As 2001 budget process begins, change is in the air

Today's release of President Clinton's budget request officially kicks off the fiscal 2001 budget season-and budget mavens will have more to chew on this go-around than just how Congress will respond and how the annual budget battle will play out.

Now that the Congressional Budget Office projects the federal government will run its second consecutive on-budget surplus in fiscal 2001-and continue doing so through 2015-the budget process faces a different challenge than envisioned a decade ago, when deficit reduction was the prevailing budget gospel in Washington.

The surpluses now accruing outside of the Social Security trust fund are forcing congressional leaders and budget writers to think not only about their priorities for allocating the surplus, but about the nature of the budget process itself in a post-deficit environment.

One budget tool that is continuing to change is the reconciliation process. Reconciliation was created in the same 1974 law as the current budget process to allow Congress to fine tune revenue and spending levels at the end of the fiscal year through legislation that cannot be filibustered in the Senate, according to the Senate Budget Committee's most recent version of "The Congressional Budget Process-An Explanation."

During the 1980s, the process became a way to implement comprehensive economic and budget packages.

And, as Congress and the White House made eliminating the deficit their focus, reconciliation was used to instruct specific committees to write legislation to amend existing laws to decrease spending on mandatory and entitlement programs or increase revenues by a specific amount by a date certain.

The budget committees would then package all of the legislation into one omnibus reconciliation bill for floor consideration.

But last year, when the CBO projected an on-budget surplus for fiscal 2000, the only committees to receive reconciliation instructions were the two chambers' tax-writing panels, and their instructions were simply to cut taxes.

This year, House leaders have signaled their intent to pass three separate tax bills rather than one big tax cut package, as they did last year.

But in the Senate, where the threat of a filibuster looms large and floor debate is far more freewheeling than in the House, "reconciliation protection" is considered a virtual must in order to pass tax legislation.

Still, Senate Budget Committee Chairman Pete Domenici, R-N.M., last week expressed reservations about whether the Senate could consider three separate reconciliation bills designed to cut taxes. "It's very hard to draw more than one reconciliation bill on the same subject," Domenici told reporters. "I think it's pretty much impossible."

Several House budget sources disagreed with Domenici's assessment, noting that in the 104th Congress, Congress passed three reconciliation packages for fiscal 1996: a seven-year balanced budget and tax cut plan, a Medicare reform plan and a welfare reform measure that was eventually signed into law.

Budget experts from off Capitol Hill say that regardless of whether it is used solely for tax cuts or to move complex entitlement reform packages, the reconciliation process is flexible enough to adapt to the current surplus budget forecasts.

Stanley Collender, senior vice president of Fleishman- Hillard's federal budget group (and a columnist for GovExec.com), said, "You've got a budget process that really wasn't a budget process, it was a deficit reduction process-and that problem has been solved."

Collender noted that budget law does not specify how many, or how few, committees to which the Budget committees can issue reconciliation instructions-only that they amend current laws to achieve certain mandatory spending or revenue goals laid out in the congressional budget resolution.

Collender said the reconciliation process is "still a mechanism for putting in place a big [budget] deal in one piece . But that begs the question of whether there is going to be another big deal anytime soon."

Richard May, former staff director of the House Budget Committee and now with Davidson & Co., said: "The budget process has enough flexibility to do what the leadership wants it to do. If leadership wants the process to do tax cuts only, it can do that."

May added that the deficit era reconciliation model "still has a role-it's the only way you're ever going to get committees to address how the federal government spends money. It's a vehicle to package together a number of reforms to make government work better, although not necessarily to achieve a deficit reduction goal."

Although the fiscal 2000 budget plan assumed the government would run only a small surplus outside of Social Security, May said that future budget plans written in the context of larger surpluses "could play the role of driving a government reform effort" to weed out wasteful spending and inefficiency.

Even at a time when the government is running a surplus "and everybody wants to spend it," May said, streamlining the bureaucracy and saving taxpayer dollars remains an important goal-one that reconciliation could help to achieve.