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This is the second essay in a two-part series on congressional budget policy. The first essay [ [link removed] ] details the rules governing the budget process.
For years, a veritable army of economists and others has been warning Congress that federal deficit spending is taking our country over a fiscal cliff. But are our rapidly rising debt and stubbornly high inflation mainly a consequence of broken politics or of a broken process?
Many members of Congress (and others) seem to think the rules of the game matter, and they have proposed a variety of institutional reforms aimed at fixing some of the structural flaws in the congressional budget process. However, in a world of hyperpartisan politics, are they correct? And if so, then which reforms are most likely to produce better fiscal policies, and which, if any, stand even an outside chance of becoming law?
How (Not) To Think About Institutional Reform
Given the obvious unsustainability of America’s current fiscal situation, it’s tempting to praise any proposed reform as a step in the right direction. But it’s important to remember, first, that institutional change is not always good. Moreover, because rules do not operate in isolation, even a seeming improvement in one dimension might make the overall outcome worse. In the spirit of G.K. Chesterton’s fence [ [link removed] ], we should not make changes before understanding the reasons for the current state of affairs—especially before removing impediments to “getting things done.”
Second, like a doctor prescribing medicine, evaluating the desirability of an institutional change requires a hypothesis about the underlying problem. For example, a diagnosis of political gridlock would warrant much different institutional changes than one involving faction, ignorance or irrationality. Even worse, changes to reduce one ill can exacerbate another. For example, reducing gridlock might worsen faction by reducing the incentives for cross-party negotiation, deliberative debate and consensus-building. In that sense, rather than the process being irrelevant in the face of hyperpartisanship, I worry that the broken process is helping to drive it.
Budget reconciliation, which requires a simple majority to pass the Senate, has this unintended consequence. By bypassing the Senate’s supermajority requirement, a party with control of the presidency and slim legislative majorities has the incentive to ram through its preferred policies on a party-line vote. Reconciliation transforms budgeting into a high-stakes, partisan game of parliamentary procedure. Five reconciliation bills have passed the Senate since 2010, all of which [ [link removed] ] were [ [link removed] ] on [ [link removed] ] party-line [ [link removed] ] votes [ [link removed] ]. We should instead seek to empower supermajorities of the center.
Third, institutions are not an escape hatch from the problem of politics. The public will judge any potential institutional change (and their representatives who support it) by the outcomes that such a change portends. In particular, as explained by James Buchanan and Richard Wagner in their book “Democracy in Deficit,” fiscal irresponsibility has a natural political advantage in democratic societies. Current generations reap the short-lived benefits of deficits—more government spending today—while future generations bear the burden but cannot vote. Ultimately, restoring fiscal responsibility will require the political will of lawmakers—and we citizens who elect them—to prioritize our posterity over ourselves.
While all reforms have costs and benefits, I think the following reforms are worth considering.
SUBMIT IT Act
Introduced by Sen. Joni Ernst (R-Iowa), the SUBMIT IT Act would require [ [link removed] ] the president to submit his budget request before addressing Congress in the State of the Union. As the bill text notes, presidents from both parties have often failed to deliver their budget requests on time, delaying the budget process and making it less likely that Congress will actually pass a budget.
Improve CBO Scoring Instructions
Congress could reform its scoring instructions to the Congressional Budget Office (CBO). For example, Congress requires CBO’s baseline projections to assume that almost all programs are extended and that their appropriations grow with the rate of inflation. Since higher deficit spending is thus built into the baseline, bills that raise spending by that amount are scored as not increasing the deficit. Former CBO Director Doug Holtz-Eakin suggests [ [link removed] ] changing this “current policy” approach to a “current law” approach, aligning with how CBO scores tax policy. E.g., CBO assumes that the Tax Cuts and Jobs Act will sunset as scheduled, and therefore it scores [ [link removed] ] any extensions of tax cuts without pay-fors as raising the deficit.
