Reform 1: Enact “No Budget, No Pay”
According to Article I of the Constitution, the federal government cannot operate unless Congress appropriates money. Congressional appropriations should be based on a federal budget, and the related spending bills should be passed before the end of the fiscal year (Sept. 30th). However, in recent years, Congress has failed to pass a joint budget resolution or all of the related spending bills by September 30th. Rather, it has passed “continuing resolutions”to authorize the government to continue spending at current levels. This reform would suspend the salaries of all members of Congress, beginning on October 1st,until both houses of Congress pass a federal budget and all related spending bills.
Although appropriating money is Congress’s primary constitutional responsibility, it has failed to do so in a timely fashion. Over the past sixty years, Congress has passed all related spending bills on time only four times. In fact, Congress has not passed a joint budget at all since 2009, and for the past three years it has relied mostly on continuing resolutions.
Passing “continuing resolutions” creates waste and disruption. When Congress passes a budget, it has the opportunity to look critically at each of its spending programs and cut back on waste. Without a budget, federal agencies are unable to plan for the future and often have to halt, or accelerate programs abruptly, which can increase overall costs. Unpredictable cash flows can create situations where money has to be spent before the end of the fiscal year thus accelerating profligate spending because of the “use
it or lose it” mentality of government.
Reform 2: Recapture control over the budget
Even when Congress does pass a budget, the majority of federal spending essentially runs on autopilot. Many of the federal government’s biggest programs, such as Medicare, Medicaid, and Social Security are mandatory spending programs: Congress has no ability to budget how much the government spends on them from year
to year (for instance, Medicare spending is determined largely by the number of Americans who are eligible for and opt to receive benefits). This reform would make almost all federal programs discretionary and give Congress the ability to limit all federal spending other than Social Security and interest payments.
Politicians like to promise additional spending or tax cuts, without paying for them, or having a plan to pay for them.
Mandatory spending is projected to account for 67% of federal spending in 2012. This means that only a small portion of the budget is devoted to some of the central functions of government, including defense, foreign relations, homeland security, and law enforcement – all of which are discretionary spending.
A century ago, almost all government spending was discretionary. In 1912, the only expense Congress had no control over was interest payments.
Reform 3: Reform federal budget controls
Require any new tax cuts or spending programs to be paid for through reductions in other spending or additional revenues (Pay-As-You-Go Rules). Currently, one of the
most significant federal budget controls is the debt ceiling, which places a fixed dollar limit on how much debt the government can legally accumulate. If the debt ceiling
is not raised by an act of Congress, the U.S. Treasury loses its authority to borrow money and many government operations must be suspended. This reform would
replace the debt ceiling with “debt-to-GDP targets”, meaning that government debt would not be allowed to exceed a certain percentage of the size of the U.S. economy.
However, if government debt were to rise above debt-to-GDP targets, the government would not have to stop borrowing immediately. Instead, prospective spending
cuts and tax increases would automatically be triggered to return to the debt to a specified level within a reasonable period of time.
The United States is the only nation with a debt ceiling. Debt ceilings punish governments for past actions, causing political and economic disruption, and can create more problems than they solve.
The debt ceiling has been an ineffective way of controlling the federal debt. A budget control that shuts down government operations if it is exceeded and needs to periodically be raised by Congress is asking for a political crisis. In recent years especially, the debt ceiling has served as a political tool, rather than a fiscal control mechanism.
- 90% supported package of Budget reforms
- 95% agree that Congress should be required to pass detailed budget and spending bills on time
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