Congress is on a path to enact a $1.9 trillion COVID-19 relief package under a budgetary procedure known as reconciliation. It was originally designed as a tool for fiscal responsibility — a principle I have spent my professional career trying to uphold.
No one denies the need to assist families and businesses that have and continue to suffer from the economic fallout of the pandemic. But the current Democratic reconciliation bill and the 2017 Republican tax reconciliation measure have paid scant attention to the country’s mounting debt load.
The budget and reconciliation procedures that once led to America’s balanced budgets from 1998 to 2001 are now driving us further into debt. In cinematic words that should be familiar to Sen. Pat Leahy, “You either die a hero, or live long enough to see yourself become the villain.”
Abused in recent years by both Senate Republicans and Democrats for its filibuster immunity, reconciliation has hollowed out America’s pocketbook, stuffing IOU slips in its place. Congress must reform or repeal reconciliation before it ends any hope of restoring a modicum of bipartisan fiscal responsibility.
The 1974 Congressional Budget and Impoundment Control Act was one of the last pieces of legislation President Richard Nixon signed into law before leaving office in disgrace. Sen. Sam Ervin, who chaired the committee critical to its adoption, said the act’s purpose was to reclaim Congress’ “power of the purse” from an imperial president. Nixon’s disregard for the congressional authorization and appropriations process by impounding monies was the raison d’etre for its adoption. The law not only created the respected Congressional Budget Office (I had the honor of being one of its earliest employees), but importantly, it created a disciplined process for establishing an annual federal budget.
The law also created a process by which a second budget resolution in the fall would be ‘reconciled’ with one adopted earlier in the spring. This evolved into just one budget resolution, and if directed by that resolution, expedited legislation bypassing the Senate filibuster could be considered to implement changes in “existing” tax and spending programs to achieve the fiscal goals outlined in the resolution.
The first reconciliation bill was enacted in 1980 under President Jimmy Carter and a Democratic-controlled Congress. It was a small one-year reconciliation bill to reduce the deficit by $8 billion and modify existing federal programs, and was intended to counter the deficit arguments of GOP presidential candidate Ronald Regan. It did not work.
In 1981, the new Reagan administration and the Republican-controlled Senate spearheaded what would become the avant-garde reconciliation process that would remain for the rest of the 20th century. The three-year reconciliation bill achieved deficit reduction by making changes to existing federal programs and was emulated throughout the ’80s and ’90s.
Focused on the government’s red ink, Congress reached bipartisan agreement in 1997, resulting in a balanced federal budget spanning the next three years. Victory?
In hindsight, budgeteers won the war against America’s deficit but failed to secure the peace.
The Bush administration entered office in 2001 with a 50-50 Senate and a narrow Republican majority in the House. (Sound familiar?) But unlike today, it arrived with future surplus projections. Instead of cutting spending or increasing taxes or both, Republicans used the process to return the projected surplus to taxpayers.
The genie was out of the bottle. If reconciliation procedures could be used to cut taxes promoted by Republicans, it could be used to increase spending by Democrats.
In 2017, with control of the White House and Congress and no previously binding budget, Republicans attempted to quickly adopt a new budget resolution that would have repealed Obamacare. It failed, but even in the face of projected deficits, they successfully adopted a new budget for 2018 with reconciliation instructions to cut taxes by $1.5 trillion over the next decade. It was wrong to use the process to achieve that outcome, and more importantly, it was wrong fiscal policy.
Fast forward to February 2021, with no previous budget adopted and Democrats in control of the White House and Congress. Following the principle of “do unto others as they do unto you,” Democratic leaders are now following the Republicans’ 2017 playbook to enact $1.9 trillion in new spending. However, this will be followed by another budget reconciliation bill for 2022 that would extend many of the one-time spending items. A truer cost of this $1.9 trillion package, with extending expansionary provisions such as child care, the Earned Income Tax Credit and health care premiums, would be $3.4 trillion over the next decade.
With today’s low interest rates, this may not be the time to worry about debt and deficits. But the reconciliation process does not produce good or structurally sound legislation. It was not meant to take over the annual appropriations process. It was not meant to bypass the two Budget committees. It was not meant to create new entitlement spending. It was meant to focus on the real drivers to federal debt and deficits: taxes and entitlements.
As a veteran Senate budgeteer it is with sadness and trepidation that I write these words. Abused, misused and perverted, reconciliation is the tool our polarized, partisan country deserves, but it is not the one we need. If we truly want to build back better with bipartisan agreements, repeal it or reform it for deficit reduction only, as the original authors of the Budget Act envisioned.
G. William Hoagland is a senior vice president at the Bipartisan Policy Center. He is the former staff director of the Senate Budget Committee and an original employee of the Congressional Budget Office.