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Explaining the budget paralysis

Jul. 24, 2014 - 06:00AM   |  
By JAMES WINDLE   |   Comments
James Windle works at the National Renewable Energy Laboratory and has worked at the Office of Management and Budget, the House Committee on Appropriations, and multiple federal agencies. The views expressed are his own and do not represent those of NREL or the U.S. Department of Energy.
James Windle works at the National Renewable Energy Laboratory and has worked at the Office of Management and Budget, the House Committee on Appropriations, and multiple federal agencies. The views expressed are his own and do not represent those of NREL or the U.S. Department of Energy. (Courtesy Photo)

Budget uncertainty is the new norm in the federal sector. With the sequester and government shutdown in recent memory, it has reached the point where the possibility of the next fiscal year starting with a Continuing Resolution of a few months is a relief. Two key questions: Why is this happening in Congress and will the uncertainty ever end?

The most common explanation is to blame a political party or person. This is incomplete. Federal sector managers, executives, and contractors can benefit from looking deeper into Congress and its processes. A better understanding of the dynamics can even improve planning by setting realistic expectations for Congress.

The reality is the federal discretionary budget, which funds the federal government, has become the central battleground for the hyper-partisan warfare in Congress today.

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Before rushing to conclusions about how bad it is right now, history offers some perspective. It has never been easy for Congress to complete its work on the budget. Since 1977, only four times have all 12 appropriations bills that make up the discretionary budget passed by the beginning of the fiscal year on October 1—fiscal years 1977, 1989, 1995, and 1997, respectively.

Yet, the events over the past 24 months do suggest something is amiss in Congress.

It is a period of acutely polarized partisanship. The discretionary budget represents less than a third of federal spending. It has come to symbolize, however, the core of the debate between the two political parties on the proper role of the federal government. Congress finds reforming the tax code and mandatory spending—e.g. Social Security and Medicare—too contentious to address.

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Therefore, the appropriations bills have become a major forum for the two parties to collide on their differences.

There are a few noteworthy features to consider on how the recent Congresses approach the discretionary budget.

First, compromising on spending bills is risky. Compromise is a dirty word in a hyper-partisan environment. A conference agreement or even drafting a bill can leave incumbents vulnerable to attacks in primary and general elections by supporting the opposing party's spending priorities. It is striking how often the two chambers and the parties come together on doing nothing, usually in the form of a CR. For example, CRs are often agreed upon well in advance during election years to stay focused on campaigns rather than the controversy of appropriations.

Second, the annual appropriations bills are among the few reliable legislative actions on the calendar. Consequently, the appropriations process becomes bogged down considering amendments on the most contentious issues dividing Congress. Due to these policy riders or 'poison pills,' the leadership of the chambers sometimes withdraw appropriations bills from consideration rather than take votes that divide the party.

Finally, executive branch resiliency has enabled the approaches Congress takes on the discretionary budget. Members and staff in Congress have seen the executive branch operate under almost any circumstance. Even during the FY 2014 shutdown more than half the federal workforce continued to work as Congress agreed on a single provision for Department of Defense civilian employees. In short, the brinkmanship and politics have not caused any severe mission failure in the federal sector. An ambivalence in Congress has developed with the confidence the executive branch will find a way to get its work done.

What is next in Congress is likely more of the same. The dynamics described above are not likely to change regardless of the outcome the elections in November. The leadership of both parties in both chambers recognize the discretionary budget as a thoroughly political issue, not an obligation to complete in a timely manner.

Planning federal programs in this environment is no easy task. A new saying in Washington is that “a flat budget is the new increase.” Indeed, this is the case. The discretionary cap is $1.014 trillion for fiscal year 2015, which starts this October 1; in fiscal year 2016 the cap will be $1.016 trillion. Pressure will continue to be placed on the executive branch and its contractors to deliver more with less resources as inflation erodes the effective purchasing power of flat budgets.

Only a breakthrough grand bargain by Congress and the White House could relieve the pressure on the discretionary budget by focusing on the tax code and mandatory spending. It is difficult to imagine such a bargain given the failures of the Bowles-Simpson Commission report in 2010, and the Super Committee in Congress in 2011.

The outcome of political polarization in Congress is unintended, but it just might be that paralysis is the new government.

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