Hearings of the
Committee on Rules
Subcommittee on Legislative & Budget Process
Thursday, March 11, 2004
The subcommittee met, pursuant to call, at 1:19 p.m. in Room H-313, The Capitol, Hon. Deborah Pryce [chairwoman of the subcommittee] presiding.
Present: Representatives Pryce, Diaz-Balart, Goss, Hastings of Washington, Dreier Frost and Slaughter. Also Present: Representatives Myrick and Hastings of Florida.
Ms. Pryce. The subcommittee will come to order. Good afternoon, everybody. Thank you for joining us. Ms. Slaughter will be right along, I am sure, so we will just get started.
Many American households establish family budgets to control their monthly spending. Simple: There is an income, and from that they subtract the necessities, the mortgage payment, the utilities, the car insurance, the food, and whatever else is needed. They also plan for anticipated future expenses, hopefully setting aside some money for savings and an emergency fund for unanticipated expenses. Families get into trouble when they veer off their budget plan and spend more than they have.
Similarly, the Federal Government plans yearly expenses and attempts to anticipate future expenses. Just as in the case of households in America, Uncle Sam gets into trouble when the Federal budget does not enforce controlled spending.
We are here today to discuss how the Federal budget process can be more effective in establishing spending control. This hearing is the beginning of an ongoing dialogue to not only preserve our fiscal household, but, more importantly, to ensure that we spend American tax dollars more wisely.
Today the Rules Committee will hear from Members of Congress who are developing or have introduced proposals to advance the original congressional intent to increase the effectiveness of the budget process. We are also privileged to have the Director of OMB, Josh Bolten, later today to testify on the Administration's proposals.
Let me be clear about what this hearing is not about. This hearing will not examine this year's budget resolution, nor will it argue or defend its elements. We are here to look at the process currently in place and examine if it can be improved upon. Lawmakers have long been searching for ways to get Federal spending under control. This hearing is about exploring potential solutions in the budget process to help control Federal spending. We have done it before, and we can do it again.
We all know about the current fiscal landscape and the growing Federal deficit. It is important to remember how we got there. We are at a Nation at war and have to deal with the necessary budgetary increases associated with protecting our national security, but this must also be accompanied by holding our agencies and departments accountable for wasteful spending.
With the return of budget deficits, there is a growing consensus among all lawmakers that we must stem the tide of red ink. While Republicans and Democrats may differ on their approaches to reduce deficits, there is a growing consensus among lawmakers on both sides of the aisle that there is a need to look at the process as one way to account for and control spending.
Budget process reform is not a new concept. Since the inception of the Congressional Budget Act, proposals to modify its procedures have been plentiful. In 1988, President Ronald Reagan said, quote: “The budget process does not serve the best interest of the Nation. It does not allow sufficient review of spending priorities, and it undermines the checks and balances established by the Constitution.”
In previous Congresses, modifications to the budget process have generally occurred as part of the reconciliation legislation or as changes to the House rules on the opening day of Congress. Congress has made further change to the budget process by enacting the Balanced Budget and Emergency Deficit Control Act of 1985, the Budget Enforcement Act of 1990, the Line Item Veto Act of 1996, and the Budget Enforcement Act of 1997.
There are numerous budget process reform proposals that have been introduced in the 108th Congress. These proposals range from budget enforcement mechanisms to biennial budgeting and aggregate budgeting. Sponsors of these proposals attempt to address the weaknesses in the current system in their legislation, and we will hear from those Members of Congress today.
Friends and colleagues, we know what needs to be done. We need to examine the ways to put restraints on spending -- both mandatory and discretionary, reform our budgeting process, and spend American tax dollars more wisely. It is time to put partisanship aside and unite behind our goal to protect future generations from burdensome deficits. Thank you.
[The statement of Ms. Pryce follows:]
Ms. Pryce. Chairman Dreier, is it protocol to go to you next?
Mr. Dreier. Go to Mr. Hastings.
Mr. Hastings of Florida. I was just going to say, if we just have a place for Ms. Slaughter's statement when she arrives at the appropriate time, Madam Chairwoman.
Ms. Pryce. All right.
Mr. Chairman.
Mr. Dreier. Thank you very much, Madam Chairman. And let me thank you and Ms. Slaughter for holding this hearing and for the interest shown by our colleagues. Obviously, we see Mr. Hastings here, and Mr. Frost was here earlier, Mr. Diaz-Balart, Mrs. Myrick is here, and we know that our colleague Doc Hastings has taken a great interest in this issue.
And I also want to congratulate you, Madam Chairman, for your very thoughtful statement; and the fact that you underscored that we are not here looking at this year's budget and the details of that, but we do know that one of the main reasons that we are here is the challenges that we have with this year's budget and the budgets that we have had in the past.
In fact, this year, interestingly enough, marks the 30th anniversary of the 1974 Budget and Impoundment Act, and I think that is critical for us as we deal with these budget issues to realize, as we are constantly underscoring in a wide range of areas, that we are in a new century, and we are dealing with a 21st century economy. And I think that has got to come into the mix as we look at our attempts to make changes, modifications in this budget process.
I hope that we can begin a process that helps us set up to actually set our sights higher and to make changes that reflect the realities of this 21st century economy.
There are a number of political reasons for us to reconsider the current budget process. We also need to think about the long-term policy implications as we look at those prospective changes. I am very pleased that we have proposals, a wide range of proposals, as you said, Madam Chairman. My colleague, Rules Committee colleague, Mr. Hastings, who is our designee to the Budget Committee -- I am talking about the other Mr. Hastings. I saw you look up -- who is our designee to the Budget Committee, has a proposal that he has worked on with Mr. Castle and has been involved with working with them on that. It provides a more flexible, functional category structure within the budget which we know has created a wide range of problems.
We need to focus, as I was saying, on the larger macroeconomic impact of the policies of budget rather than a summation of proposed spending. And I happen to believe that the current functional categories have really become dysfunctional mechanisms for setting our priorities as a Nation. The Hastings-Castle proposal provides the Budget Committees the discretion to include whatever functional categories, if any, that they deem appropriate. It is important because it will prevent us from constraining the economy by being beholden to the antiquated procedures that we have had over the past three decades.
Likewise, I am happy to see the group here with the panel that we are going to be hearing from. Messrs. Hensarling, Ryan, and Chocola are going to be offering a proposal that includes something that Ms. Pryce and I have worked on for a long period of time, and she alluded to that, and that is the issue of biennial budgeting.
For many, many years I have felt that moving ahead with an attempt towards biennial budgeting would go a long way towards diminishing some of the traditional challenges that we have had based on politics, procedure, and the challenge which we have constitutionally dealing with responsibilities as a Congress for oversight.
I am disappointed with proposals that require supermajority procedural votes, I have to say. I agree with our Founding Fathers that extraordinary votes should only be required for extraordinary circumstances, and as the Framers envisioned it, amending the Constitution or expelling a Member of this House really are those extraordinary circumstances. And I believe that for us to in any way increase supermajorities, my sense is that it is somehow saying -- or to move towards supermajorities really has a tendency to say that we don't have confidence in the American people to choose leaders who are going to make the right decisions in the future. And I am not going to be so arrogant as to conclude that they, the American people, will not make the right decision on that. And I know there is a lot of controversy, certainly a lot of controversy within my party on that.
As well, proposals that call for a joint resolution, I think, are problematic because including the executive branch may well result in a further slowdown in the process itself. I mean, we are the first branch of government. I regularly underscore that. In fact, I always like to remind people that the House of Representatives is actually even mentioned before the other body, the United States Senate, in the Constitution. It is our responsibility to dispose of what the President proposes. We have the sole power of the purse and should not unnecessarily tie our own hands, which I happen to believe the inclusion of the executive branch in the budget process will do.
Despite my concerns, I am glad that we are at least examining these issues here today, Madam Chairman, and I hope that before this Congress adjourns, the two Houses can at least make a down payment on budget process reform. At a minimum, I hope we can agree on a target list of reforms. We all know this will not be easy and that this House can't do it alone. My frustration is that because we know we can't get it done in 1 year, we often don't try.
