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Time to restore integrity in the budget reconciliation process

Time to restore integrity in the budget reconciliation process
© Greg Nash

The budget reconciliation process was first used in 1980 to facilitate difficult choices to address deficit and debt levels. Bipartisan concern regarding the finances of the federal government increased when the level of debt exceeded $1 trillion and the ratio of public debt to gross domestic product passed 40 percent the next year.

Unfortunately, policymakers started to lose fiscal sanity several decades later. The total federal debt is now approaching $30 trillion, the ratio of public debt to gross domestic product exceeds 100 percent, and both measures are rising. It is true that interest rates are artificially very low, however, they are forecasted to rise in the future.

The budget reconciliation process is a means to expedite consideration, avoid filibusters, and provide for a simple majority vote in the Senate. In the 1980s, Robert Byrd led efforts to prohibit amendments that increase deficit or debt levels, and preclude consideration of key Social Security reforms and other extraneous items in the process.

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The process worked well during the 1980s and 1990s. However, both the parties have abused it in recent decades. Republicans have used it to cut taxes, while Democrats have used it to increase spending. The result was to significantly increase our deficit and debt burdens. Though the current budget reconciliation rules prohibit amendments that increase deficit and debt levels, they do not prohibit any original package that would increase deficit and debt levels. This loophole makes no sense.

The federal government was on an unsustainable fiscal path before the coronavirus hit. It is now in much worse shape thanks to major spending initiatives over the last year. All the legislation related to the pandemic in 2020 passed using regular rules and with significant bipartisan support. However, the American Recovery Act this year passed on a straight party line vote using the budget reconciliation process, and its hefty $2 trillion cost was simply charged to the national credit card.

In addition to abusing the budget reconciliation process, politicians have violated “truth in advertising” principles by naming bills and pushing new legislation in ways that do not represent their true nature and intent. For instance, the American Recovery Act was aggressively sold to the public as an emergency coronavirus relief legislation when, in fact, most of the related spending did not meet that specific definition.

The proposed “infrastructure” initiative from the administration includes many items that are not traditional federal infrastructure projects and is evidently just the first installment. In fairness, unlike other coronavirus relief legislation, the administration proposes tax increases on business and the wealthy to pay for a portion of the related cost.

The lack of integrity in the narrative reduces public trust and confidence in government. Moreover, while additional investments in infrastructure are needed and would result in some job gains, escalating debt burdens are likely to result in considerable pain over the long term. History shows that excessive rising debt levels will likely result in less job opportunities, lower economic growth rates, increased interest and inflation rates, and an unwanted decline in the value of the dollar over time.

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This economic decline cycle is likely to be exacerbated unless we take steps to address our structural deficits after we defeat the coronavirus. The Federal Reserve also has to discontinue buying trillions in debt and engaging in other activities that give an excuse for Congress to be even more fiscally reckless given artificially low interest rates.

It is time to restore the budget reconciliation process as a critical means to facilitate decisions in connection with fiscal policy choices that, in the aggregate, will clearly reduce deficit and debt levels. Additional reforms are needed to fix a broken system. The debt ceiling limit can be repealed and replaced with vital targets and automatic enforcement mechanisms tied to the ratio of public debt to gross domestic product.

Legislation to address the sunset of the debt ceiling limit this summer is an opportunity to enact needed reforms. The next budget reconciliation process should also include a fiscal sustainability commission tasked with actively engaging the public and making its package of fiscal policy and budget process recommendations that would be debated and voted on in Congress. It would be designed to cut down debt levels to reasonable and sustainable levels over time, which is consistent with the original intended purpose of the budget reconciliation process. Other focused panels such as those in the Trust Act deserve serious consideration.

It is time to restore integrity to fiscal policy and the budget reconciliation process. Our elected officials must wake up and properly discharge their stewardship duties for our country both now and for future generations. After all, despite what some leaders may believe, the United States as a nation is not excused from the laws of prudent finance.

David Walker served as former comptroller general of the United States. He is a distinguished visiting professor with the United States Naval Academy.