Executive Policymaking. Andrew Rudalevige
not by individual member, allowing members to make difficult compromises without public vilification by opponents.
Although restoring the regular order to the appropriations process would be salutary, regular appropriations now constitute an increasingly smaller portion of total spending, and reducing expenditures in discretionary spending will not significantly reduce the deficit or decrease the national debt.
Continuing Resolutions, Shutdowns, and the Debt Ceiling
Constitutionally, all agencies must be funded through appropriations bills passed by Congress; when it cannot agree on appropriations for one or all of the twelve appropriation bills, Congress must pass continuing resolutions (CRs) to keep agencies funded. These laws are stop-gap measures allowing the agencies to continue operating, generally at the previous year’s levels. OMB strictly enforces the spending limits specified in the continuing resolutions, often a certain percentage of agencies’ previous fiscal year appropriations; no new programs can be undertaken. Political polarization and the other factors just discussed have resulted in increasing use of CRs, which (along with sequestration) are extremely disruptive to executive branch operations.
Since passage of the 1974 Budget Act, all regular appropriations have been enacted before the beginning of the fiscal year only four times: 1977, 1989, 1995, and 1997. Since 1997, the average annual number of CRs enacted is six, their coverage averaging five months. In 2002, 2011, and 2013, some CRs lasted for the full year.73 The continuing resolution passed in March 21, 2018, totaled $1.3 trillion and was 2,322 pages long.74 Continuing resolutions and omnibus bills decrease budgetary transparency, disrupt federal agencies, and lead to less deliberative policy decisions. When continuing resolutions run out without an appropriation, governmental programs are further disrupted by government shutdowns.75
The Antideficiency Act (31 U.S.C. § 1341) prohibits government employees from obligating or spending funds that have not been appropriated. Thus, when the fiscal year begins without the passage of an appropriation or a continuing resolution, affected agencies must begin the shutdown process. Before the 1980s, there were occasional lapses in appropriations, but they did not stop agencies from carrying out their functions. During the 1980s, gaps in funding with no continuing resolution occasionally entailed the shutdown process for those agencies that had not been funded, though only for several days. During government shutdowns, the power of OMB is enhanced, since it must decide which programs and personnel are essential for the protection of life and property and, thus, must continue to operate during shutdowns.
In 1995, however, the lack of agreement on appropriations between Bill Clinton and the Republican Congress resulted in a shutdown that lasted twenty-one days (after a previous six-day shutdown), and in 2013 Republican attempts to stop parts of the Affordable Care Act resulted in a sixteen-day shutdown. In 2018–2019, when President Trump did not get sufficient funding for his promised “wall” along the border with Mexico, 800,000 federal workers were furloughed for thirty-five days.76
During shutdowns, those employees in affected agencies who are deemed by OMB to be essential for the protection of life and property still must continue doing their work, though these “excepted” employees do not receive pay, and other furloughed workers were forbidden from reporting for work. The rules OMB uses are based on the Antideficiency Act and subject to differing interpretations in different administrations.77 As the 2018–2019 shutdown dragged on, the Trump administration ordered OMB to reinterpret its policies to allow workers to return to perform functions that were having a highly visible impact; for example, to process tax refunds, to clean up national parks, etc. None of the workers in the affected agencies received their pay during the shutdowns, though Congress appropriated their back pay after the shutdown. Government shutdowns disrupt the agencies that implement programs; they waste resources; and they have serious economic consequences. CBO estimated that the 2018–2019 partial shutdown delayed $18 billion in federal spending and cost the economy about $11 billion.78
In addition to shutdowns, threats to not increase the debt limit further increase budgetary uncertainty. The statutory limit on the national debt was created in 1917 in reaction to the need to provide continuing funding for World War I. Before that, Congress had to pass separate authorizations when additional borrowing was needed, in order for the Treasury to borrow money. In contemporary times, however, the statutory debt limit has been used as a “fiscal suicide vest” in which the full faith and credit of the United States is put at risk for one party to extract concessions on fiscal policy. Treasury Secretary Jack Lew observed: “the debt limit has morphed into a weapon that irresponsible actors in Congress can wield against our economic well-being.”79
From 2011 to 2019 the debt limit was approached several times. In these cases the Treasury Department shifted cash balances and took extraordinary measures (that is, shifting funds among accounts; for example, from Social Security and Medicare trust funds) to pay its ongoing expenses. In the final resolution of each of these disputes, Congress suspended the debt ceiling until a specific date, when a new round of negotiating over fiscal policy had to begin.80
Permanent legislation could provide for automatic increases in the debt ceiling, allowing the United States to pay the debt it has incurred. But some members of Congress have refused to pass such legislation to be able to hold the full faith and credit of the United States hostage to get their way on policy issues. Automatic CRs would deprive some members of a powerful tool to get their way. The problem, of course, is that in such hostage showdowns, the hostages (that is, U.S. citizens, the full faith and credit of the U.S. government, and the economy) suffer.
The Rise of Mandatory Spending
Funds that are provided through the appropriations process are considered discretionary, or “controllable,” and must be passed annually. Mandatory, or “uncontrollables,” spending is authorized by substantive committees and is not subject to the regular appropriations process. To reduce mandatory spending, which comprises most of federal spending, Congress must pass new legislation that changes the level of benefits and/or the number of beneficiaries in entitlement programs (or increases offsetting collections netted against that spending).81
The largest entitlement programs are Social Security (about 24 percent of federal spending) and Medicare/Medicaid (about 27 percent of federal spending); their costs are increasing rapidly due to an aging population.82 Other mandatory spending includes government retirement programs, unemployment insurance, and the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps). These types of uncontrollable, mandatory spending amounted to 63 percent of total outlays in fiscal year 2017. In addition, interest on the national debt, which amounted to about 7 percent of annual spending in 2017, must be paid, leaving discretionary spending at 30 percent of outlays. In 2018, CBO projected that by 2028 mandatory spending would be 64 percent of outlays with net interest of 13 percent, leaving discretionary spending at 23 percent (table 2-6).83
Although defense spending is technically discretionary, spending has been increasing steadily and is unlikely to be cut; in 2019, it was more than $700 billion and amounted to more than half of all discretionary spending. The total of mandatory spending, interest on the national debt, and defense spending amounted to about 85 percent of the federal budget. Without cuts to the defense budget, by 2028 nondefense discretionary spending (that is, most of what the federal government does) will shrink even further from its 2018 level