Mr. Cox is here, and we have worked on this issue together, not always agreeing on every issue in the past, but we have tried our darnedest, along with many other Members, to work on the issue of reform. It is going to be a challenge that we will be facing because of the immediate difficulty that we have with the budget, and so I hope that the challenges that we face immediately will lay the groundwork for us to bring about the kind of responsible reform that will be helpful to improving the performance of the United States Congress.
So with that, Madam Chairman, I thank you very much. And I have a full statement, without objection, I would like to ask be included in the record.
Ms. Pryce. So ordered.
Mr. Dreier. And with that I yield back.
Ms. Pryce. Thank you.
[The statement of Mr. Dreier follows:]
Ms. Pryce. Mr. Diaz-Balart.
Mr. Diaz-Balart. Thank you, Chairwoman Pryce. I look forward to hearing from the distinguished panel before us today. And as everyone knows in this room, with the growing deficit it is imperative to take a closer look at the budget process now more than ever. I believe that there are several measures we can take to curb spending while maintaining the economic growth that now has taken hold.
Mandatory spending is out of control. I was reminded that the mandatory spending share of our annual budget has doubled in four decades, 33 percent in the 1960s, to nearly 60 percent. This increase is obviously unacceptable to the program, as we all know, and is paid for by mandatory spending which are obviously desperately needed by our seniors and those who lack affordable health care.
A pay-go rules extension is a good way of ensuring that this mandatory spending is kept in check. However, we must be sure to protect the recent tax reductions that the Congress has made. I think we have seen economic growth as a direct result of the tax cuts passed by this Congress, and under no circumstances do I believe we should squander the important recovery efforts by raising taxes at this delicate time.
Several of our witnesses today will testify to curbing discretionary spending. I want to stress that while I do see imperative need for discretionary spending reduction, I am worried about two unintended consequences: first, that small communities we are all proud to represent will see a reduction of needed Federal funding that fuel everything from roads to public utilities to first responders. These communities rely on this funding, and I believe that we in Congress are best equipped to address these needs because every day we witness their problems. I have made a habit, Madam Chairman, of communicating with the local mayors and city councils in order to vet their most pressing needs. I know where the problems are in my district, and I don't want to see that local control leave this body.
That leads me to my second concern, the continuing ability for Congress as the legislative body to control the pursestrings. I believe that all too often we leave important decisions to agencies in the executive branch. While I have faith in their abilities, I worry that the most important role of this Congress and the democratic process could be unknowingly forfeited to career bureaucrats.
I would like to thank you again, Chairwoman Pryce, for organizing this important hearing of this subcommittee at this very critical time. Hearings such as this are a key first step in the process to control the budget and drive down Federal spending. And I think, like in 1997, we will see the benefits of this control. Thank you very much for calling this meeting.
[The information follows:]
Ms. Pryce. Any other statements?
All right. Very well then. We will start with our first panel, the panel on Family Budget Protection Act, which I believe consists of Chris Cox, Jeb Hensarling, Paul Ryan, and Chris Chocola. Gentlemen, please step up. I think Jeb is tied up in a budget hearing and hopefully will be here soon.
All right. Gentlemen, feel free to summarize. Your full statements can be submitted for the record. And something that we don't do often here in the Rules Committee, I hope it isn't going to get me in trouble with the Chairman, we are going to try to stick to 5-minute rule, if we can. There is no timer, but I have a watch, so -- I am not going to kick you out of the room, but just to keep things orderly if you can try.
Ms. Pryce. All right. We begin with Mr. Ryan.
STATEMENT OF THE HON. PAUL RYAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN
Mr. Ryan. If you don't mind. I ask unanimous consent to have my statement included in the record, and I will go off the cuff, but I will stick within the 5 minutes.
The budget system is broken, pure and simple. Now, one of the things that we propose in our legislation is to replace pay-go, not to improve pay-go, because pay-go doesn't work. Let me just read you a couple statistics over what the history of pay-go has been.
November of 1999, we removed 12.7 billion from the pay-go scorecard. In December of 2000, we removed 10.5 billion from the pay-go scorecard. In 2000 January, 130 billion we took off the scorecard. In 2002 December, 559 billion we took off the scorecard. Over the last 4 years, we took $713 billion off the pay-go scorecard. What that means is we just ignored $713 billion of spending and taxing with respect to pay-go. We easily waived the pay-go rules. So what we are proposing is something that works better.
Number one, pay-go was never really designed to limit spending; it was simply to make sure that you pay for things as you go on. What we are proposing is replacing pay-go with a real spending cap, a cap on mandatory and a cap on discretionary, and one that is reinforced with good budget enforcement rules so that that cap is not easily avoided.
Now, this get into an area on your committee that you guys are very wary of, which the Chairman has talked about, which is that we in this bill require a two-thirds supermajority to prevent these caps from being broken.
One of the problems we have here in the House is that we are not in the game when it comes to enforcing budget rules, budget points of order. In the Senate, they can enforce these points of order. They had 37 budget points of order last year in the United States Senate, which one Senator could come to the floor and raise a point of order against, and only two of those 37 points of order raised against legislation which broke the budget were -- actually had a supermajority vote, which they have in the Senate, to break those budget points. So 35 out of the 37 budget points of order on the Senate floor worked to keep legislation off the floor from passing to break the budget.
We don't have a mechanism like that here in the House, and so what we are proposing is to have a two-thirds supermajority to break these budgets and not to allow points of order to be waived in the rules before they come to the floor.
Now, I know this something that you are very, very interested in here in this committee, but let me just give you a couple of points. Number one, we already have a supermajority in many different things. We have a supermajority requirement to consider a rule in the same day; we have a supermajority requirement to suspend the rules; a supermajority requirement to move other business before the completion of the private calendar; a supermajority requirement to move other business before the completion of the calendar call of the committee on Wednesdays; a three-fifths requirement to pass a bill under the Corrections Act, a three-fifths requirement to pass a bill for tax increases.
So this rule we are simply advocating is to recognize the fact that we have a three-fifths vote to raise taxes, but a simple majority can break the budget in spending. And what we end up doing every single year now is we break the budget resolution like that, because we waive the rules, we bring bills to the floor, and then break the budget resolution. And we do not use pay-go anymore.
And so what we simply want to do here is bring some sense back from the budget system by having the brinksmanship that will inevitably occur every year in the beginning of the session. By having the President sign the resolution into law gives us the enforcement we need to enforce these numbers throughout the process.
The alternative is the status quo, which is brinksmanship that occurs throughout the year, House and Senate on different numbers, and then we end up spending more money to get out of town at the end of session.
I think biennial budgeting, which is also in our bill, is another very important issue that I think this committee does support, which would be very helpful, doing the spending in the off election year and the oversight in the election year, which is sorely underutilized in this Congress.
And with that, I just wanted to make those few points without going into a huge summary of our bill. And I will yield to one of my colleagues.
[The statement of Mr. Ryan follows:]
STATEMENT OF THE HON. CHRIS CHOCOLA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF INDIANA
Mr. Chocola. Thank you, Madam Chair, for holding the hearing. I think this is one of the most fundamental and foundational issues that we face as a Congress, and I would like to submit my comments also to the record.
Ms. Pryce. Without objection.
Mr. Chocola. But in my comments here, I would like to share with you very briefly the impressions of a freshman. I have been here about a year now, and I came here without a political background, without a legislative background, and I quickly formed several impressions when we went through the budget process last year, and I would like to share that with you briefly.
Now, the first impression I had, coming from a business background, was that Congress is kind of like a business with 535 general managers and no CEO. Now, with all due respect to the Speaker and the Majority Leader and the Senate, they can't require us to do anything, and the only people that can fire us are the people that sent us here in the first place. And human nature being what it is, we are all very vigorous advocates for our divisions who are our constituencies or our districts. And that is not all bad.
