Reconcilable Differences?: Congress, the Budget Process, and the Deficit - Hardcover

Gilmour, John B.

Hardcover

ISBN 10: 0520067789 ISBN 13: 9780520067783

Publisher: University of California Press, 1990

Synopsis

Gilmour traces the development of the congressional budget process from its origin through the emergence of reconcilliation and Gramm-Rudman-Hollings. He shows how changes in process have brought about far-reaching shifts in congressional power, and explains why they have failed to control the explosion of budget deficits.

Throughout the last decade budgetary issues have dominated the national political agenda as the deficit has skyrocketed to previously unimaginable levels. In this important book, John Gilmour traces the continuing quest of Congress over the last fifteen years to reform its budgeting system in the hope of producing better policy. He shows that the enactment of the Congressional Budget Act of 1974 and the introduction of the reconciliation procedure in 1980 have produced a budgetary system in which congressional majorities can get what they want, provided only that they can agree on a comprehensive budget policy. From his thorough analysis, Gilmour concludes that, while the reforms have not produced balanced budgets, they have eliminated procedural obstructions to the adoption of a coherent budget.

New budget procedures have transformed the way Congress works. Before the reforms of 1974 and 1980, Congress had an extremely fragmented, disintegrated budgetary system in which the budget emerged almost haphazardly from the independent actions of numerous committees. Gilmour shows that reconciliation procedures in the budget process makes total revenue, total expenditures, and the size of the deficit matters of deliberate choice, consolidating decisionmaking to an extent unprecedented in the history of the modern Congress.

Yet, despite the striking structural and procedural changes, and despite its highly majoritarian features, the budget process has failed to reduce dissatisfaction with congressional handling of money. Deficits have been larger, not smaller, and overall spending has gone up. Gilmour deftly shows that the massive budget deficits of the Reagan years were due primarily to the failure of the House, the Senate, and the President to agree on how to reduce spending or increase taxes enough to eliminate the deficit. Responsibility for budgetary failure, he argues, must rest with Congress and its inability to reach consensus, not on the new budget process, which, given what we can expect from procedural change, has been quite successful.

About this title

About the Author

John B. Gilmour is Assistant Professor of Political Science at Washington University.

Excerpt. © Reprinted by permission. All rights reserved.

Reconcilable Differences? Congress, the Budget Process, and the Deficit

By John Gilmour

University of California Press

Copyright © 1990 John Gilmour
All right reserved.
ISBN: 0520067789


Introduction

In its dealings with budgetary issues since 1980, Congress has acted uncharacteristically, upsetting longstanding expectations and contradicting contemporary theories of congressional behavior. Members of Congress are seekers of reelection, we are told, and the quest to retain their offices leads them to decentralize the organization of Congress because, through their work in committees, representatives can best engage in the activities most likely to get them reelected. In policy making we have come to expect Congress and its members to favor legislation that confers tangible benefits upon constituents and districts, while scrupulously avoiding choices that impose costs or hardships directly upon constituents.

Despite these widespread expectations, members of Congress have undermined their committee system by developing an overarching, all-encompassing budget process that allows congressional majorities to exercise an unprecedented degree of control over committees. Moreover, since 1980 Congress has come to rely on budgetary negotiations and decision making that take place largely or entirely outside the normal committee structure of Congress. In some cases the budget process has

enabled congressional floor majorities to adopt comprehensive budgets on the floor and to enforce their preferences on reluctant committees. In other cases party leadership and committee chairs have agreed on the general outlines of budget policy and used the budget process as a means of implementing these group decisions. Either way, the budget process disrupts the ordinary sequence of the legislative process. Normally the committees go first, determining their own agenda and presenting legislative proposals to the rest of the chamber. Under the new budget process entities outside committees—whether gatherings of committee chairs, summit meetings, or committed majorities—effectively can set the agenda for committees and direct them to draft spending resolutions or tax increases.