A second proposal for reforming CBO scoring instructions was offered by another former CBO director, Keith Hall. In a study [ [link removed] ] from the Mercatus Center at George Mason University, Hall argues for fixing the “hole” in current guidelines that prevents CBO from accurately scoring the “savings” from reductions in spending to prevent “waste, fraud, and abuse.” As Hall notes, the Government Accountability Office estimates that improper payments have cost the federal government a trillion dollars since 2020.
The Prevent Government Shutdowns Act of 2023
Introduced by Sen. James Lankford (R-Okla.), Sen. Maggie Hassan (D-N.H.) and a number of other original cosponsors, the Prevent Government Shutdowns Act would automatically [ [link removed] ] provide a continuing resolution if Congress failed to pass appropriations on time. In such an event, the government would remain open and funded at current levels. Meanwhile, until appropriations were passed, members’ government-funded travel out of D.C. would be curtailed, and (with limited exceptions) business on the floor would be restricted to appropriations.
Comprehensive Congressional Budget Act of 2024
Introduced by Reps. Blake Moore (R-Utah) and Marie Gluesenkamp Perez (D-Wash.), the Comprehensive Congressional Budget Act would amend [ [link removed] ] the Congressional Budget Act of 1974 to repeal and replace the current fragmented budget process (budget reconciliation and 12 separate appropriations bills). In its place, the bill would establish a single, comprehensive budget process. The process would put all spending and revenue on the table for members to discuss and debate.
Fiscal Commission Act of 2023
Introduced by Rep. Bill Huizenga (R-Mich.), Rep. Scott Peters (D-Calif.) and a number of other original cosponsors, the Fiscal Commission Act would establish [ [link removed] ] a congressional commission on fiscal responsibility and reform. Working with outside experts, the commission would identify policies to stabilize the debt-to-GDP ratio in the long term, as well as to improve the 75-year solvency of federal trust fund programs (such as Social Security and Medicare Part A). The commission would issue a report and legislative language to carry out its recommendations. Unlike the Simpson-Bowles Presidential Commission in 2010, the Fiscal Commission would be a creation of Congress, and legislation reflecting the commission’s recommendations would receive expedited consideration.
Responsible Budget Targets Act of 2022
Recent research [ [link removed] ] from the congressional Joint Economic Committee (which I oversaw as the chief economist for the Republican staff) finds that Congress could stabilize federal debt as a share of the economy by balancing non-interest spending with revenues. (Federal revenues predominantly come from federal taxes, such as taxes on income.) While the debt would still grow as the government borrows to pay interest on the existing debt, the U.S. economy would grow at roughly the same rate, leaving the ratio of government debt to the U.S. economy unchanged.
To that end, the Responsible Budget Targets Act was Introduced by Rep. Tom Emmer (R-Minn.) and Sen. Mike Braun (R-Ind.). This bill would amend [ [link removed] ] the Congressional Budget Act of 1974 to slow the growth of federal spending by implementing flexible budget caps, which would close the gap between current spending and revenue in about 12 years. This approach is similar to the “Swiss debt brake,” which is a provision of Switzerland’s constitution that has been successful [ [link removed] ] in restraining the growth of its debt.
Balanced Budget Amendment
Similarly, members of Congress have proposed many constitutional amendments to require balanced budgets, which all differ in subtle but important ways. Constitutional amendments are not easy to pass, since they require two-thirds majorities in both houses of Congress and ratification by three-fourths of the states. Still, the idea of amending the Constitution to require a balanced budget has a long pedigree, predating [ [link removed] ] World War II. And the idea remains popular today, with a number of proposals currently out there.
As one example, Rep. Jodey Arrington (R-Texas), who chairs the House Budget Committee, and a number of Republican colleagues introduced the Business Cycle Balanced Budget Amendment. The bill proposes [ [link removed] ] a constitutional amendment that would cap federal expenditures (excluding interest) at the level of average tax revenue from the prior three years, adjusted for population growth and inflation. Expenditures above the cap would require an “emergency” declaration by Congress, subject to a two-thirds majority of both chambers.