But the weakness of that environment, I think, displays itself very much in the budget process that we go through here currently. And the fact that we are all human, and human nature makes it very hard to say no, I think my experience here isn't too unique in that we have people lined up outside our door every day with the most important Federal program that exists. And human nature is you want to help people; you want to help them secure funding for that program.
That, combined with the fact that our current budget process reflects none of the realities that I had, as a business person with a budget, and I think every other American business has to face, it reflects none of the realities that every family budget has to face in the United States; combined with the fact that what we do here in the budget process is not enforceable. What should be one of the most important processes that we engage in every year, and one of the most important votes that we engage in every year in many respects is irrelevant by the end of the year; combined with the fact that many in Washington measure success only by how much money Congress spends, now how well it spends money, the taxpayers' money; combined with the fact that we engage in language here that I am still not used to, including calling small increases 'cuts'. In all seriousness, no one else in America uses that kind of language. Those things as well as many other facts that we don't have time to cite today, really lead us to a budget process that I think lacks fiscal discipline and leads to runaway spending.
Another impression as a former CEO of a publicly traded company: If someone budgeted and accounted for their business the way the Federal Government budgets and account for the taxpayers' money, in the best case I would be fired and bankrupt. In the worst case, they would be in jail. And that is the most likely outcome that if someone ran their business the way the Federal Government is run. So I find it ironic at times when Members of Congress lecture business executives about truth in accounting and the integrity of financial disclosure.
But my final impression when I got here is I don't want to complain about things, I actually want to do something, and that is what has led me here to be here today to join my colleagues in support of budget process reform, because it became clear to me that in order to serve the people that we are elected to represent, be better stewards of their money, we are not going to overcome human nature and all the other facts that we just talked about unless we change the process.
And I think we need a framework of discipline. We need to simplify the process so the American people can understand what we do and we can understand what we are doing. We need to strengthen the enforcement tools so that what we say we are going to do, we actually do. We need to require truth in accounting so the American people understand that we say we will spend their money one way, we spend it that way, and they understand what the liabilities of this country are in the future, and that we are all held accountable, and people can hold us accountable because they can understand what they are doing, and we combat waste, fraud, and abuse, which there is very little incentive or opportunity do here.
So the Family Budget Protection Act does exactly all those things. That is why I am here today. That is why I am proud to join my colleagues, and I look forward to your questions.
Ms. Pryce. Thank you.
[The statement of Mr. Chocola follows:]
Ms. Pryce. Gentlemen, who would like to be next?
Jeb, thank you for joining us.
STATEMENT OF THE HON. JEB HENSARLING, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. Hensarling. Yes. And forgive my tardiness. It is budget markup day. I appreciate you holding this hearing and allowing me to participate. I did not hear the earlier testimony; I will try to not to be repetitive of what they said.
But it appears to me that there is no doubt that our budget process, really our budget enforcement, is broken, and that we have a significant spending problem in this town by almost any measure.
Now, since 1998 until this present year, annual spending per household has gone from $16,000 to $21,000 per household. This is the largest 5-year expansion of government since World War II. It marks only the fourth time in United States history that we have spent over $20,000 per household. Now, many people want to point to 9/11 as the culprit, and certainly it did play some role. But since 2001, 55 percent of all new spending has been on programs not related to the war or terror, despite historical precedent, particularly in World War II and Korea, where we have reprioritized and restrained nondefense spending in such times of conflict. Discretionary spending has risen 63 percent over the last 5 years, shredding any argument that our budget woes result solely from runaway entitlements, although mandatory spending certainly remains a growing problem as well. Since 2003, it reached 11 percent of GDP for the first time ever.
I think by any metric we choose, one would have to conclude that spending is out of control. Frankly, it has been for quite some time. Since I have been on the face of the planet, the Federal budget has grown seven times faster than the family budget, which I think is an unsustainable growth rate.
Now, both our President and the Chairman of the Federal Reserve has asked us to turn our attention once again to the budget process, and I think it is right that we do that. But before we consider specific reforms, I think we need to have some understanding of how we got into this particular situation in the process. And I think what we have over time is built up over 30 years a spending machine in Washington. If we were a factory, we have created a spending machine. If we want to be in the savings business, then we are going to have to retool this particular factory.
Right now the political choice that lawmakers are given is to essentially be -- if you want to be for a value proposition, then you have to be in favor of spending more money next year than you did last year. Some of us have a competing vision, and we believe that maybe families should be spending more of their money on education, on nutrition, on housing, and that family choices count for something.
So -- but there has been a loaded question in the spending machine, and that is, if you care about veterans, if you care about children, if you care about the elderly, then you have to vote for more spending next year and deliver more government, higher taxes, and less freedom.
Our bill, the Family Protection Budget Act, is designed to change that machinery. It is designed to protect the family budget from the Federal budget. First, it would transform the budget resolution into what is really de facto, a mere suggestion, into a legally binding budget. The 20 main functional spending categories would be reduced to 4 to encourage broad agreements on overall totals early in the process.
Second, I believe there has already been a discussion on both the discretionary caps and mandatory caps as we put into the budget, and the creation of a family budget protection account so that members can actually be for something during the appropriations process. Since that material has already been covered, I will move on.
Third of all, and I think this is especially important, that our bill would put a premium on trying to reduce spending without cutting needed services by helping a process that would help eliminate waste, fraud, and abuse. Until you actually forced our Congress to start dealing with the issue of priorities, then I am not sure there will be an incentive to start finding all the waste, the fraud, and abuse. And it is really not finding it as much as it is eliminating it. Some people say, well, there is no line item in the budget that says waste, fraud, and abuse. I would offer the retort that those people have not read a report of the inspector general, and they have not read the report of the General Accounting Office. Frankly, there are a lot of line items that should be saying waste, fraud, and abuse.
In addition, we set up a sunset process which 20 States use, including my home State of Texas, and have used very, very effectively. Because we have over 10,000 Federal programs spread across 6,000 agencies, I am not sure how any one individual can keep track of all of their activities. And we all know, for example, at one time we had a national helium reserve that was set up after World War II to ensure that we had helium for our dirigibles that were used in World War I, and we only recently managed to get rid of it. To the best of my knowledge, not one dirigible was used in Operation Iraqi Freedom. Why did it take us 50 or 60 years to get around to finally figuring out that this was a form of waste, fraud, and abuse? And family understand this process, but yet we are having trouble to have the government understand this particular process.
Now, one concern that this committee may have is our point of order protection. And I do not know if that has been discussed in the previous testimony or not. And I would just offer the opinion that certainly it is within this jurisdiction to waive points of order on the budget, and I have no doubt that from time to time there are exigent circumstances that call for that. But I would also ask the question: If it is done on such a routine fashion -- and I ask the Budget Committee which is supposed to keep track of these things -- how often are budget points of order waived in rules? The answer was: So often that we stopped keeping count.
There comes a point where it becomes so routine, where the exception becomes the rule, then I would argue that to what extent is our budget process, really our budget, really a charade? If we pass a budget, shouldn't we mean that we are going to stick to the budget? And if we want to change the budget, maybe a more proper way of going about it is to actually amend the budget resolution. But when we go about putting the census into emergency spending, and we waive all the budget points of order, when none of the supplements count against pay-go, discretionary spending caps, at some point you have to ask your question are we being honest with the American people about what we are doing in the budget?
And so in conclusion, Madam Chairman, President Reagan once said: Spending by government must be limited to those functions which are the proper province of government. And we can no longer afford things simply because we think of them."
I hope that that is something that we believe as a Congress. And, if so, we need to recognize that we have a spending problem, and that we need to protect the family budget from the Federal budget, and only by putting enforcement mechanisms into our budget process can we do that.
And I appreciate the opportunity to testify here today.
Ms. Pryce. Thank you.
[The statement of Mr. Hensarling follows:]
Ms. Pryce. I would like to welcome my co-chair, and offer you an opportunity to make a statement if you would like.
Ms. Slaughter. I will submit it for the record, if I may, please. Thank you very much.
Ms. Pryce. All right.