Two episodes from recent history suggest the nature of the new budgetary order in Congress. First, in 1981, the initial year of the Reagan presidency, a unanimous Republican party in the House was joined by a substantial number of "boll weevil" Democrats; they succeeded in enacting the president's budget recommendations in their entirety, despite the objections of committees with jurisdictions over programs and despite the best efforts of the majority party leadership to thwart the administration's budget proposals. Republicans were able to achieve this remarkable feat only because of the budget process, particularly the new "reconciliation" procedure, which enormously consolidates congressional procedure and reduces the influence of committees.

Second, spurred on by the Black Monday stock market crash of October 19, 1987, in which the Dow Jones average fell by more than 500 points in one day, Democrats and Republicans of both the House and the Senate met with leaders from the administration and negotiated

a package of deficit reductions worth some $30 billion. Committees in both chambers then proceeded to draft legislation implementing the decisions reached in the interbranch "summit" meetings. Such summit meetings, almost commonplace in the 1980s, were basically nonexistent before 1980. The initiation of reconciliation is linked with that of interbranch budgetary negotiations: reconciliation allows committed floor majorities to impose their will on committees, making it possible to enforce negotiated agreements. Without an enforcement device, it makes little sense to negotiate agreements.

These developments contrast starkly with Woodrow Wilson's classic discussion of Congress. A century ago, Wilson asserted that Congress conducts its "business by what may figuratively, but not inaccurately, be described as an odd device of disintegration ." In Wilson's view, Congress qualified as "disintegrated' because its work was conducted by the parts—the committees—and not the whole. "Congress in session," he continued, "is Congress on public exhibition, whilst Congress in its committee-rooms is Congress at work." Furthermore, he wrote, "the chairmen of the Standing Committees do not constitute a cooperative body like a ministry. They do not consult and concur in the adoption of homogeneous and mutually helpful measures; there is no thought of acting in concert. Each committee goes its own way at its own pace."1 Subsequent observers have seen little to cause them to disagree with Wilson's assessment. Innumerable observers of Congress have found it to be a committee-centered body in which negotiations are conducted in committee and important

Woodrow Wilson, Congressional Government (Gloucester, Mass.: Peter Smith, 1973), chap. 2, pp. 57–98.

decisions are not made on the floor. Authors often condemn the fragmented structure of Congress; sometimes they applaud it, and occasionally they are even ambivalent. But whatever view they take of fragmentation and committee autonomy, they do not dispute their existence.

There has also been common agreement on congressional policy-making tendencies. At least since Schattschneider wrote about the politics of the Smoot-Hawley tariff, scholars have contended that Congress favors narrow, assertive interests, over broader, less well-mobilized interests.2 This tendency manifests itself in the congressional enthusiasm for water projects and public works,3 agriculture subsidies, food stamps,4 merchant marine subsidies, tariffs,5 tax exclusions,6 veterans' benefits, and Social Security.7

But in 1980, an election year, Congress did the unthinkable when it voted to increase taxes and cut spending. In 1981 Congress passed the largest spending cut ever enacted. In 1982 Congress defied conventional wisdom

E. E. Schattschneider, Politics, Pressure, and the Tariff (New York: Prentice-Hall, 1935).

John A. Ferejohn, Pork-Barrel Politics: Rivers and Harbors Legislation, 1947–1968 (Stanford: Stanford University Press, 1974).

John A. Ferejohn, "Logrolling in an Institutional Context: A Case Study of Food Stamp Legislation," in Congress and Policy Change , ed. Gerald Wright, Leroy Rieselbach, and Lawrence Dodd (New York: Agathon Press, 1986), pp. 223–253.

Schattschneider, Politics, Pressure, and the Tariff.

Stanley Surrey, "How Special Tax Provisions Get Enacted," Harvard Law Review 70 (1957): 1145–1182. Of course, the tax reform of 1986 suggests that tax politics is not necessarily controlled by those seeking tax expenditures. But the story of the 1986 tax bill fully confirms the view that members of Congress cater to special interests. Jeffrey Birnbaum and Allan Murray, Showdown at Gucci Gulch (New York: Random House, 1987).

Martha Derthick, Policymaking for Social Security (Washington, D.C.: Brookings Institution, 1979).

when it cut spending and enacted the largest tax increase in history. Normally we expect Congress to pass difficult legislation only with presidential support, but in passing the 1982 tax bill, the Tax Equity and Fiscal Responsibility Act, Congress and the president reversed roles, as the legislative branch persuaded an otherwise reluctant executive to go along with a large revenue increase. Again in 1983, 1984, 1985, and 1987, Congress passed legislation to cut spending and increase taxes.

