Indubitably, our nation’s finances are a mess. America has run deficits 36 of the past 40 years. The national debt is $18 trillion, and it has tripled as a percentage of gross domestic product since 1974.
Each February, the president rolls out his budget—a collection of tomes loaded with tables and text attempting to explain the government’s $3.7 trillion in spending. And where does this money go? Mostly to fund long-existing federal agencies and programs.
The public, already horrified by the rising waters of red ink, are further enraged by Congress’ ineptitude. Both chambers have adopted a budget resolution on time only six times since 1977. Congress blows its own April 15 deadline by an average of nearly 40 days. Congress virtually never passes the 12 appropriations bills before the end of the fiscal year (Sept. 30), and often fails to vote on a single one. Instead, the leaders avert a government shutdown at the last minute by rushing through omnibus spending bills and continuing resolutions whose contents are unknown to most legislators.
In December, I saw up close just how estranged Congress has become from the power of the purse. I was one of four witnesses before a subcommittee of the Oversight and Government Reform Committee of the House of Representatives. The hearing’s topic was the money collected by executive agencies in the form of fees, fines and settlements. It is a whopping sum: $516 billion per year, an amount equal to about one-seventh of the federal budget.
One representative asked us: How much of this money are executive agencies spending without congressional direction? I did not know, despite having spent almost 15 years on Capitol Hill. Nor did the expert from the watchdog Government Accountability Office. Another colleague on our panel ventured that the spending data likely could be found in an office within the U.S. Treasury. Congress could request it, but it was otherwise unavailable.
The subcommittee members present (the modest number who had shown up at the hearing) were gobsmacked by this response. Congress is supposed to have power of the purse! As Article I of the Constitution says:
No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.
Clearly that’s not how it works. How did we get here?
The legislative branch’s loss of control over the public purse, as detailed in John Marini’s Liberty Forum essay, typifies the breakdown of our constitutional system. The story Marini tells is a dispiriting one. In short, the executive branch has grown, Congress has shrunk and a qualitative transformation of the branches has accompanied this change in size and power. No longer is Congress primarily a lawmaking body. Today’s legislative branch is “an oversight body” that busies itself responding to the demands of a massive administrative state. Practically speaking, the institution seems resigned to its subservient position, despite the fact that legislators tell themselves and anyone who will listen that they remain in charge.
Marini aptly highlights this existential paradox. Congress, he writes:
has attempted to retain the pre-eminent place it naturally held within the structure of a republican government, while at the same time giving up the fundamental power that established its preeminence. Congress has willingly relinquished much of its lawmaking power. It did so by delegating significant lawmaking authority to an administrative apparatus.
At its inception, Congress was the most powerful of the three branches, whose essence was lawmaking. Article I—at 2,268 words the longest of the Constitution’s three main articles—assigns to Congress the fundamental authorities of government. Only it may “lay and collect taxes,” “coin money [and] regulate the value thereof” and “regulate commerce with foreign nations.” Congress, and especially the House of Representatives, was designed to be the place where the will of the people, the ultimate fountain of power, is represented and refined into policy.
Contrast that with the Constitution’s text regarding the executive. As drafted in 1789, Article II was a mere 1,025 words, half of which outlined how a president is to be selected, compensated and removed. The president’s enumerated powers are few: He may appoint “Officers of the United States” and “require the Opinion, in writing, of the principal Officer in each of the executive Departments, upon any Subject relating to the Duties of their respective Offices.” Most presidential authorities relate to international affairs, and are shared with the legislature. Thus, the president is commander in chief, but Congress retains the power to “raise and support armies,” “provide and maintain a navy” and “declare war.” The core executive charge is to “take care that the Laws be faithfully executed.”
Congress’ power of the purse—to control taxing and spending—was, Marini quotes Madison as saying, “the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people.” It is “complete,” adds Marini, “because it allows the legislature to establish the purposes of government, and to determine its priorities by putting the public wealth of the community in the hands of the people’s representatives.”
How times change. These days the tail tends to wag the dog. The presidency has become a dominant force in policymaking, while Congress frequently plays the quasi-parliamentary role of cheering or jeering executive actions. America’s policy agenda, as Marini accurately identifies, has been swamped by the demands of the administrative state and the interests and citizens who benefit from it. When this quasi-parliamentary entity proves unable to act or, heaven forbid, refuses to go along with the president, the executive branch can act alone. Policy gets made by the executive branch through executive orders and memoranda, regulation and the reprogramming of spending from one purpose to another. The legislature has no formal role in these forms of policymaking. Lawmakers even tend to shrug them off as what Presidents do rather than treating them as usurpations of authority that warrant reprisal.
Congress began losing its control over the purse a century ago, and not only it but the other two federal branches, and the public generally, are to blame.