[The statement of Ms. Slaughter follows:]
Ms. Pryce. Mr. Cox, you are senior to this committee and have spent a lot of the years working on these issues; and if you wrap up for your group here?
STATEMENT OF THE HON. CHRISTOPHER COX, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Cox. I do. And I am pleased to have the opportunity not only to be part of this group, but also to be before this committee and Members who are all here patiently listening to testimony from Members, without any TV cameras or a whole lot of press.
But, I mean, the truth is that this is hard work, and you are not getting the usual Washington rewards for doing it. And that means to me that you are serious about it, and that is a great thing for this Congress and this country.
I came to Congress with an overhaul of the budget process uppermost in mind because it is something that I had worked on in the White House with President Reagan. President Reagan sent legislation up here. I brought it up here and had a meeting with Billy Pitts talking about how the Reagan administration and the Congress could work together, because there was something of some deference that needs be paid by the executive branch when they are proposing to the legislative branch how to rewrite the process up here.
Ms. Pryce. Did you write the great one-liner that was just quoted?
Mr. Cox. No, I did not. Dana Rohrabacher may have written it. On the other hand, there is always a chance President Reagan said that.
And so I joined the Government Reform Committee, which had, I noticed, jurisdiction over the budget process. I waited that out patiently for a decade or so, and then as a member of leadership participated in rewriting the rules a few Congresses ago so that we placed all the jurisdiction to overhaul the budget process here in the Budget Committee to see if that would work better. But the truth is we have burned up more than a quarter century with more evidence of failure under our belt than anybody should need to know that we need to do something different.
And for the last 10 years, I have been chairman of a committee which has a much longer pedigree on overhauling the budget process than I do personally, and that is the Policy Committee. This year's policy annual report has a dedication in it to Barbara Conable. This is a sort of weak Xerox of it, but we published a book dedicated to Barbara Conable, who served on the Policy Committee as Chairman in the years that wrapped around the 1974 Budget Act's adoption. They critiqued it in 1973 beforehand; they critiqued it in 1975 after they had gone through the process once.
And I just want to quote from Chairman Conable's policy statement in 1975: The new budget procedure -- talking about the first year of the 1974 Budget Act -- is no panacea. And the first resolution on the budget makes it clear. Chairman Conable predicted 1 year after this legislation was adopted it would lock us, quote, into a higher tier of uncontrollable spending for future years.
And there is a lot of analysis. It was very clear to them and later on to Chairman Rhodes, who also wrote about this, that the problem was, first, we weren't controlling total Federal spending the way the legislation that you just heard described would, both discretionary and so-called entitlements. And, second, there wasn't any enforcement. And the enforcement, such as it was in the Budget Act, has dissipated over the years, as Jeb just mentioned, so that now it is nonexistent.
The number one job we have to do here if we are going to have budget process reform is focus on enforcement.
Now, the Chairman started out raising -- Chairman Dreier -- two issues that honestly ought to be central to this discussion. And I don't want to disagree with his approach because I think I can distinguish between the principles that you just described that you adhere to, Mr. Chairman, and what I mean by enforcement. I think it is proper for you, indeed the committee and the whole Congress, to be wary of willy-nilly introducing supermajority procedures into a democratic body. And I think when it comes to making policy choices, there really isn't much justification for that.
The question is once Congress makes a choice, once Congress adopts rules and procedures, once Congress has a budget for as short a period as 12 months, possibly 2 years if we go to a biennial budget, is it then in any way enforceable, or is it like Alice in Wonderland? Is it just what we say it is? Is there something called a rule of law in America? And can this place pass a law that anybody in the country can take seriously?
The two major reforms in President Reagan's proposal that he sent up here a quarter century ago -- well, not a quarter century ago, 20 years ago, if that, 18 years ago -- were, first, make the budget a law. One way to enforce things, make them laws.
Now, it is only for that reason that you bring the executive branch in. I don't think the executive branch should be telling us how to run our business here, but I do think that we have a constitutional way to pass laws; and if you make the budget resolution a law, then there is a role for the executive. And I would argue that far from slowing it down, nothing could make it any slower than it is right now. God knows, when was the last time we met our legal deadlines around here? We break the budget law every year with no consequence.
If we have a law, and we have then an opportunity to require a supermajority vote to break the law -- and that is what we are talking about -- then we might have some discipline in this budget process. And a lot of the rest of these provisions reinforce this notion that there has got to be enforcement of the budget. But unless you come up with some way to enforce these things, then all the rest of it is just desirat, and it is not going to amount to anything more than the experience we have had over the last several years.
In addition to the budget process reform legislation that I am happy to cosponsor with Representatives Hensarling, Chocola, and Ryan, I will also soon reintroduce the shorter bill that I most recently carried with 200 cosponsors, and the Policy Committee is also going to be working on a constitutional spending limit based on what we have in California, based on what has been adopted in Colorado, and we would like you to consider that.
The good news and the bad news is -- bad news first: We have a half-billion-dollar deficit. The good news: You are all here, and you have the power, we have the power together, to fix this, particularly for Republicans who are in the Majority of the House and the Senate. In fact, forget the Senate. For Republicans in the Majority here in the House, a unicameral approach to this can get you 99 percent of the way. If you want to stop spending over a budget that we adopt here in the House, you can even do that.
So we have the power to bring this under control, and the seriousness that you bring to this suggests to me that we are finally listening to the wisdom of Representatives Barbara Conable and Rhodes and even that guy on the wall who was very interested in this as well, former Chairman Jerry Solomon from New York.
So thank you very much for carrying on this important work, and I hope this year we get it across the finish line.
[The statement of Mr. Cox follows:]
Ms. Pryce. Thank you very much, gentlemen. An excellent presentation. I know how much hard work, thought, and dedication you have given to this.
Ms. Slaughter, any questions?
Ms. Slaughter. Just one, and I would like to ask of all four of you. Do you think the Budget Committee is necessary? Is that a process that is necessary in the House?
Mr. Hensarling. I believe today it is -- if we are not going to enforce the budget, then I would say that is an excellent question. I suppose one could offer the opinion that even as many leaks as there are in the budget dam, that maybe at the end of the day we are better off with a budget than without a budget. But without real enforcement of ostensibly the majority will of the Congress, I think it is a question well worth asking. The whole purpose is trying to really enforce what the Majority has already done here. So I hope that the budget will be a relevant document, but certainly we have to have legislation to enforce it.
Ms. Slaughter. Chris.
Mr. Cox. Yes. The Budget Committee is vitally necessary. And, no, it is not serving the purpose to which it was designed in the first place. It has got to be strengthened. The process has to be strengthened. Otherwise, not only is the question a good academic one to ask, but it is a good real live question to ask.
If the budget -- I served on the Budget Committee, as I think many of us have here. If the Budget Committee endures in its current form with an unenforceable process, then I think you are just going to have a lot of brave souls who do their turn and then go find something more productive to do on the Appropriations Committee.
Ms. Slaughter. I know that feeling.
Mr. Ryan. Yes, it is necessary, but it needs to be made more relevant. And it is becoming less and less relevant every year. I was a budget associate staffer in the 104th Congress on the Budget Committee, served on the Budget Committee my freshman term. Every year you see more and more and more budget points of orders being waived and, therefore, making the Budget Committee less and less relevant. We need to make it more relevant.
Ms. Slaughter. In a real showdown battle between Appropriations and Budget, we know who wins.
Mr. Ryan. Yeah.
Mr. Chocola. I would just agree with my colleagues. As I mentioned in my comments, my background is in business, and we didn't have a Budget Committee in our business, but we had an enforceable budget. And so I think that so long as we have a budget that we can enforce, then a Budget Committee is necessary. Yes.
Ms. Slaughter. Thank you.
Ms. Pryce. Mr. Hastings, you are interested in all these issues.