Congress has achieved these perverse results by means of its budget process, enacted first in 1974 and variously strengthened in subsequent years. The overall effect has been to centralize congressional handling of the budget, increase the influence of congressional floor majorities, and reduce the autonomy of committees. The heart of the budget process has been the reconciliation procedure, first employed in 1980. Reconciliation, a revolutionary tool, enables congressional majorities to overcome barriers to swift and comprehensive action, dramatically reduces the long-standing capacity of committees to block the legislative desires of majorities, facilitates intercommittee negotiations, and, perhaps more important, increases the probability that the results of negotiations will be implemented. By means of reconciliation, congressional majorities can direct committees to reduce spending on the programs in their jurisdictions. It significantly reduces the virtual veto power committees have had over changes and reductions in entitlement programs, and this rearranges the balance of power between committee and chamber or between "faction' and "majority." Not in the past hundred years have majorities been so favored by congressional procedure and organization. Without the budget process, the budget cuts and tax increases enacted in

1980 and subsequent years almost certainly would not have been passed. Given what we have come to expect from Congress, this is truly, as James Jones (D-Okla.) claims, "the most bizarre way to legislate."8

New procedures do not, of course, appear of their own accord; rather they are adopted by Congress to enable its members to achieve purposes considered unattainable under previous arrangements. Procedure does not itself determine policy; rather it is the means by which members' preferences are translated into actual legislation, an intervening variable that influences and shapes the translation of members' policy preferences into legislation. Procedure can warp and modify the extent to which legislation reflects the preferences of representatives, but it cannot cause the enactment of legislation that members do not, in some sense, desire. Members can and do change the procedure of Congress when they perceive that it obstructs their will or otherwise produces undesirable consequences.

In this book, legislators are seen as complex individuals with conflicting preferences. They are concerned with both particular programs, especially those of disproportionate benefit to their own constituents, and such issues as the size of the budget, its distribution among programs, the size of the deficit and its impact on the economy, and the size of the total public debt, even though such issues may not be of direct electoral benefit and even when these goals interfere with the quest to obtain tangible benefits for their constituents. Legislators want more spending for their constituents, but they also want to balance the budget. Budgetary procedure mediates between the preferences of legislators

Congressional Record, daily edition (June 25, 1981), p. H3390; hereafter cited Cong. Rec.

and their choices, helping to determine which preferences will be manifested in a given decision. A budgetary procedure that focuses more attention on the size of the budget and less on the components tends to elicit member preferences for lower spending. A procedure that focuses attention on particular programs tends to elicit member preferences for more spending. In budgetary matters, how a question is posed largely determines the answer given; consequently, budgetary procedure is of tremendous importance in "framing" issues.

Members of Congress recognize the impact of different procedural arrangements on their behavior. Consequently, when members discover that the budgets enacted by Congress diverge significantly from what they want, they will attempt to set matters straight—not by voting directly for a more suitable budget, but by changing the procedures under which they consider budgetary issues. This happened in 1974 and 1980: Congress found itself incapable of adopting acceptable budgets under its existing budget process, and so it amended its procedures in an effort to produce better budgets.

Since 1974 members of Congress have been seeking to create a set of budget procedures that will result in enacting a satisfactory budget. In this quest, they acted on the belief, widely shared among political scientists and other observers of Congress, that a major source of their problem was a budgetary organization and procedure that fragmented budgetary deliberations. By distributing power over spending to many committees and subcommittees, Congress gained considerable control over the parts of the budget but lost sight of the whole. According to this interpretation of congressional incapacity, the proper solution was to reconstitute congressional ability to control the budget as a whole.

Budget reforms have introduced procedure and organization that enable Congress to adopt a plan to balance or do anything else with the budget, should only members agree on such a plan. That cannot be said of any previous budgetary arrangements in Congress, which could and did prevent enacting coherent budget policy in Congress. The ability to adopt and implement a budget plan in Congress may seem to some a minimal or trivial accomplishment, but it is without precedent in the annals of the modern Congress. In this sense—political or structural—I would argue that the budget process has been a success. This book documents and explains political and structural changes that have taken place in Congress in the 1980s as a result of the budget process.

