Why Obama's 'dead on arrival' budget isn't such a bad thing after all

The new budget season opened, as it typically does, on the first Monday in February with cries that the president’s $3.99 trillion budget is “dead on arrival” in Congress. That’s probably true, but it’s not as fatal as it sounds.

It’s also true that Congress hasn’t managed to pass a budget since 2010 – and that the record of success has been spotty ever since Congress established its own budget process in 1974.

But the simple fact of requiring the president and members of Congress to present public estimates of revenue and spending, debt and deficits, and for Congress to vote on them, is one of the distinguishing strengths of American democracy.

Congress can adopt the president’s budget, crib from it, or reject it outright.  What matters is that it’s the start of a process that requires Washington to take account of the overall impact of its spending on the nation’s debt and deficit.

The president has laid down his marker. Now, Congress responds. (The president doesn’t sign and can’t veto a budget resolution.)

Unlike most democracies, the US gives Congress, not the executive branch, the power of the purse. Until the mid-1880s, government agencies sent their own requests directly to Congress, bypassing the White House.

In 1921, in a bid to get wartime federal spending back in line with revenues, Congress required that presidents submit an executive budget that sets priorities for spending. FDR took up the new process with enthusiasm to fund New Deal programs. But when President Nixon found it inadequate to roll back congressional spending that he found excessive, he impounded billions of dollars that a Democrat-controlled Congress had authorized.

To counter what Democrats called “an imperial presidency,” Congress beefed up its own budget capacity. In 1974, Congress set up its own budget committees and established the nonpartisan Congressional Budget Office. With CBO, Congress no longer had to rely on data out of the White House Office of Management and Budget for budget estimates and data.

In its annual budget resolution, Congress set the top limit for federal spending and took ownership of its consequences for deficits and the national debt.

Even when the House and Senate failed to agree on a budget document, the culture on Capitol Hill began to change. From then on, no law could be voted on Capitol without taking into account the impact on deficits and, more recently, finding spending cuts to pay for it.

“Until the Congressional Budget Act was enacted, members of Congress never had to go on record on a big [budget] number, never had to vote on the total picture and take account of deficits and debt,” says Stan Collender, a budget expert and executive vice president at Qorvis MSL Group in Washington.

Subsequent budget legislation, such as spending caps and automatic cuts to control deficits (1985) and “reconciliation” rules (1990) gave a “fast track” to cut deficits, but also added to the complexity of the process.

Ironically, these fast track rules designed to cut spending quickly evolved into a fast track for boosting spending. Democrats relied on budget reconciliation procedures, for example, to pass the 2010 Affordable Care Act. Now Republicans, back in control of the Senate, are talking about using such reconciliation to roll back Obamacare, to avoid the threat of a filibuster from Democrats.

The value of that fast track is one reason that some Congress watchers say it’s likely that the Republican Congress will find a way to pass a budget resolution this year.

Another change in the offing involves the prospect that the choice of a new CBO director will come down to a policy litmus test that could damage its reputation. CBO budget director Douglas Elmendorf’s term expired on Jan. 3, but he will stay on until Congress finds a replacement. Republicans have signaled that they are not going to reappoint the director but have yet to announce their choice for a replacement.

Last month, the GOP-controlled House passed a rule requiring the CBO and Congressional Joint Committee on Taxation to take account of “dynamic scoring” when they analyze the cost of new legislation. That’s viewed as a largely partisan demand, because Republicans have long claimed that CBO scores don’t give enough weight to how tax cuts generate more economic growth and, therefore, more revenue.

Until now, the CBO has been respected on both sides of the aisle as strictly nonpartisan.

The CBO could lose a great deal of credibility and a lot of staff, if support for dynamic scoring became a requirement for a new director, says Mr. Collender, a former congressional budget staffer.

“I know a lot of senior staff that are waiting around to find out who replaces Doug, because they don’t want their personal credibility to suffer,” he says.