In itself, a two-year budget cycle would do little to reduce the deficit and is no substitute for making difficult choices. As part of a comprehensive plan to reform the budget process and reassess revenue and spending priorities, biennial budgeting is a sensible reform that could result in a less time-consuming process and more opportunities for oversight.
Biennial budgeting would formalize a process that, in many respects, is already in place. This year will mark the fourth year since 2000 that the previous year's budget resolution will remain in effect because Congress has not passed a new one. Over the last ten years, the appropriations process has not once been completed prior to the start of the new fiscal year. As a result, the prior year's funding levels have routinely been continued into the new fiscal year. Many accounts are already routinely funded using appropriations that remain available for more than one fiscal year.
A two-year cycle could decrease the time Congress spends repeating debates over appropriations bills and permit more time to be spent on authorizing and oversight responsibilities. Ideally, the first session of each Congress would be spent setting priorities and establishing funding levels, and the second session would be devoted to long-term planning and oversight. A growing pile of critical Government Accountability Office (GAO) reports, and the fact that Congress appropriated $290 billion this year for programs with expired authorizations, suggest that more attention should be devoted to these activities.
Biennial budgeting could also improve the efficiency of agencies where preparing detailed budget documents has become a year-round process. If less time were spent preparing budgets, more resources could be shifted to long-term management and oversight. A two-year cycle would also reduce the pressure some agencies have to preserve future budgets by spending all of their funds by the end of each fiscal year.
The value of setting aside adequate time for the legislative and executive branches to conduct effective oversight would go far beyond the dollars saved. The fiscal challenges facing our nation require policymakers to evaluate existing programs and eliminate those that are no longer needed, ineffective, or are unaffordable during a time of trillion dollar deficits. Taking on waste is a crucial step in restoring public trust in government. Without this trust, the public will remain skeptical that tax increases or broad reforms in popular spending programs are necessary for deficit reduction.
Biennial budgeting could provide an incentive for Congress and agencies to conduct more accurate assessments of long-term funding needs. Under the existing process, the budget resolution's spending assumptions beyond the first year are often unrealistic and ignored because they are routinely revised in the next year's budget resolution. A two-year cycle with binding second-year numbers could result in more realistic assumptions and fewer opportunities for funding increases and earmarks.
A two-year cycle could limit some opportunities for using reconciliation for the intended purpose of deficit reduction. However, recent experience suggests that an annual process is more likely to be used as a procedural shortcut for tax cuts, health care reform, and other proposals that do not have a primary purpose of deficit reduction.
Implementing biennial budgeting will require a procedure for providing funding if unexpected needs arise after the budget is adopted. The current system of providing emergency funding using supplemental appropriations is a well established though flawed process. It has been abused as supplementals have routinely included extraneous items. An effective biennial budgeting proposal should include reforms to require that emergency spending be used only for legitimate emergencies -- not to simply evade the second year of the budget.
Given the current fiscal outlook, we will likely be hearing more about biennial budgeting and similar proposals. With potential benefits such as increased oversight, a more orderly budget process, and fewer opportunities for fiscal irresponsibility, biennial budgeting should be seriously considered as part of a broader package involving budget process, spending and revenue reforms. It is no magic bullet that will make deficits disappear, but it would be a step in the right direction.
Cliff Isenberg is the Concord Coalition's chief budget counsel.