The magnitude of change has been difficult to appreciate because of the concurrent rise of extremely large budget deficits, which have arisen and persisted despite the apparent opposition of nearly every member of Congress and the president. A casual examination of the history of budget deficits and budget reform might lead one to believe that budget reform encourages not increased congressional control of the budget, but instead large deficits. In the twenty years before the adoption of the Budget Act in 1974, deficits were common but normally small, and debt declined continuously as a percentage of GNP throughout this period (see Figures 1 and 2). But soon after implementing the budget process the deficit began regularly to exceed $50 billion, and debt ceased to decline as a percentage of GNP. Then, after the process was significantly strengthened in 1980 through introducing the reconciliation procedure, the deficit promptly surpassed first $100 billion and then $200 billion. If correlation could be interpreted as causation, the budget process would be considered one of the great catastrophes

Figure 1.
Federal Budget Deficits, FY 1967–1987

Figure 2.
Total Federal Debt as a Percentage of GNP, FY 1963–1985

of all time because efforts to make it stronger have consistently been accompanied by increases in the deficit.

Observers often dismiss the budget process as ineffective and interpret the fantastic increase in the deficit

during the life of the budget process as evidence of failure. President Reagan called the process "a sorry spectacle … a magic show. It's wink and blink; and smoke and mirrors; and pulling rabbits out of hats; but almost all that ever comes up are designs to hide increases for special interests."9 Detractors point out that Congress, faced with $200 billion deficits "as far as the eye can see,"10 passes spending cuts of only $10 billion or even less. Furthermore, to produce this morsel of savings the budget process drags on for months past supposed deadlines, disrupts normal legislative activity, compels reliance on continuing resolutions rather than normal appropriations bills, and generally turns Congress inside out.

Assessing the impact of a procedural change solely or primarily by means of budgetary outputs grossly oversimplifies the relationship between procedure and outcomes. The massive deficits of the Reagan era and the frustrating inability of Congress and the president to eliminate them do not indicate procedural inadequacies in Congress as much as a failure of the House, the Senate, and the president to agree on a specific means of reducing the deficit. Both the House and the Senate have proposed major deficit reduction plans that have stalled because of either an inability of the two chambers to agree or threatened presidential vetoes. Likewise, the president has proposed significant cuts in domestic programs, but he has been unable to convince Congress to enact them. The problem is that neither the White

Reform of the Federal Budget Process , Hearings before the House Committee on Government Operations, 100th Cong., 1st sess. (USGPO, 1987), p. 195.

David Stockman is responsible for this unsettling description of the budget dilemma. The Triumph of Politics (New York: Harper & Row, 1986), p. 370.

House, the budget committees, nor anyone else has been able to devise a plan to reduce the deficit that will satisfy both chambers of Congress and the president. If and when that plan appears, the budgetary procedure of Congress will facilitate its enactment into law. We have witnessed less a failure of the budget process than a lesson in separation of powers. Overcoming problems like these demands reducing conflict in government, not tinkering with procedures.11

Similarly, observers take the passage of Gramm-Rudman, the automatic budget balancing bill, as evidence of the failure of the budget process. Frustrated with the persistence of huge deficits, Congress twice adopted measures that set mandatory deficit reduction targets and required automatic reductions in spending if Congress was unable to meet deficit targets. In fact, Gramm-Rudman neither subverts nor replaces the budget process; indeed, it complements the process well. The threat of large, across-the-board reductions in all programs, except a handful specifically exempted, was intended to create a strong incentive on the part of Congress and the president to agree on a deficit reduction package. When and if such deficit reduction packages are negotiated, the reconciliation procedure is nearly the only practical, workable means of implementing them.

The budget process should enable Congress to exert control over the level and growth of spending where there is a clear preference to do so. This it has done. Even though the budget deficit has often been huge since

See James L. Sundquist, Constitutional Reform and Effective Government (Washington, D.C.: Brookings Institution, 1986), who argues for lessening separation of powers on the grounds that it will reduce stalemate.

