Seeing Red  

The federal budgeting process is broken.

Former lawmakers and budget office leaders know it, current negotiators on Capitol Hill know it, a whole slew of good government groups know it and perhaps most of all, federal agencies know it.

Under a process established in 1974, the president submits a budget proposal to Congress in February and the House and Senate each pass their respective blueprints in April. They go to conference, set the top-line spending levels, and the appropriations committees delegate that money to agencies in 12 separate bills before the annual August recess.

That sounds nice in theory, but it has not happened that way since the Clinton administration. Instead, political dysfunction has created a never ending loop of showdowns and shutdowns, last-minute deals and shortsighted agreements. Political sideshows have sidelined accountability.

Calls for a return to regular order come from all sides of the political spectrum, but none have been able to resolve the cycle of ineffective governing. The current budget entropy has diverted agencies from mission-critical business and long-term planning, and requires them to focus instead on shutdown contingency planning.

And when a process that is supposed to take months unfolds in a matter of days, mistakes are inevitably made and wasteful spending is overlooked. In a budget of more than $1 trillion, there are initiatives that “either deserve to be, objectively, raised because they are important programs, or reduced because the program is no longer needed,” says Shai Akabas, the associate director for economic policy at the Bipartisan Policy Center.

Continuing resolutions—the stopgap funding mechanisms that Congress has increasingly turned to in recent years after failing to enact regular spending bills—rob lawmakers of their responsibility to engage in the annual budget process entirely. Instead, funding is blindly continued at the previous year’s level. Nothing new is authorized; nothing that has outlasted its utility is terminated.

With each short-term agreement comes the specter of a shutdown, which agencies repeatedly have to worry about and plan for. Alice Rivlin, director of the Office of Management and Budget under Clinton, said the ever-shortening length of continuing resolutions amplifies the havoc caused by a disruptive budgeting process. In fiscal 2011, for example, Congress passed seven separate stopgap bills.

“You don’t know how long you can plan for,” Rivlin says. As agencies plan for funding lapses, they must decide which programs will continue to operate during a shutdown. That process is not only time-consuming, but leaves much up to the discretion of agencies. Agency planners work with OMB and the Justice Department to avoid Anti-Deficiency Act violations in which spending obligations exceed appropriations, but there is no third-party oversight of that process.

Then there’s the matter of which employees are necessary to keep those programs up and running.

John Cooney, who was deputy general counsel at the Office of Management and Budget during the Reagan administration, says there is no set enforcement mechanism to guarantee anyone working during a shutdown is truly essential to protecting life or property. Accordingly, agency and department shutdown plans have varied wildly from one threat to another.

When Congress eventually gets its act together, it generally agrees to an omnibus measure, lumping all elements of federal spending into one bill.

“Rolling appropriations bills together into one massive package under the threat of government shutdown is concerning because it doesn’t allow for close scrutiny of where taxpayer dollars are going,” says Americans for Prosperity, a conservative group aligned with the tea party.

“It’s very hard to make rational, long-term decisions for the budget when you’re making decisions at the 11th hour,” says Akabas. Often, he adds, whatever is on the mind of the lawmakers or staffers putting the final touches on a compromise deal is what makes it into the bill. “That’s not the best way to be making policy decisions,” he says.

Cooney agrees, adding that spending choices made under the pressure of a confined schedule are “much less efficient than they otherwise would have been.”

It is, of course, difficult to be a stalwart protector of the efficient spending of taxpayer dollars when the timeline is compressed. When a CR erases the ability to plan for a pending funding increase for a certain program, decisions are rushed and prudence is sacrificed when that funding finally arrives, budget experts say.

Transparency advocates theoretically have scored a major victory in the budgeting process in recent years because lawmakers have outlawed “earmarks” that drive federal dollars to legislators’ home states or districts. But banning the direct funneling of money by the legislative branch has simply shifted such spending decisions to the executive branch. And with agency decision-makers forced to allocate new monies in a shorter period of time, it’s dubious how much more efficient that spending has become. It also could increase federal officials’ vulnerability to “lettermarking,” the new earmarks workaround in which lawmakers lobby agencies to send money to their constituents.

Many in Congress and on the campaign trail have heralded a return to the regular budget order as an important step to “fixing Washington,” but few have shown a determination to turn their rhetoric into action. Until that happens, political ideology will continue to trump effective governance, and the process of spending the government’s money cannot be scrutinized by the American people that supply it.