Mr. Hastings of Washington. I do have an interest. And maybe I can respond to Ms. Slaughter when I have my opportunity. But -- I am on the Budget Committee with Jeb, and we are going through that drill as we speak right now. But I think you have some great ideas on here, and I think part of this is because of the study here involving my colleague. Of course, Mrs. Myrick is the one who leads it. And I think we are moving in the right direction. I serve on both the Budget Committee and this committee, and so I maybe get a little different perspective because I can see it here when we waive it, and I see it over there where we have the frustrations. So I really can see that. And I have a potential solution to that.
But I think you guys are moving in the right way. At the end of the day, the only way this works is if people of good will try to come together to resolve problems. If we are going to use all of these opportunities to stand in the way, we will never get anything done no matter what we do.
But there has to be some discipline. As Paul Harvey said -- self-government doesn't work unless you have self-discipline. I think we are the epitome of that. We need to set that example. The American people expect us to.
And, Chris, I want to thank you for the compliment, sitting around here listening to something as dull as this, because I can certainly say -- that there is a great deal of frustration amongst a lot of people on both sides of the aisle that this needs to get fixed, that timing is everything. And we have this opportunity now.
Mr. Cox. Well, only in Washington are we so urbane that we consider a conversation about how to control $2.4 trillion dull.
Mr. Hastings of Washington. That is true.
Ms. Pryce. Mr. Hastings of Florida.
Mr. Hastings of Florida. Thank you.
I just wanted to make one comment and then a couple of questions. And my comment, I guess, is directed to our colleague Mr. Hensarling with reference to your comments about spending per household and the increases that are pretty well documented by the statistics that you gave us.
And then you made a reference to previous wars. And I would only urge that you take into consideration that the war footing that we are on now is the only time in the history of this country when we are at war that we have had tax decreases. And I would urge that you contemplate that as you are looking at the full spectrum.
For any or all of you, how much does the Federal -- can a Federal budget do with regard to deficits, considering that a lot of elements contribute to a deficit, and some of those elements are kind of out of our control. I for one in terms of committee jurisdiction have advocated and still believe that we should follow the model that Japan has for a disaster relief committee. It is kind of interesting how they do that. They have 13 committees of jurisdiction, just like we do, and then they have a 14th committee that is constituted of the chairs of those committees. And they have a pot of money that they move when they have an earthquake. Here, we have a drought, and we have a fire, and we have whatever, and it takes going through all of that process before the people who are harmed or victimized receive the relief that rightly they should receive.
So I can see how a lot of things, a bad economy or assisting unemployment, a loss of jobs, can affect the budget process. Well, how can the budget do anything about that?
Yeah, Paul.
Mr. Ryan. We have actually put a title dealing with that. We propose a rainy day fund for emergencies. So we propose in the budget that the budget that is signed into law by the President is the mandatory number that is not defense discretionary, nondefense discretionary, and a rainy day fund for emergencies. We then tighten up the definition of emergencies to fit really what is an emergency. The FEMA definition, war, terrorism, floods, those kinds of things. And then we require that you can't put things in an emergency bill that don't meet that definition. Because a lot -- one of the other tricks of getting around the budget process here is just declare an emergency, you know, the census. We kind of saw that one coming, I would argue.
Mr. Hastings of Florida. Wouldn't it be better to go back to some of that rather than the supplemental process?
Mr. Ryan. Right. That is what we propose is a rainy day fund to be set up with money, you know, set aside in the budget for emergencies so we can prepare and plan. We always have a supplemental every year because there is some unforeseen problem that occurs; we should begin to budget for it --
Mr. Hastings of Florida. But some of it isn't fair, Paul, if we set up -- for example, we are getting ready to do a budget now. All of us know we are at war in Iraq and Afghanistan and against terror, and yet we know we aren't going to put the funds in the budget. I think that that is not being real with the American people.
Mr. Hastings of Washington. Would the gentleman yield for a moment?
Mr. Hastings of Florida. Of course I would.
Mr. Hastings of Washington. The budget that we are contemplating marking up has money setting aside for the request that is coming down the line. We have put a function in there right now. So I just want the gentleman to know that. We are planning for that in this process this year.
Mr. Ryan. And our bill does not prohibit emergency spending above the rainy day fund, because there will be moments where you will have to do that. We simply say for the emergencies we typically run into, we should start trying to plan for those things. Obviously, we have a procedure in our legislation to offer what you traditionally call emergency spending if something huge happens, like a terrorist attack.
Mr. Hastings of Florida. So all of us pretty much agree that the appropriations process as has been exercised in recent years circumvents the budget resolution. All of us pretty much agreed on that? None of us are appropriators here. Charlie? I am just trying to make sure. Chris, you said there were no media.
Mr. Hastings of Florida. All of us are pretty much agreed on that.
Let me ask you, Mr. Cox, you evidently favor the line-item veto, a form of that. Is that true?
Mr. Cox. Yes, in fact, we have had a lot of constitutional tests of this as well as policy discussion about it. I think what suits us best as the legislative branch is not so much the line-item veto, but something that you could call "line-item reduction." The line-item veto is a light switch; turn on and off. The line-item reduction is a rheostat that gives the President as the enforcer of a budget that we have passed in the form of a law the opportunity to pare back overbudget spending to the level originally set in the budget.
So you wouldn't have to zero out a function. You wouldn't have to have planned irrationality. You would end up doing things like taking 4.8 pages out of every book in the library. You could actually have planned rationality instead of planned irrationality. Congress' policy authority would still be enforced. The President would not get a chance to undo what a majority of Congress wanted that way.
Mr. Hastings of Florida. Madam Chairman, I will observe the 5-minute rule. I do not concur that we should have that in the Rules Committee, and I will take that up with you. I do not want to vote on anything. But I did want to ask, how do you get around the existing case law, Glynn v. New York and other laws, where the Supreme Court has said it is unconstitutional? And so if you have the line-item reduction how do you get around that?
Mr. Cox. The stark difference between what we have tried so far and has been litigated and what is being proposed is that we would transform the budget resolution from a concurrent nonbinding resolution which guides our procedures here in the Congress to a law which the President as the chief executive actually has the opportunity to enforce, and all that he is doing is using a separately enacted legislative procedure to enforce a separately enacted law.
That operates very, very differently from line-item veto, which makes him a participant in the legislative process.
Mr. Hastings of Florida. Thank you.
Ms. Pryce. Mr. Chairman Dreier.
Mr. Dreier. Thank you very much, Madam Chairman, and thanks to all of you for this very thoughtful approach that you have taken in dealing with this, and obviously I am very supportive of much of what you are doing.
I would like to comment on the issue of budget waivers. Chris was at the meeting, and Deborah the other day, when I talked about this. It does get to the issue that was just raised by Louise, and that is the Appropriations Committee versus the Budget Committee. And when it comes to management it is an issue, as I explained the other day, that I believe it will take us some time and effort to work on management wise.
The main reason that we provide these waivers is that it is so often that putting together pieces of legislation is challenging -- I am talking about the appropriations bills -- challenging and, as all of my colleagues in the Rules Committee know very well, it is often done late at night, overnight, and we have a very short period of time and I am a strong advocate of trying to do our doggonedest that we do have a longer period of time so that we do not have to provide those blanket budget waivers that we have in the past.
So short of dealing with it in another way, I am committed to continuing our quest. And I am not going to say that there will not be late nights when we, working with the Appropriations Committee, do end up here in the Rules Committee late at night if it weren't the case. But we will try to as much as we can mitigate the number of those.
I would like to for a moment explore one area where I am in complete agreement with the package that you all have, and that is the issue of biennial budgeting. We know that there is an institutional struggle that has gone on. The main reason that I pursued it in the past was that we have the chairman and the number two Republican on the Appropriations Committee, Bill Young and Ralph Regula, as two of the most eloquent, thoughtful champions of the issue of moving towards biennial budgeting.
And a lot of the other appropriators obviously are not, because we have had virulent opposition that came from a number of the members of the committee. And we all deal with jurisdictional struggles around here and it is something that I have gone though. This Rules Committee itself is simply designed from my perspective to implement the wishes of the Speaker of the House. We are the Speaker's committee. We do that and obviously the Speaker serves at the kindness of the Republican Conference and the full House, but this is really what our responsibility is.