Budgeting in a pluralistic society is inherently difficult. Each interest or constituency wants something, and when all these demands are aggregated, the total cost tends to outstrip what any one of us feels like paying. It is a collective action problem. As Sen. Russell Long, D-La., colorfully put it, “Don’t tax you, don’t tax me, tax that fellow behind the tree!” Ever hungry for re-election, members of Congress are eager to meet these demands. Logrolling and pork were endemic in the 19th century, and our nation carried debt more years than not. The nation did not have a budget proper, and veered from deficits to surpluses.
The Civil War imperiled the nation’s financial health; war is costly, not least in transforming private citizens into government employees and long-term pensioners and beneficiaries. Technological disruption and economic panics fueled pluralistic demands on Congress. By 1900, the federal government had 230,000 employees, who delivered the mail, administered farm-support programs, managed public lands and regulated and enforced commerce. Appropriations acts, budget expert Allen Schick notes, “sprawled across hundreds of pages,” listing various local projects and employee salaries.
To try to bring spending under control, Congress revised its committee structure and changed its rules for enacting spending bills at the turn of the 20th century. Nonetheless, Congress slipped severely in the Progressive Era. The executive branch and the judiciary threw fertilizer on the nascent Leviathan. Theodore Roosevelt took a “stewardship” view of the executive, and interpreted Article II’s terseness, not as a restraint on the president, but as a blank check for presidential action.
As he wrote in his 1913 autobiography:
I declined to adopt the view that what was imperatively necessary for the Nation could not be done by the president unless he could find some specific authorization to do it. My belief was that it was not only his right but his duty to do anything that the needs of the nation demanded unless such action was forbidden by the Constitution or by the laws. Under this interpretation of executive power I did and caused to be done many things not previously done by the president and the heads of the departments. I did not usurp power, but I did greatly broaden the use of executive power. In other words, I acted for the public welfare, I acted for the common well-being of all our people, whenever and in whatever manner was necessary, unless prevented by direct constitutional or legislative prohibition.
He and most of his successors took that perspective to the public via the newly emergent mass communications technology (radio, television and eventually the internet), and promised voters more government action to improve their lives.
The Supreme Court set loose voracious pluralist demands by eliminating structural barriers to federal spending. In Massachusetts v. Mellon (1923) it effectively ruled that the federal government could set up a matching-grant program with states to help needy mothers and their babies. Never mind that the undeniably well-intentioned objective of this program was not found among the enumerated powers; nor was the program necessary and proper to the achievement of an objective listed in Article I. Grants-in-aid breached the federalism dam between federal and state policy areas, and today, according to James Buckley, amount more than $640 billion in annual spending.
The Constitution’s remaining curb on spending was reduced to rubble not 15 years after the Mellon case. The high court held in Helvering v. Davis (1936) that “Congress may spend money in aid of the ‘general welfare.'” In determining what constitutes the general welfare, moreover, “the discretion belongs to Congress.” These decisions and others invited the legislature to spend money on local areas of policy and anything that might be reasonably construed to promote the general welfare, thus generating the need for more executive bureaucracy to administer these programs.
Which brings us to entitlements.
Helvering pronounced Social Security constitutional, which justified the establishment of additional entitlements to benefit the old, the poor and the disabled. At the behest of presidents and rallied publics, Congress delivered relief in the form of cash, food stamps and medical care. Entitlements indubitably have had some salubrious effects. Social Security has proven very successful at keeping the elderly out of poverty.
Their costs, however, are staggering, and make congressional control of the purse nearly impossible. Entitlements are legally owed to beneficiaries, leaving Congress with little ability to contain their costs. If unemployment spikes, more individuals can demand and receive unemployment compensation and benefits under the Supplemental Nutritional Assistance Program (the successor to food stamps). “Automatic spending” is the depressing term that is frequently applied.
Even when entitlements have a dedicated revenue stream, as Social Security does, the funding inevitably proves insufficient over the long run. For one reason or another, the projected costs always rise, but woe to the elected official who proposes trimming benefits or requiring anyone to kick in more funds to cover the deficits. The corrosive effect has been to feed the public’s desire for government. Once upon a time, rights were a restraint on government action. Now they signify, in the minds of many Americans, the individual’s demand for largesse from the executive branch.
Marini is quite right that the connection between the public and the federal government’s use of taxpayer dollars has been severed. Clearly, Americans do not like the annual deficits and the mounting debt, and they want the nation’s finances righted. Yet this broad public desire for improving the nation’s finances does not translate to their representatives’ being able to enact reforms.
All too often, the tendency is to blame Congress for this failure. Certainly, the lawmakers bear some responsibility, but the public is a big part of the problem. Few citizens understand that we all have become wards of the state. Almost 60 percent of federal spending ($2.2 trillion) goes to transfer payments to We the People. Social Security, Medicare, Medicaid, student-aid subsidies, military pensions—it is a long list. And this is to say nothing of the other federally funded goods and services (roads, education, medical care and others). Individuals tend to imagine (incorrectly) that somebody else is the drag upon the system; I am the maker and he is the taker.
