Washington Wednesday: Budget woes

MARY REICHARD, HOST: It’s Wednesday, the 28th of November, 2018. Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher. First up: Washington Wednesday.

Last February, Congress passed the Bipartisan Budget Act. It was one of several stop-gap spending measures lawmakers passed to keep the government running.

But this bill didn’t only fund the government. It also created a committee to work on reforming the process.

The panel has 16 members, a mix of Republicans and Democrats. It’s divided equally between the House and Senate. The task: to try to fix the budget appropriations problems that have plagued Washington for decades.

Senator James Lankford is a Republican from Oklahoma. He’s one of the 16 lawmakers on the special panel. Two weeks ago he spoke on the Senate floor about the nature of the problem.

LANKFORD: You see, this process that we have was started in 1974, right after Watergate, Congress created this new process with a budget, with authorizing bills, with appropriating bills, and they would all work together for greater transparency. It was a great plan on paper. But since 1974, it has only worked four times. Four times. And year after year, Americans keep saying the same thing: ‘Why isn’t the budget working again? Why is everything climbing?’ And every year Congress says the same thing: We’ll fix it next year, next year, next year, next year. At some point we have to admit it’s a bad process, and we’re not going to get a better product out of it. We have to be able to fix that process.

Since April, these lawmakers have held hearings and crafted recommendations. Those recommendations are due for a vote by the end of this week.

But Lankford is not convinced they’re going to do the job. He points out that the committee’s mandate is—quoting here—“to significantly reform the budget appropriations process.”

LANKFORD: So far, the only agreements that have been set so far have been to do budgets every two years rather than every year, but still keep reconciliation and appropriation every year, change the membership of the Senate Budget Committee, and then to add a new, optional, bipartisan budget pathway in case some future Congress has lightning strike, and they want to be able to try it. That’s the only agreement that we’ve had so far. I don’t know if that sounds like significant budget reform to you, but it doesn’t to me. That sounds like just shifting things around.

Lankford is arguing for bold changes. He says with a little incentive, it is possible to stop the congressional addiction to budget brinkmanship.

LANKFORD: If you want to avoid government shutdowns, if you want to end all of the end of the year fighting, if you want to make budgeting an actual bipartisan process, there’s a simple solution: Make the budget a law. I know that may sound overly simplistic to people outside this Senate body. And many people may think the budget is already a law. But it is not. It isn’t in law because then you can create partisan documents and debate it and hash it around for a full year, and then go fight at the very end of the year before the government shutdown happens, when there’s lots of pressure. The simple way to resolve this at the beginning of the year is to make the fight about the budget at the beginning of the year, long before there is a discussion of government shutdowns. Make the budget itself a law.

Well, it is nearing the very end of the year, and that scenario is playing out again. The president has signed five of the needed 12 appropriations bills into law. So chunks of the government could shut down in 10 days if lawmakers can’t come to a spending agreement.

Joining me now to talk about Washington’s budget woes is Jim Capretta. He’s a resident fellow at the American Enterprise Institute in Washington. Jim, good morning to you.

CAPRETTA: Good morning. Thank you for having me.

EICHER: You bet. I’d like to start with this special budget committee. It’s set to vote on recommendations tomorrow. Do you see any way it could produce real reform?

CAPRETTA: Not this year. Unfortunately, because of the dynamics in the Congress right now, I don’t think either party is ready to take the big steps necessary to fix the budget process. So what they’re likely to approve is a small step to go to what they call a two-year budget cycle for just one part of the budget resolution. And that’s unlikely to have much of an effect on the overall spending and taxing dynamic that’s been going on for years. So, no, unfortunately, what they produce will be pretty modest.

EICHER: We just heard Senator Lankford talking about moving up the fight to earlier in the year. Making the budget a law. What the panel has agreed to thus far, he dismisses as tinkering around the edges. Small ball, as he put it. But this notion of making the budget binding, that he sees as a potential home run.

Do you see it that way?

CAPRETTA: I do think there’s some real potential there. In other words, the way to think about it is that right now, Congress produces this thing called the budget resolution and it only controls spending decisions and there it only does it very mildly in the Congress.

If, instead, the budget resolution either directly or indirectly with a spinoff bill sent to the president binding caps on appropriated spending, the budget resolution itself would become a much more meaningful vehicle because it would become law and both the Congress and the president would have to live with the effects of that law.

I think then you might get some more serious discussions between the two branches of Congress earlier in the year. And so I think that would be a useful step in the right direction. It wouldn’t be sufficient to fix all of our budget problems, but it would be a good step.

EICHER: Obviously the national debt is now $21 trillion. That’s up from $14 trillion when the tea party wave came to Washington in 2011. And now that we’re starting to see interest rates tick back up, the cost of servicing all that debt is just enormous.

Yet, federal revenues are at an all-time high. What will it take to get the government to live within its means?

CAPRETTA: Well, that’s a trillion dollar question, as you know… Some big things are going to have to change. I think that the parties at the moment are very uninterested in taking this on because the bases of the parties are committed ideologically to different visions for what the government’s role is in society, and until there’s some forcing of both parties to make some compromises, it’s going to be very difficult to get this situation under control. Neither party has enough political juice, if I can put it that way, to fix the problem on its own.

The Democrats don’t want to pass a tax increase that’s big enough to get the budget under control because that tax increase would be so unpopular it would be thrown out of office. And the Republicans don’t want to cut spending enough to get the deficit under control because a) they don’t even know what to do and b) if they did they’d get thrown out, too.

And so the only way you get around that is a) a crisis forces them to cooperate or b) there’s some process change or some opening where the parties see it’s in their interest to cooperate lest they allow the situation to become so unmanageable that they, too, get thrown out of office.

EICHER: You’ve written a lot about how entitlements are the real driver of the national debt. That is, Medicare, Medicaid, Social Security—these programs that continue unlimited growth. Do you see budget reform as a possible way to get at those bigger problems?

CAPRETTA: Possibly. I mean, there’s an old saying that the problem isn’t the process but the problem is the problem. There’s some truth to that, but on the other hand the process probably isn’t helping either. One way to think about this is that these entitlement programs are really 10- and 15- and 20-year problems. Even if you made some big changes to Social Security, Medicare, and Medicaid, the fiscal benefits for making those changes aren’t going to be next year. They’re not even going to be in two years or three years. The big effects will be in 10 and 15 and 20 years.

So the Congress needs to have a much longer term focus, and it needs to come to some understanding about what is a reasonable and safe level of debt above which we should not go.

This isn’t going to be solved in one swoop. You’re going to take five or 10 whacks at it and so you’re going to have to then set in motion a number of legislative responses that could take a decade to get ourselves back into a better position in terms of our budget. So I think that’s really how you need to think about getting ourselves out of where we are now.

EICHER: Jim Capretta of the American Enterprise Institute in Washington. Jim, thank you so much.

CAPRETTA: You’re welcome. Thank you.

(AP Photo/J. David Ake) The U.S. Capitol Building in Washington is shrouded in fog early in the morning Tuesday, Nov. 6, 2018.

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