Sunday, August 11, 2013

The Looming Federal Budget Crisis - Again

The federal budget process is a complicated affair but usually begins with a proposal sent to Congress by the president. Lately, however, that process has been anything but usual. As September approaches we once again face the twin issues of authorizing federal spending and raising the debt limit to pay for it.

Contrary to popular opinion, President Obama has proposed a budget, albeit sometimes late, for each year he has been in office. All of those proposals, however, have been rejected by Congress. Having refused his suggestions, the House, for most years, has then drafted its own version of the budget. Those House-originated budgets have been rejected in the Senate.

To keep the federal government functioning, Congress, with House approval, has regularly passed legislation known as a Continuing Resolution which says, in effect, “we approve budget authorization for this year at last year’s levels.” However, a continuing resolution grants only budget approval. It's not a funding mechanism. Because those resolutions approve budget amounts at current levels, which exceed current federal revenue, they also continue the budget deficit, requiring an issuance of federal debt to cover the shortfall.

Lately, this process has produced a strange result, particularly in the Republican-controlled House of Representatives. Conservative House members regularly approve continuing budget resolutions – supposedly to keep the government open – but balk at raising the debt to cover the resulting deficit created by those resolutions. This practice of saying yes on the one hand and no on the other makes for a confusing situation, one that adds a measure of uncertainty to our economy and regularly roils world credit markets. It's a dangerous situation, and one created solely by Congressional action, but I think I’ve figured out why this happens.

Members of the House of Representatives stand for re-election every two years. Most Republican seats in the House are safe from Democratic challenge. However, any budget plan that would stand a chance of gaining Senate approval would increase the debt. Voting in favor of a budget that increases the public debt would make a Republican Congressman, even from a safe district, vulnerable to attack from the right. Supporting a continuing resolution, though also increasing the debt, is a stop-gap, short-term measure that puts House members in a much more defensible position - that is, saving the government and fighting the good fight. Defunding or re-purposing programs – the real budget solution - poses a much greater risk. (Ask someone over the age of 50 about means-testing Social Security retirement benefits and you’ll see what happens when you touch a constituent's favorite program).

So, when a conservative member of Congress votes in favor of a continuing resolution, he's not thinking about sound public policy. He’s thinking instead about the next election and about protecting himself from voter backlash over cutting a constituent's favorite government program.

When he votes against an increase in the federal debt limit - an increase occasioned by the continuing resolution he just approved - he’s not taking a stance for smaller government. He's actually only protecting himself from the accusation of a challenger (a fellow conservative) who could say “you aren't conservative enough." That is, his stance on either topic - budget authorization or debt limit increase - isn’t really a substantive position. It’s actually a campaign event.

Statesmanship – taking a course of action with the good of the people in mind – is no longer a motivating factor for House members (if it ever was). Getting elected and staying in office is the sole goal. That they gamble with their personal reputations for self-aggrandizement is one thing. But risking the national credit rating for the sake of gaining re-election shows just how small-minded politics has become.