When it comes to solutions, reducing foreign aid and cutting government employee salaries tend to be John Q. Public’s favorites. Abolishing all overseas aid ($35 billion) and firing all government employees ($250 billion) would not even cover this year’s projected federal deficit ($559 billion). Besides, who would issue all the entitlement checks and collect the taxes?
Public responses to more realistic solutions to our nation’s slow-moving budgetary wreck tend to be lukewarm at best. Those polled reject outright increasing the gas tax, reducing federal grants to states, raising Medicare contributions or treating employer-provide health insurance as taxable income. The citizen who told Congress, “Keep your government hands off my Medicare” was no lone wolf. Legions of voters of this ilk put Donald Trump in the White House, in no small part based on his claim that he could balance the budget without touching Medicare or Social Security.
With the public so confused about where the money goes and so used to relying on government, is it any wonder lawmakers struggle to exercise the power of the purse?
Most certainly, Congress has tried to improve its budgeting. Major reforms were enacted in the late 1940s and early 1970s to strengthen legislative control, and incremental improvements been adopted periodically since then. But this tinkering has not been able to stop the pluralistic crush—spending continues to soar, and long-term federal liabilities for promises made today (Medicare, pensions) are in the tens of trillions of dollars.
Marini is rightly dubious that Election 2016 will rejuvenate Congress into an entity whose essence is lawmaking. The administrative state might be modestly reduced but the America’s early watchman state will never return. In the 21st century, the congressional agenda will continue to be jammed with tasks related to executive agencies.
Still, the gross constitutional disequilibrium can be redressed a bit, and some congressional control can be asserted over the purse.
Indirectly, Congress could be strengthened by actions that recover power currently being exercised by the executive and judicial branches. Two actions in particular would be highly significant: passage of legislation giving Congress a role in enacting regulations—for example, the Regulations form the Executive in Need of Scrutiny (REINS) Act—and overturning the judicially created Chevron deference to agencies’ regulatory activities. These reforms would work in tandem to curb executive discretion to legislate via rulemaking, and expand Congress’ role in policymaking. The bonus would be that any measures that reduced the reach and activities of the executive branch would benefit Congress collectively by reducing its oversight workload.
For Congress to reclaim any control over the purse it must simplify the budget process, which is too complex and onerous, to make it more manageable and less dominated by appropriators and leadership. An improved budget process would have Congress adopt multiyear caps on aggregate spending bills that are signed by the president. In fact the Budget Control Act of 2011 did just this, and it pushed back against the aforementioned popular pressures to increase executive spending. If caps were put in place, Congress would annually adopt a budget resolution apportioning its spending within them.
To help draw legislators back to policymaking, the appropriations subcommittees should be made into full committees, and doubled in number and assigned narrower jurisdictions. These new mini-appropriations committees would be empowered to report their spending bills directly to the floor of their respective chambers for prompt votes without amendment. (Right now, subcommittees hand off their recommendations to the full appropriations committees, where their work may be revised or sit for months.) The futile fiscal-cliff scenario, where Congress rushes through omnibus continuing resolutions mere moments before the federal government is about to shut down, would be no more. Instead, any appropriation not enacted would be automatically continued but with a 1 percent across-the-board cut.
Such a budget process would afford lawmakers the time and the incentive to perform oversight of the executive branch. No longer would the House and Senate try to enact a one-year spending resolution and move 12 big spending bills between January and September each year. Congress instead would have small groups of legislators with greater ownership of the spending within their jurisdictions. Individual members who wanted to affect policy (spending, of course, is policy) would have to do so through subcommittee participation.
Finally, Congress would enhance its influence and discretion over the purse by dialing back the executive agencies’ authority to collect and spend funds. The high tide of this giveaway of legislative power came with the Dodd-Frank Act of 2010. It funds the Consumer Finance Protection Bureau with money from the Federal Reserve (a quasi-governmental entity). The bureau can fine financial service providers and then give the proceeds to private parties operating “consumer education” and “financial literacy” programs. Our elected officials in Congress currently have no say over the use of these public funds. The legislature should direct agencies to turn more of this money over to the U.S. Treasury, giving congressional committees the ability to decide whether to reappropriate it, and if so, to what purpose.
Article I provides Congress with all the authority it needs to strengthen itself and reclaim some power over the public purse. Will it assert itself? Possibly.
The arrival of Tea Party legislators in recent years has heightened Republicans’ interest in restoring the first branch to something roughly resembling its constitutional design. The election of Donald Trump has struck fear into the Democratic Party, whose members now admit the undesirability of letting an oversized executive branch unilaterally make policy. In fact Trump’s loose cannon behavior has sparked bipartisan concern on Capitol Hill, and may force congressional Republicans and Democrats into a shared foxhole.
The latter also might have an additional motive for cooperating on budget reform: the 2018 midterms. Some 25 Senate Democrats face re-election, compared with only eight Republicans. The GOP could end up with eight more seats, which would give it a filibuster-proof majority. With the House highly likely to stay firmly in Republican hands, the Democrats can play ball now or suffer exile later.