Figure 3.
Federal Outlays Less Defense, Social Security, and Interest as a Percentage of GNP

1974, it nonetheless appears that congressional behavior in some respects has been very responsible. An examination of expenditure growth from the 1960s through the 1980s suggests that Congress has exerted rather tight control over large portions of the budget following the adoption of the Budget Act. Since 1974 spending has continued to grow in relation to Gross National Product. But if we exclude three especially high priority components of the budget—defense, Social Security, and interest on the national debt, all of which have deliberately been protected from budgetary control—we can see evidence of congressional restraint. Figure 3 shows federal outlays, minus defense, Social Security, and interest, as a percentage of GNP. For twenty years prior to FY 1976 the remaining components of the budget rose rapidly and continuously in relation to GNP.

However, after instituting the budget process there has been no growth and even a small decline. An examination of spending in the same budget functions expressed

Figure 4.
Outlays Less Defense, Social Security, and Interest, in Constant 1967 Dollars

in constant 1967 dollars shows a steady increase prior to FY 1976, but only a very gradual increase thereafter (see Figure 4). The exempted budget functions are very large, but those remaining include all other payments to individuals, Medicare and Medicaid, public works, civil service compensation and retirement, veterans' benefits, and so on. In these areas of the budget, at least, a strong tendency toward growth has been countered, and spending has not been out of control. In the case of Social Security and defense, there has been a strong consensus that growth should occur. A budget process cannot, and should not, obstruct the will of Congress. But where Congress has willed restraint, it has been able to achieve it through the process. These data pose a significant challenge to critics who blithely dismiss the budget process as ineffectual.

Chapter 1 of this book studies the background of the Budget Act. In the years prior to adopting the Budget

Act, Congress was continually of two minds over the budget, voting for both more spending on particular programs and a lower overall total. The chaotic situation thus engendered led to the adoption of the new process.

Chapter 2 discusses the budget process and how it addresses the problems discussed in the first chapter. I argue that by creating a more consolidated budget process, involving the simultaneous consideration of both the parts and the whole, the new process tends to discourage the flip-flop characteristic of the preceding years.

Chapter 3 shows how the actual use of the budget process and how the introduction of reconciliation in 1980 have caused a major transfer of power out of committees. I argue that power in the budget process is not exercised by the normal legislative committees, or even by the budget committees, but rather by the majority coalitions that form to pass budget resolutions. Insofar as majorities are able to agree on policy, the budget process with reconciliation allows them to get their way. This is a degree of majoritarianism unknown in Congress since the days of Joe Cannon.

Chapter 4 examines the impact of the budget process on congressional committees. Formerly committees would "go their own way at their own speed." Under the budget process, however, congressional committees find their actions constrained by an array of scheduling and reporting requirements, as well as by spending ceilings and required reconciliation legislation in conformity with a budget resolution. Committees lose much of their autonomy and become part of a more tightly integrated Congress.

Chapter 5 discusses the Gramm-Rudman phenomenon.

In 1985 Congress enacted a law requiring the budget to be balanced by fiscal year 1991 and authorizing the president to withhold, or "sequester," sufficient funds to achieve that goal. Congress resorted to such a radical solution to the problem of persistent deficits due to the unwillingness of the president and Congress to come to terms on a plan to produce lower deficits. Through the experience of Gramm-Rudman we can see more clearly why the budget process, despite its marvelous majoritarian features, has not produced more nearly balanced budgets. President Reagan insisted on maintaining low tax rates and high defense spending, while Democrats in Congress wanted to cut defense, increase taxes, and protect domestic programs. They could not agree on a course of action, and so the budget process could be of little use. Gramm-Rudman was a plan to force consensus by threatening massive and destructive program cuts in the absence of action to reduce the deficit. By the end of the Reagan administration it had done little to force consensus.

Continues...

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Edition details

• Publisher: University of California Press
• Publication date: 1990
• Language: English
• ISBN 10: 0520067789
• ISBN 13: 9780520067783
• Binding: Hardcover
• Number of pages: 272