But, when it comes to the issue of jurisdiction on this budgeting question, there are real challenges with which we have to contend. But I think we have made compelling arguments and we almost passed the biennial budget. When we were dealing with it before, we had something like 250 or 260 cosponsors of the biennial effort and we finally had the vote and we had about 206 votes.
Mr. Ryan. In the 106th Congress.
Mr. Dreier. We had 206 votes. It was very, very close because there was understanding of the importance of this. The President of the United States happens to be a great champion because of the success that he had with it in Texas. You know that very well, Jeb, and Charlie Stenholm as well. And I think that I would still like to see us -- if we do not do it completely, I have had a number of proposals that we have worked on that deal with this question of doing it incrementally and having, for lack of a better term, sort of a pilot project on it.
And this is the final point that I want to make quickly. I think it is important, as I just said in my opening statement, for us to look at this entire budget process in a macroeconomic way. And Mr. Hastings and Mr. Castle have a fascinating proposal that I have been working with them on that they are going to be outlining as we look at some of the structures there. And I think that there are a number of things that you could be supportive of.
Thank you. I do not have any questions.
Ms. Pryce. Mr. McGovern.
Mr. McGovern. I am not sure what was covered here. I apologize for being late. But if I could make a couple of observations and then ask a question. This is an interesting topic about trying to figure out how we can get this budget better and coming up with all kinds of mechanisms to handcuff us here or put limits on us here, put rules in place that would prevent us from doing bad things. But we have rules and processes that we seem to waive all the time. So I am not sure, no matter what kind of concoction we come up with, if the political will is not there to do this right, to balance the budget, to try to bring down the deficit, I am not sure whether you could do it any other way.
I mean, I think the problem is more with policy than it is with process. And having said that, I guess my question is there are a number of you who are supporting the reauthorization of pay-as-you-go for discretionary spending. And if we are serious about trying to control the deficit, why do not we extend that to tax cuts as well? Because I think it is a strong case that could be made that these tax cuts that have been implemented have contributed very greatly to the budgetary mess that we are in right now, to the deficit.
And people can have a difference of opinion in the long term how these will all play out. But wouldn't it make sense to apply PAYGO to tax cuts as well? I would be interested to see what people thought.
Mr. Hensarling. Are there two questions or one?
Mr. McGovern. It could be as many as you want.
Mr. Hensarling. I will deal with the latter one first. Obviously, there can be a legitimate debate on that issue. I for one believe that when it comes to dealing with our Federal deficit that tax relief is part of the solution and not part of the problem.
Already we have cut marginal rates under President Bush's economic growth program and Treasury reports that we have greater tax revenues. We saw the same phenomenon in the Reagan administration. We saw the same phenomenon in the Kennedy administration. We saw the same phenomenon in the Coolidge administration. Often times the history is that when we cut marginal rates we have increased economic growth and increased tax revenues.
The second observation I would make --
Mr. McGovern. If I could just -- and from my perspective I would say that we have got a $500 billion deficit, a 3 million job loss, and I could make the argument that investing in education over time would result in X amount of economic activity and therefore we shouldn't subject that to pay-as-you-go.
But the fact of the matter is, my question is no matter what you think about what tax cuts will or will not do ultimately, what is wrong -- if you are going to have PAYGO with regard to discretionary spending, what is wrong with subjecting tax cuts to that same thinking?
Mr. Hensarling. Well, two points: One, actually our bill does not have a PAYGO, we have mandatory caps. We have spending caps. So it is a slightly different approach as opposed to PAYGO. So once again we could have a legitimate debate on PAYGO. This particular bill, the Family Budget Protection Act, does not contain that.
The only other opinion I would offer is that when you look at the tax relief that we have passed, at least under the Bush administration, since I serve on the Budget Committee, we passed I believe -- we scored at $1.7 trillion over a 10-year period contrasted between $8.3 trillion of spending over that same time period. If you do the math what you see is 94 percent of the challenge dealing with our deficit is on the spending side.
So it is a legitimate debate that we could have. But if you really want to be serious about bringing us into balance, then you have to look at the spending side. And there are many of us in this Congress who believe that we have a spending problem, not a taxing problem.
Mr. Cox. I would like to jump in on this, too. I think we are making a mistake in analysis when we are confusing policy, fiscal policy, with the budget process. The budget process if it is going to work, particularly in our government, which is comprised of Democrats and Republicans and occasionally others, has to be absolutely neutral on these questions of whether an additional dollar of Federal spending is going to grow GDP or not.
My staff actually wrote some things for me that I did not bother to use here because I have had this discussion with my own staff. They wanted me to say that the Joint Economic Committee and economists around the world have repeatedly observed in recent years that each additional dollar spent by the government reduces GDP by more than one dollar. Although the estimates of this cost vary, their common theme is that free markets, in which people with financial stakes in the outcome of spending and investment decisions make decisions, are better at creating jobs than are government monopolies, under which performance incentives are comparatively weak. One need only compare the success of free markets in the U.S. with the economic failure and high unemployment in nations with larger government sectors, et cetera. And you might not agree with that. That is what we debate about on the floor of the House.
What we need in the budget process is not a magician that is going to come in and resolve this issue for us so that we eliminate Democrats and Republicans. What we need is something that says you have to live within your means. We are trying to have a budget process that spends less than we take in. So first we do our best job of estimating our revenues, and then we do our best job of living within a system that says that you spend that much and no more, and that washes out all the ideology.
It is a completely different approach than trying to invest too much hope in the budget process to make us all sing Kumbaya.
Mr. McGovern. I guess I would say, you know, that if we were to go ahead with PAYGO for discretionary programs and not for tax cuts, I would argue that you are putting ideology into the process.
Mr. Cox. I thought you were going to say why do you apply it to discretionary and not to mandatory? Because that was the criticism that was leveled more than a quarter of century ago when this process was first brought into place. What we have all seen in the past decades is that retirement spending has grown from a relatively manageable portion of the budget to the whole thing. So that now the appropriators, who are beaten about the ears all the time for doing the wrong thing, are not responsible for most of the budget. And that is what we really need to do if we want to get a grip on this.
Ms. Pryce. Mrs. Myrick.
Mrs. Myrick. I do not have any questions. I commend all of you for your hard work and the thoughtful process that you have gone through and I support everything that you want to do.
Ms. Pryce. I thank you gentlemen very, very much for your hard work and being here on a getaway day. We have three more panels before our Director is going to testify in 35 minutes. So for those of us who were not here for my announcement, we are going to try to stick to the 5-minute rule, which is unusual in the Rules Committee, but our next panel is Charlie Stenholm and Baron Hill on the Enforcing Fiscal Promises Act.
Gentlemen, thank you very much for being here and for your patience today, and your full statements can be included in the record and feel free to summarize.
STATEMENTS OF THE HON. CHARLES STENHOLM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS; AND THE HON. BARON HILL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF INDIANA.
STATEMENT OF THE HON. CHARLES STENHOLM
Mr. Stenholm. Thank you. I am delighted to be here and I thought it was fascinating listening to the previous panel. There is a lot that we can agree to and agree on in this.
Our budget enforcement rules are not a substitute for making the tough choices that will be necessary to restore fiscal discipline. Budget enforcement rules can raise a red flag for legislation that can increase the deficit and hold all of us accountable for our decisions, but unless there is consequences for our votes you are not going to get there.
And that is why that we advocate PAYGO for discretionary spending, mandatory spending and revenue. And my sincere belief, based on the experience in 1990, the 1990 budget enforcement rules were not perfect but they worked and they were extremely helpful in bringing about the balanced budget in the 1990s. But when you exempt, as those who argue that revenue should be off base, that is a perfectly great political argument to make and it gives us what we have now got, $500 billion deficits with borrowed money and finger pointing.
But if you have a sequestration that affected taxes as well as mandatory spending as well as discretionary, then inability to come together in a compromise would have consequences on every one of us because we would having gone home and made tax increases, spending cuts, and done all of the other things that we would not want. So here we have to have consequences.
