formulas or other economic drivers of legislation. However, as these policies were implemented, these modified formulas could result in hundreds of millions of dollars in increased cuts or spending that were outside the visibility or control of the president, key committees, or other policymakers.³⁹ Without the necessary information or feedback loops required to make responsible choices, Congress inadvertently locked in spending changes without making a specific policy choice to do so. By establishing the CBO, Congress is now more able to adequately assess the impacts of its decisions. The public too is now supplied information on the economic impacts of proposed legislation, better allowing congressional representatives to be held accountable for their votes. The CBA has provided necessary elements of more thoughtful, informed, and transparent debates across the federal government. To the extent that the nation’s current discourse and debates in Congress fail these standards, that is in spite of and not because of the CBA’s reforms.

The current budget process is broken

The CBA’s budget process, however, has yielded mixed results. The orderly process for annual appropriations envisioned in the CBA has clearly broken down. The expectation of an annual congressional budget puts some pressure on party caucuses to produce one—but congressional budgets increasingly fail to provide an honest accounting of their authors’ priorities. For example, recent House majority budget resolutions have used various gimmicks—including enormous but wholly unspecified spending reductions, reliance on unrealistic economic assumptions, and simply ignoring the cost of tax cuts. In a recent congressional hearing, Richard May, the former staff director for the House Budget Committee, gave away the game, noting that:

The budget resolution is based on a series of policy assumptions that we make to meet our number. But, again, those are not binding on the committees. We only provide illustrative examples. … So it’s not so much the fact that we’re driving a particular policy or policies, it’s simply an outline or a blueprint, as to, if we get to balance, these are the approximate savings that we believe is (sic) a fair and reasonable way of getting to balance within the 10-year period. So I mean, we’re not trying to—we’re not trying to hide anything. It’s just that some of the details really are—I don’t want to say irrelevant, but it’s not really a policy-driven process, it’s a numerical effort to show how we can get to balance.⁴⁰

The fiscal year 2018 budget resolution passed by the House of Representatives provides a vivid example of these budget gimmicks. This bill relies on several unrealistic assumptions, including rosy growth estimates, vague and unrealistic cuts to discretionary spending, and unrealistic policy assumptions. The bill assumes an average real gross domestic product growth rate of 2.6 percent for the decade, well out of the range of mainstream estimates, including that of the CBO. It contained savings of $620 billion in unspecified cuts to spending, and $700 billion on top of that through cutting improper payments without providing policy guidance on how it would do so.⁴¹ The House budget also did not account for the cost of the major deficit-increasing tax overhaul that congressional leaders were crafting at the time, and which they ultimately enacted in December 2017.⁴² While process changes cannot force leadership decisions, it is important to generate a process that establishes strong norms and increases transparency.

The rise of fiscal brinkmanship

Congress sought to impose a measure of order on itself by establishing a budget process in the CBA. But in recent years, factions within Congress have increasingly sought to use budget-related chokepoints to demand their desired policy outcomes. Since 1977, Congress has shut down the government or allowed funding to lapse 19 times by failing to enact timely appropriations bills or by using continuing resolutions (CRs), and it now brings the government to the brink of shutdown on a regular basis.⁴³ Worse, in 2011, House conservatives used the approaching need to raise the debt ceiling as a weapon in their budget fights with President Barack Obama—and the United States came dangerously close to defaulting on its obligations for the first time in its history.⁴⁴

The debt ceiling’s original purpose was to facilitate the approval of debt issuances by the Treasury Department; prior to its enactment, Congress needed to authorize each individual debt issuance. Raising the debt limit only serves as a vote for Congress to make good on the spending it has already agreed to pay.⁴⁵ Historically, this was a routine vote to simply allow the Treasury to finance the nation’s obligations. But in recent years, it has become a cudgel for conservative members of Congress who threaten U.S. default to extract policy concessions.⁴⁶ In recent years, the debt limit has caused unnecessary self-inflicted crises that brought the United States to the brink of disaster—though Congress has not yet allowed the country to default. But it keeps coming close, and with just one misstep caused by partisan brinkmanship, the economic consequences would be dire, leading to the disruption of financial markets, a downgrading of the nation’s credit score, and increased costs to taxpayers.⁴⁷