One of the prime purposes of the budget process created by the Congressional Budget Act in 1974 was to provide a way for Congress to have something other than an accidental role in national economic policy-making. Before then, all Congress really did was micro budgeting. No one on Capitol Hill had the responsibility to see the big picture-or how any of the individual authorizations, appropriations and tax bills fit into it.
That macro role was given in 1974 to the newly created House and Senate Budget Committees. They were charged with drafting and getting adopted an annual budget resolution that was Congress' recommendation for total spending and revenues, based on economic outlooks for the coming fiscal year. The 1974 act specifically instructed the budget committees to pay attention to the economy as a whole, and to the impact of total federal spending and taxing on it-that is, to overall fiscal policy. Micro budgeting-the individual line items-was supposed to be the sole responsibility of the authorization, appropriation and tax-writing committees.
Over the past 15 years, however, Congress's macro budgeting capabilities have become something equivalent to a vestigial organ. Once the annual process changed into Gramm-Rudman-Hollings and the Budget Enforcement Act, thought devoted to and planning for appropriate fiscal policy was replaced with blind obeisance to deficit reduction. Both the budget committees and their budget resolutions became almost totally micro oriented-which programs to cut and which taxes to raise, rather than how much deficit reduction was appropriate next year.
Today, the continuing lack of a deficit means that Congress's macro budgeting role and responsibilities are again critically important. One of the reasons the budget debates of the past two years have been so difficult is that the budget process has not been dealing with the big picture, and deficit reduction is no longer the de facto fiscal policy driving the debate over micro questions.
So how should things change? Rather than just assuming that a budget surplus is the correct fiscal policy, it would be appropriate for Congress to make some effort to determine whether that is in fact the case. With the surplus expected to keep growing, it is correct for the budget committees to address whether a bigger surplus is best given where the economy seems headed and for the budget resolutions to be drafted on that basis.
This, after all, was the traditional role of the budget committees. They not only should be ready to reclaim it, but-given the relative chaos in the budget debate the past two years-their colleagues on the other committees should be anxious for them to do so as well.
The authority to do this remains in place. Gramm-Rudman-Hollings and the Budget Enforcement Act may have amended the Congressional Budget Act and replaced many of its key provisions, but the macro function continues to exist. Before it can be revived, however, two questions must be answered.
First, have Congress's macro budgeting brain cells atrophied to the point where they cannot be used without some serious rehabilitation efforts? Does Congress's macro budgeting role have to be retaught and reinvigorated with new procedures and tools that force these big issues to be raised every year?
Second, have the political and economic worlds changed so much that others now play the macro budgeting role the Congressional Budget Act carved out for the budget committees in 1974? For example, the chairman of the Federal Reserve Board is far more visible today and his pronouncements on the economy and the appropriate fiscal policy are now better heard and respected than was the case 25 years ago. Perhaps the macro budgeting responsibilities that have informally shifted to the Fed should be formally and assigned to Alan Greenspan or someone like him.
At the very least, however, asking the macro questions once again must be a central aspect of federal budget making. And finding some answers would be even better.
Question Of The Week
Last Week's Question. The question-what is the name used in the federal budget process to describe the difference between the cost of the U.S. Mint making a coin and the amount the government collects when that coin goes into circulation-was not as easy as it seemed. Almost everyone said "seigniorage," which is the term that has indeed been used throughout history. However, Public Law 104-52, which created the United States Mint Public Enterprise Fund and significantly changed the way the Mint is funded, effectively changed the name from seigniorage to a more common word that is seldom used when talking about the federal budget: "profit."
(Admittedly, most budgeteers at the Office of Management and Budget and the Congressional Budget Office still insist on using seigniorage whenever they can get it into a conversation.)
In the interest of avoiding hundreds of protesting e-mails, "I Won A 2000 Budget Battle" T-shirts are being awarded to two people. Vladimir Vojnovich, who is with the 8th U.S. Army in Korea, was selected at random from the handful of people who responded with "profit." Jerry Hartman, who is the budget officer for the National Institute on Aging, was selected at random from the large number of people who responded with "seigniorage."
This Week's Question. You don't need to know anything about the budget to take a shot at this one. President Clinton's fiscal 2001 budget is expected to be sent to Capitol Hill on Monday, Feb. 7. What color will it be? Send your response to scollender@njdc.com by 5 p.m. on Saturday, Jan. 29, and you could win one of the all new "I Won A 2000 Budget Battle" T-shirts to wear while combing through the Clinton budget proposal for items of interest. (Note: please be as specific as possible. "Blue polka dots" will be a better answer than just "blue" if there really are dots on the cover.)