Stand-alone reconciliation must end
Beyond the most glaring problems with the budget reconciliation package currently under consideration in Congress, it also demonstrates beyond a reasonable doubt that the congressional budget process is a mess.
Under the Congressional Budget and Impoundment Control Act of 1974, reconciliation should have been enacted in June with bipartisan votes to reduce deficits. Full-year appropriations were supposed to be finalized in July, but they won’t be until at least December. By then, Congress must increase the debt limit again.
The taproot of this dysfunction is considering appropriations separately from direct (sometimes called mandatory) spending and revenue. In contrast, many states use “unified budgets” to manage all fiscal policies together. These states are empowered to adjust priorities regularly. They can make difficult-but-necessary decisions. Congress’ budget process does no such thing.
Reconciliation is wrecked
As I write in a new report, reconciliation is a twisted shadow of its purpose. Congress intended it to manage direct spending and revenue policies comprehensively, in coordination with discretionary spending, and to control imbalances. It requires a bare majority of senators instead of the customary 60 votes. Congress successfully enacted deficit-reducing reconciliation in the 1980s and 1990s.
Reconciliation started going off-track in the late 1990s. Congressional Republicans sought to return large surpluses to taxpayers instead of using them to grow government spending. That effort failed, but it set up (post-surplus) tax cuts in 2001, 2003, and 2017. Democrats gamed reconciliation for health program expansions in 2010 and alleged pandemic response in 2021.
Reconciliation is now a polarizing tool of unified government — however narrow — to force through sweeping policy changes while cutting out the minority party entirely. Proposals are pre-cooked by majority party leaders and committee chairs. Even majority party members have only as much influence as their threats to withhold votes provide in leverage. The outcome is often tenuous and poorly crafted victories.
But this is understandable. Competitive party politics and a leadership-dominated Congress mean that members mostly matter to the extent they can get majority party leaders’ blessing for their initiatives. As Rep. Tom Cole (R-Okla.) said in November 2020, “The job of the majority is to govern. The job of the minority is to become the majority.”
Unified budgets can restore sound management
Creating stand-alone reconciliation was a mistake. Congress should instead fold it into a single “unified budget” each year.
Committee organization would not change. The Budget Committees would still do a budget resolution with the support of all other committees.
The main change would happen in the House Appropriations Committee. It would assemble unified budgets by combining its appropriations legislation with reconciliation-like submissions from the other committees for direct spending and revenue policies.
In addition to proposing policy changes, authorizing committees’ submissions would include a line-item amount for each account even if a committee recommends no change. The Congressional Budget Office already produces a baseline for spending accounts, and the Joint Committee on Taxation reports on tax expenditures.
Unless Congress proposes and enacts actual changes to programs, these line items would not affect policies or take them off auto-pilot. They would simply provide context for tradeoffs and outcomes inherent in a comprehensive budget. They would also set up a floor amendment process across all areas to seek greater valued uses of resources.
Unified budgets would make annual mini-bargains possible. Tough decisions could advance along with popular defense, veterans, health, transportation, and other accounts. Once-in-a-generation “grand bargains” would not be the greatest, or only, hope for getting back on track.
Unified budgets could produce beneficial spillovers outside of the budget and appropriations process. Discussions initiated in a unified budget context could help advance program updates within authorization legislation. The ability to build ad hoc coalitions on amendments could strengthen relationships and reduce polarization within Congress.
Most importantly, unified budgets could involve all members, both in their committee assignments and through a robust amendment process on the floor. They would reduce pressure on leaders to have to save the day, and they would bring far more order and coherence to the annual process. Unified budgets would help strengthen the congressional power of the purse and restore Congress’ primacy as the federal government’s main policymaking body.
But first, stand-alone reconciliation must end. It has become a divisive tool of a self-undermining, temporary, unified government.
Instead, the annual budget process should cover all budget accounts and involve all members at multiple stages. Congress can coordinate fiscal policies only if it can review them all together.
Unified budgets can reduce polarization, improve results, strengthen Congress, and engage members in productive legislating. Let’s fix congressional budgeting to restore Congress.
Kurt Couchman is a senior fellow for fiscal policy at Americans for Prosperity.