Likewise, Sen. Mike Braun (R-Ind.) and Rep. Nathaniel Moran (R-Texas) introduced [ [link removed] ] the Principles-Based Balanced Budget Amendment, which is similar to Chairman Arrington’s bill in spirit but less detailed. The difficulty of balanced budget amendments is the necessity of allowing flexibility for a genuine emergency (like a war) without allowing Congress to too easily “slip the cuffs” in normal times.
Strengthen the Origination and Appropriations Clauses
As discussed in my prior essay [ [link removed] ], although the Constitution requires that revenue-raising bills originate in the House, the requirement is a dead letter because the Senate has the power of unrestricted amendment and so can simply take a House bill and use it as a vehicle for its own tax proposals. Writer James J. Heaney notes that the original origination clause proposed by Elbridge Gerry specified that money bills “shall not be altered or amended by the [Senate],” and he proposes [ [link removed] ] a constitutional amendment to strengthen the origination clause.
While amending Article I, Congress might also consider strengthening the appropriations clause. In a recent Supreme Court decision [ [link removed] ], a 7-2 majority found that the funding structure of the Consumer Financial Protection Bureau (CFPB) was constitutional. The CFPB receives its funding from the Federal Reserve (not Congress), and the CFPB director (not Congress) determines the level of CFPB’s funding. To improve Congress’ control over the purse, a strengthened appropriations clause would prohibit Congress from putting an agency’s appropriations on permanent autopilot.
The Outlook for Reform
While Congress will be reluctant to take action before the election, I suspect the SUBMIT IT Act and the Prevent Government Shutdowns Act face the lowest hurdles to passage. Here’s why.
By requiring the president to submit his homework to Congress before addressing it, the SUBMIT IT Act makes a commonsense tweak without a hint of partisan tint. While the president might be reluctant to sign a stand-alone bill that conditions his ability to give the State of the Union address, the provisions could be included as an amendment to a must-pass bill. For example, Congress still needs to pass appropriations and the National Defense Authorization Act for fiscal year 2025.
While the Prevent Government Shutdowns Act makes a more substantial change to the budget process, it also has substantial bipartisan support. Republicans may be inclined to support the bill because it would help enforce regular order for the budget process. Democrats might be inclined to support the bill because it would remove the threat of government shutdowns as a negotiating chit. The bill would give each side a major policy win that (I surmise) the other side could live with.
Improvements to CBO’s scoring instructions also seem like low-hanging fruit. Changing the scoring instructions would not require an act of Congress, just the unanimous agreement of the four budget scorekeepers (i.e., the House and Senate Budget Committees, the White House Office of Management and Budget, and CBO itself). The scorekeepers are required to meet once per year. Particularly if Republicans keep the House, re-take the Senate and re-take the presidency, I could imagine the scorekeepers making these tweaks in 2025 before CBO releases its next baseline.
What about the other proposals I’ve discussed? The Comprehensive Congressional Budget Act, the Fiscal Commission Act and the Responsible Budget Targets Act are all possibilities, but because these bills would likely be more impactful for deficit reduction, they face a higher hurdle. Nevertheless, strong presidential leadership might be able to get one of these bills over the line. High inflation has dragged on President Biden’s approval rating, which currently stands at [ [link removed] ] just 36% of Americans. Lower deficits would lower inflation and presumably help buoy his approval and his prospects for re-election.
The prospects for a balanced budget amendment or reforms to the origination or appropriations clauses face even higher hurdles. That’s because the Constitution is hard to amend. The most recent constitutional amendment was ratified over 32 years ago and was originally proposed by Congress over 202 years ago. But while constitutional amendments call for patient realism, they are still worth pursuing, even if these structural reforms may not be achieved within our lifetimes. To quote the Roman poet Caecilius Statius: “They plant trees for another generation.”

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