I hope that we do not make the mistake of exempting revenue. If we do, it is guaranteed to be a failure because we will continue to have what we now have. What the Blue Dogs are suggesting, the first thing we need to do is stop digging the hole deeper. If you find yourself in a hole, quit digging.
As has already been discussed, policy is what we argue in the budget process. But let's quit making the hole deeper. For example, those of us who voted for the Medicare bill last year -- I am one of them -- we were told it was not going to cost more than $400 billion. We suddenly found out it was $534 billion. Why not go back and have the President revisit, suggest how to reduce spending so that we can come back in the budget?
With all due respect for those who talk about taxes, this year revenue is $100 billion less than the budget in the economic game plan that you have been passing. I have not been a part of it because I disagreed with the fiscal irresponsibility of the budget based on tax cuts, not restraining spending. But here we find revenue was $100 billion less than projected. Therefore, why not force us to go back and make up the shortfall either by cutting spending, if you can get the 218 votes, or increasing revenue to make up the difference? That is what PAYGO does, if you are serious.
The farm bill, the much maligned farm bill, as one of the prime authors of that, we made it very clear if we spend one dime more than the $73 billion that we were allowed to by the Budget Committee, we would cut it. And fortunately, we are coming under the 73 billion. It is still a perfect prerogative for the rest of Congress to come and say you have got to cut it more, as the President suggests this year. That is a perfectly legitimate policy decision to be made. But it shouldn't subject the Ag Committee to an automatic sequestration if we were doing what is necessary as we were told by the Budget Committee that we should do.
And I am perfectly willing to apply these rules, we Blue Dogs are. I would add one thing personally that I was not successful in getting a majority of my Blue Dogs to go along with, and that is a modified rescission order. I am perfectly willing to allow any President to go into any spending bill and knock out Charlie Stenholm's pork. All I am asking is for an up-or-down vote with me defending what I put in in the light of day. And if I can get my colleagues to agree then it is not pork. If I can't, it ought to go. It is something called a modified rescission order, something that I have joined with other members on your side of the aisle and a few on my side of the aisle.
Does it make any difference -- when you talk about line-item veto does it make any difference who is President? If you hesitate for a half a second who you want to give that power to, then I do not want any part of it. If you could say it does not matter who is President, then you are honest in your effort and sincere. The Supreme Court has already ruled that is not unsurpassing, or whatever the word is, of congressional responsibility.
Finally, I would say as serious as our near term budget problems are, and they are very serious, the long-term problems we face when the baby boom generation begins to retire in 2008 are even greater and the Blue Dog proposal that we put forward would require the President's budget and the congressional budget resolution to include information on the 75-year liabilities of Social Security, Medicare and other government programs.
In addition, we would establish a point of order against any legislation which would increase the long-term liabilities of Social Security, Medicare, Medicaid, et cetera. We think that that is something that we better start paying a lot more attention to.
And, again, I would just in summation reiterate how important it is for this committee and the recommendation that you make and ultimately a vote on the floor of the House, to include all parts of the budget. If you exempt revenue, it is in my humble opinion a guaranteed road map to failure. If you put it all on the table, force us all to argue and debate these issues, then an enforcement package could do what I know all of us are setting out to do.
[The statement of Mr. Stenholm follows:]
Ms. Pryce. Thank you very much for your thoughtful testimony.
Mr. Hill, welcome.
STATEMENT OF THE HON. BARON HILL
Mr. Hill. Hello. Thank you, Madam Chairwoman, I appreciate the opportunity to appear before this committee, and I appreciate that you are taking an active interest in trying to get some real solutions to a real problem that we have got in this country right now called the Nation's debt.
Most economists will tell us that for the long-term health of our economy this debt is a problem that we need to get it under control. So I want to thank you and the members for giving it serious attention and trying to come up with a serious solution because we really do need a bipartisan fashion to try to figure this out, of how to get control of an animal that will come back to haunt us if we are not serious about it.
Much of what I was going to say has already been presented by Mr. Stenholm, so I won't waste the committee's time other than to say that in our proposal we are committed to living within the President's proposals on discretionary spending for 3 years. We have to enforce discipline here. The President is trying to get the Congress to act in a disciplined way so we are embracing his proposals of making sure that the discretionary spending does not get out of control.
The PAYGO rules are something that Charlie and others have already talked about. I would simply emphasize, as he did, that they should apply to revenues as well as spending. We will not get this animal under control unless it applies to revenues as well.
Having said that, I thank you for this opportunity to make this presentation and wish you well in your decisions.
[The statement of Mr. Hill follows:]
Ms. Pryce. Thank you very much. It is very kind of you to be so brief in your summary. I understand that you both speak from the same book, and thank you for the work that you put into this.
Ms. Slaughter.
Ms. Slaughter. Thank you, Madam Chairwoman. It just occurs to me that under the rules that we have we did get the deficit under control. We did away with it and it came up in great surplus. So that is not the answer. The deficit was not caused by the structural problems in the Budget Committee. But I was interested in what you said, Charlie, about the shortfall in the revenue. Does that trigger anything in the budget process as it exists now, that the spending would have to be cut? Nothing?
Mr. Stenholm. No.
Ms. Slaughter. The assumption was made that revenue would come. If it does not, you go on with the dance? Is that the way it works?
Mr. Stenholm. Yes, we have this general belief among some that the way to prosperity is cutting taxes and that there is nothing wrong with that and no evil, even with borrowed money, so long as you are reducing revenue. And as long as you have that belief and no one is worried about the results of that, you are going to continue to have what we now have, which I think bothers the majority of both sides of the aisle.
And I appreciate very much that we do have the proposal from the four colleagues before us today. There is much more that we agree with than disagree with, much more. But the thing is that we have got to take that next step and actually do something that works.
Ms. Slaughter. One of the things obviously that is of concern is private debt is equal to the public debt. And I think Americans sort of adopted that notion that I have no money, but I have these wonderful credit cards, which is basically the thing we are doing here.
But my problem in trying to deal with this, having served on the Budget Committee as well as most you, is if we are trying to find a structural answer to something which really does not have one, it requires discipline on the part of the people who are on the committee who sit in the House. I am always troubled by trying to find a sort of stop-me-before-I-spend-again idea, that we trigger this or hit that or sequester that or something.
It seems that we should have a mature enough understanding enough of what we are doing. Again, I did not ask you what I asked the other panel, and I need to. Do you believe there is a necessity for a Budget Committee?
Mr. Stenholm. Yes.
Mr. Hill. Yes, I do, too.
Ms. Slaughter. Why?
Mr. Hill. Because a framework is important for us to work under. It will in my view instill some discipline in us as we go through the budgetary process. Of course it does not have the force of law and we all know that. But it does put a structure in place. I mean, I put a budget together for my family. I wouldn't have to, but I do, and I think the Congress ought to do the same thing.
Mr. Stenholm. It is not the fault of the Budget Committee. When you waive the rules that we all pay homage to, when you waive those routinely in order to bust the budget, why do you blame it on the Budget Committee? It is convenient to blame appropriators, but we do not have to vote for these appropriations.
Ms. Slaughter. I remember quite seriously in 1991 when we had the agreement on what we would do about capping spending and firewalls, and there is no question about it that that is what got the deficit under control. And if we are going to deal with the process and make some changes, I think we ought to go and do our work.
Mr. Hill. I think you are right. A budget without teeth in it is not a very good budget. This will provide the teeth that the budget needs.
Ms. Slaughter. We do not have the sense of urgency that we need in my view. And frankly when I was elected in 1986, I did not think I would see it go to zero in my lifetime and it was hard work and good discipline, and a good economy, obviously, which makes a difference. That is the thing that troubles me more. If people who are lucky enough today to get a second job, they are almost always beginning on a lower wage scale and you can't interpret that any other way except that the standard of living is dropping in the United States and we need to get a handle on that.
