Examining the Case for Biennial Budgeting

budget

Biennial budgeting has been suggested for decades as a potential reform that would help alleviate many of the ills within the broken congressional budgeting process. This policy paper takes stock of the proposed advantages and criticisms of transitioning the federal government to a biennial, rather than annual cycle. Ultimately, I argue that a biennial budgeting model may provide some marginal benefits to a clearly dysfunctional budget process, but will do little to solve the more pressing problems, such as true spending priority differences between political parties.

Top points

  1. Biennial budgeting has been touted as a logical reform for the mess of congressional budgeting for decades, yet no expert consensus on its advantages or disadvantages has emerged.
  2. Advocates suggest it would provide more stability, lessen the politicization of funding debates, and more rigorous oversight of federal spending.
  3. Critics argue a biennial framework would actually raise the stakes of funding fights since the decisions would last for two years instead of one, and offer no guarantee that lawmakers would use the time savings to conduct oversight.
  4. Critics also argue that Congress would need to rely more heavily on supplemental appropriations measures to make up for inevitably erroneous fiscal projections and emergency spending needs.
  5. States have been transitioning away from biennial budgeting models to annual cycles. In 1940 44 states had biennial budgets; as of 2011, that number dropped to 19.
  6. Transitioning the federal government to a biennial framework may allow departments, agencies, and recipients of federal funds more stability in their funding decisions and planning, particularly compared with the short term spending bills that have become more common in recent years.
  7. Biennial budgeting will not fix the broken congressional budget process – Its adoption will do nothing to address the underlying political and electoral issues between the two parties.
  8. Rather than adopt a government-wide biennial model, several suggestions on a more limited implementation have received wide support. These include: implementation with more stable funding and spending levels and adopting multi-year authorizations in advance of biennial appropriations.

 

Introduction

To the frustration of members and citizens alike, Congress has regularly failed to adhere to the budget process and deadlines outlined in the 1974 Congressional Budget Act (CBA). In fact, the legislative body has not successfully finalized work on all of its appropriations bills on time since 1996.

Rather than to execute annual appropriations legislation as required in the CBA, the breakdown of the budget process has resulted in increasing reliance on short-term budget resolutions, often accompanied by a drama-filled debt crisis and the threat of (or an actual) government shutdown. After each passage of these manufactured crises, only one conclusion inevitably results: the congressional budget process is broken.

Causes for the dysfunction are many. Ideological polarization between and within the parties are clear drivers. In practice, modern budget proposals put forth by political parties better resemble partisan wish lists and campaign messaging documents than serious negotiation starters toward bipartisan agreement. Genuine disagreements on spending levels and priorities, sticky congressional budgeting rules, harsh time constraints for members and a never-ceasing focus on upcoming election messaging are also to blame for the budget process breakdown.

Even more fundamentally, the vast programmatic, spending and oversight considerations required of the budget process are argued to be too numerous, repetitive and rushed to be effectively executed on an annual cycle. As a result, if taken up at all, appropriations measures are routinely delayed and are written by party leaders instead of through a committee-driven process. Consequently, budget resolutions often fund the government only for weeks or months rather than a full fiscal year.

In response to widespread concerns that the federal budget process is too political, time-consuming, inefficient and does not allow for adequate congressional oversight of spending, many budget experts have advocated for the adoption of a two-year, or biennial, budgeting framework. The potential change has a long history, both legislative and theoretical, and has attracted advocates and opponents inside and outside of Congress. Despite its long history, however, no consensus on its likely outcomes has emerged. While many biennial budget proponents contend that many ills of the current process could be alleviated by lengthening the operation to a two-year budgeting cycle, critics are less sure.

Although many critics agree that transitioning the congressional budget cycle in this manner is likely to allow for better agency and program planning, they also fear that a biennial process would likely result in several negative consequences. These include a potential reduction in Congress’ opportunity to influence programs and policies that receive federal funds, and a likely increase in the reliance on supplemental appropriations that become necessary due to changing economic and political circumstances that occur within a longer budgeting period.

While no expert consensus has emerged on the likely effects, what is clear is that the adoption of a federal biennial framework would do little to solve or lessen the underlying political incentives and spending disagreements that have exacerbated the breakdown in the current process. In fact, although two-year budgets may provide an opportunity for more deliberation for funding decisions, the longer period for which agencies and programs are funded will only raise the stakes of the initial decisions. Consequently, budgeting choices will likely only serve to increase conflict between the parties. Additionally, despite the potential for more time for members to conduct more rigorous spending oversight and evaluation under a two-year cycle, there is no guarantee that they would take advantage of the opportunity. And, given the harsh time constraints lawmakers face, biennial budgeting advocates are likely overestimating the time members will commit to these purposes. Ultimately, although there may be some advantages to a biennial framework, it is hardly a panacea that will fix the dysfunctional congressional budget process. With that said, experiments with biennial budgeting in other legislatures and agencies, along with suggestions from lawmakers and budget experts, have produced some best practices that should be incorporated into any serious proposal to enact such a framework at the federal level.

 

Image credit: Niyazz

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