Current events and a recent stop-gap spending bill have taken the focus off the deferred, yet not resolved, budget gridlock that has nearly led to recent government shutdowns. The Israel-Hamas war, the ongoing war in Ukraine, and the Republican Congressional Caucus’s infighting, which led to the ouster of Kevin McCarthy and the election of Speaker Mike Johnson, add even more complications to an already fraught and complex set of budget negotiations. And time is ticking, with the federal government only funded through the beginning of 2024.

Few have more insight into the workings of U.S. budget negotiations than Linda Bilmes, who served as the assistant secretary and chief financial officer of the U.S. Department of Commerce in the Clinton administration. We sat down with Bilmes, the Daniel Patrick Moynihan Senior Lecturer in Public Policy and affiliate of the Mossavar-Rahmani Center for Business and Government, amidst all of this turmoil to ask her if there is a cure for the government’s budget dysfunction? 

Q: What do you see as the major historical and present factors causing budget dysfunction in the U.S. Congress?

Linda Bilmes teaching, in a classroom settingThe budget dysfunction is both political and structural. Most people are less aware of the structural aspects of this situation.  The structural issues stem from the budget reforms of 1974, which shifted greater budgetary power from the president to Congress.  Although the Constitution gives Congress the “power of the purse,” in fact the president held the lead on budget matters from 1921 through 1974. This changed during the Nixon administration, when President Nixon defied Congress to continue funding the Vietnam War. As a result, Congress enacted sweeping reforms in the Congressional Budget & Impoundment Act which re-asserted legislative control over the budget.

Unfortunately, many aspects of the 1974 budget reforms have failed. Prior to 1974, there had never been a government “shutdown”—but since then, the government has partially shut down 22 times.  The current system is also so time-consuming and unwieldy that Congress has only passed the appropriations bills on time in four years since 1974. Instead, it has relied on hundreds of “continuing resolutions,” which simply extend the previous year’s funding. In recent years it has resorted to eventually passing gigantic “omnibus” bills which are stuffed with gimmicks and tax breaks negotiated by lobbyists.

One of the most glaring flaws in the current system is that the reforms of 1974 created budget committees, which have not accomplished their purpose. These committees are supposed to create budget resolutions that set a strategic course for revenues and expenditure on both “mandatory” spending (like Social Security) as well as “discretionary” spending, which requires annual legislation. This sounds like a good idea, but the budget committees are quite weak relative to the powerful entrenched appropriations and fiscal committees. So, this has never worked as intended.


Q: How do the complications posed by present world events, namely Gaza and the Ukraine, effect moving forward on a budget?

Congress has spent most of 2023 preventing a default on the national debt and preventing shutdowns. There’s a cost to almost-defaults and almost-shutdowns, not just in terms of the country’s credit rating and how ridiculous we look to the rest of the world, but also in the amount of time and energy devoted to simply not shooting ourselves in the foot. The global situation has shifted the mood in Congress, most members are a little worried about the consequences of putting the U.S. government in a position where our government is not operating. There is still a hardcore group of Republicans who are disruptive. But overall, the majority of Democrats are more willing to accept a compromise and most Republicans are less in the mood to kneecap the new leadership.

Regarding funding for Ukraine and Israel, I expect that eventually Congress will provide funding, but it won’t be straightforward. We’ve already seen that both the House and Senate have passed stopgap measures to keep the government running without including Ukraine and Israel.  There is strong bipartisan support for Israel in Congress, so there’s little doubt that the president’s request for $14 billion in emergency spending for Israel will pass, but the Republicans will try to separate Israel from Ukraine and may try to include some of their other priorities in the Israel bill. 

When it comes to Ukraine, it’s more complicated because the isolationist wing of the Republican party is ascendant. Mike Johnson has never supported funding for Ukraine and Trump has come out against it. Additionally, there is a “main street” factor—which is that many voters are questioning why the United States is spending so much to protect Ukraine while in their view, neglecting the problems at the U.S. border and underfunding the opioid crisis and other domestic priorities. And despite refusing to raise revenues or cut obsolete Cold War weapons programs, some Republicans will try to argue that we can’t afford to help Ukraine because of the size of the U.S. deficit.

I expect that Democrats will have to compromise on the Ukraine issue and will end up passing a bill that pays for border security, opioids, and other things in addition to Ukraine funding, maybe a bit less funding than promised, as well as much stronger oversight of the Ukraine money. But it’s possible that Republicans play games with this, by adding poison pill riders or other obstacles and that this funding is delayed for a while.

“These last-minute deals and almost-shutdowns exact a high toll. We waste a lot of money paying government employees to prepare for all kinds of scenarios, and at the same time we waste people’s time and frustrate everyone, including the public.”

Linda Bilmes

Q: Continuing resolutions and last-minute budget deals have become common. What implications do these tactics have and are there strategies to move away from them toward long-term budgeting?

I have previously proposed a number of reforms that could improve how the budget process functions, although none of these is sufficient to solve all the problems. These reforms include: adopting two-year budgeting for most of the government, strengthening the budget committees; streamlining and reducing the number of overlapping subcommittees; changing the law so we cannot default on the U.S. debt; introducing capital budgeting for agencies that have long-term capital expenditures; requiring the Defense Department to pass an audit; aligning the federal budget year with state and local governments; automatically extending last year’s budget (continuing resolutions) if Congress fails to pass a new budget; and convening a national fiscal commission to address the budget and the sustainability of critical entitlement programs.  Additionally, I would clamp down on emergency spending and use it only for its intended purpose (truly unexpected emergencies like earthquakes and new wars). We funded more than a decade of the Iraq War as an “emergency,” which allowed the Bush administration to maintain the pretense that it would be coming to an end soon, while minimizing deficits in its budget forecasts.

Photo by Chip Somodevilla/Getty Images

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