Mr. Stenholm. Ms. Slaughter, if I may, I was here in 1981 when we voted to increase our debt ceiling to $1 trillion. You are correct about the sense of urgency today. We borrowed a trillion dollars in the last 2-1/2 years. It is explained away. We are going to borrow another trillion and a half this year. Why? I will give you my personal opinion. The folks who should be worried about this borrowing can't vote. It is my three grandsons. You raise taxes and you get unelected, theoretically. Not just theoretically, that is it. But you borrow the money on your grandchildren's future, they are going to hold it against us when they get old enough to know what we are doing. It is so convenient today. And I am 1/435th of the problem. This is not finger pointing, I am just stating what I think to be the obvious.
Ms. Slaughter. Thank you very much.
Ms. Pryce. Mr. Hastings.
Mr. Hastings of Washington. Thank you. I want to congratulate you for being so persistent on the whole budget process. As long as I have been here the Blue Dogs have always had an alternative or an idea, and I commend you for that. As you know, sometimes your ideas are not favorably looked at totally by us. That is just the nature of the business here. But you certainly bring a lot to the table.
And, Charlie, I am encouraged when you say that of what you heard from the previous panel there is more you agree on than disagree on. I think that is the basis for a start in this process. I think there is a real effort this year to try to change how we budget. It needs to be done and enforcement keeps coming up all along. Baron, you mentioned that in your remarks. Enforcement has to be part of it. As one who sits on both committees, I want to be with my friends, I am on one side sometimes and on the other side at other times.
But on the issue of PAYGO -- and there will probably be some part of PAYGO in there -- you heard your colleague from Texas, Mr. Hensarling, talk about his view. That is a legitimate view on a policy difference. You do not know how this is going to end up but I think there will be a PAYGO provision of some sort.
The frustration that Jeb would have is that the scoring of revenues seems to miss a whole lot more than the scoring of expenditures, and therein lies the problems because of the dynamics of the revenue stream.
But I just want to say that as one that has observed you all the time, you come up with an idea, and I think you should be commended for that. And I think on those things that we can agree upon, we ought to embrace those things and agree to disagree on some of the other things. But in the end result I have six grandkids and I am concerned about them just like you are about your grandsons. I am certainly willing to work with you, but I sincerely want to commend you for coming in all the time as the Blue Dogs and presenting something that I think is a very important part of this process.
Ms. Pryce. Mr. McGovern.
Mr. McGovern. Charlie and Baron, I just want to say you both are good. You almost make me want to be a Blue Dog.
Ms. Pryce. All right.
Mr. McGovern. I think right now I am a rabid dog.
But I would say, you know, I have really appreciated both of you on a number of occasions talking about the need for us to get our fiscal house in order and to be disciplined and to make the tough choices.
Charlie, you opened up by saying budget enforcement rules are not a substitute for making the tough choice that will be necessary to restore fiscal discipline, and you are absolutely right. And we can have hearings and we can come up with all kinds of slogans to explain away things. But the bottom line is that until we get religion on this issue not much is going to change. We have rules in place that we routinely waive because it is convenient. Somebody at the top wants to waive them.
My fear is that they are going to reauthorize the 1992 Budget Enforcement Act and do it in a way that exempts the tax cuts, exempts the revenues, and to me that is a sign that we are not serious, that we are kind of going through an exercise here to let people think that we are being serious but in fact we are not. Tough choices have to be made by people like me who are probably considerably more liberal than most people in this House and by people on the other side who are considerably more conservative.
We all, I think, understand deep down that this budget deficit and the debt that we are going in has implications that are really severe. I think some people think maybe I will retire before people know how really bad it is. But one of the things that Louise said that I also believe and I am puzzled to this fact. In the early 1990's you couldn't go anywhere in this country, Massachusetts or Texas or California, and speak before an audience where the issue of the deficit and the debt wasn't brought up and every day there were special orders on the House floor about the deficit and the debt. And today there does not seem to be that urgency and I can't figure out why when we are spiraling very dramatically in the wrong direction.
So I just -- I hope that before any Budget Enforcement Act is reauthorized that people will reread both of your testimonies very carefully, and if we are going to do this right, this PAYGO has to also include the revenue part. Otherwise I don't think it will be considered serious because it does not work otherwise.
And anyway, I just wanted to say I appreciate very much both of you being here and all of the times you remind us that we are going in the wrong direction, because I think we are probably even worse than we are now and that the Blue Dogs are trying to keep us on the right path. So thank you very much.
Ms. Pryce. Mrs. Myrick.
Mrs. Myrick. Doc gave my speech, so just thanks. But I will tell you that when we talk about trying to do a moratorium on the pork projects, the appropriators do not like that one bit of course. But I still wish we could do something along the lines that we have talked about, having one Member who submits one has to have a justification in writing for why. And the second part of that is having every appropriator, committee chairman, be able to have to say this fits within the jurisdiction of my subcommittee in effect and give justification for it. If we could get that in this year that would make a tremendous help toward moving in the direction that all of us want to move.
Ms. Pryce. Thank you. Thank you very much, gentlemen, for your patience.
Mr. Stenholm. Could I make just one brief --
Ms. Pryce. Certainly.
Mr. Stenholm. You said, and I want to amplify the spirit in which the Blue Dogs -- we want to work together and to find a compromise area. But it is awfully important -- and when we come back with our budget, we will have a budget that balances in 8 years and it will accomplish -- I mean, it accomplishes all of what we are talking about, which we think this is an important part of that. And all we ask is that those who have a different idea either acknowledge that borrowing money at the rate in which we are borrowing it is a good idea and openly say so, take responsibility for your actions. This is something that we have been avoiding like the plague around here, both sides.
But you are now in the majority and you know I got blamed for the first 18 years of my service in this body, everything that went wrong was my fault. Even when I was voting with you, it was always my fault. Well, when you are in the majority there comes a time when you have to accept the responsibility for your actions. So with all due respect to my Texas colleague, there is some of that philosophy that has not proven to be very workable. If you agree with him and you want to assume that responsibility and say, yep, that is the way we want to go, fine. I have got no problem with that. The majority rules. But it would be very difficult for me to be a part of a compromise that has we are going to overlook one more time a philosophy that clearly is not working, but we could find some other things to agree with.
Ms. Pryce. Thank you, gentlemen.
All right, our next panel consists of Mark Kirk of Illinois. Thank you for your patience. We are trying to get through this afternoon as quickly as we can, and I appreciate you -- is Michael with you?
Mr. Kirk. Yes.
Ms. Pryce. Doc, are you with him?
Mr. Hastings of Washington. I wasn't on that panel, but you could put us all three together.
Ms. Pryce. Go ahead. That will put us more on time for the Director. Gentlemen, thank you very much. It has been a long afternoon and you have been very patient. I appreciate that. Who is to begin?
STATEMENTS OF THE HON. MARK KIRK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS; THE HON. DOC HASTINGS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON; AND THE HON. MICHAEL CASTLE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF DELAWARE STATEMENT OF THE HON. MARK KIRK
Mr. Kirk. Well, you heard from the Blue Dogs. Now you are going to hear from the red cats.
Ms. Pryce. Well --
Mr. Kirk. The moderates. We agree with a lot of what the study committee did and I agree with a lot of what the Blue Dogs did. To paraphrase Napoleon, amateurs talk about policy and professionals talk about money.
And in this, I think I will take one title for myself. National Journal put out their vote ratings, which we all watched. The Kerry vote rating is the one that everyone paid attention to. But I got a vote rating too. The National Journal said in my votes last year I was more conservative than 217 Members and more liberal than 217 Members of Congress. So I got the title "Center of the House."
And so in the spirit of that bipartisan cooperation, I have looked at this problem and in many ways when you look at this problem you feel like you are going back to the future.
I started work here 20 years ago as a staffer, and the politics of what the House confronts now is almost identical to what the House faced in the spring of 1985. A reelected President Reagan, Tip O'Neill was our Speaker, and we saw this yawning budget deficit. And some of the painful lessons of the mid-1980s are that specific attacks against spending in specific programs generally fail, because the lobbies behind them are so powerful that they can mount a defense.
Probably the classic one that I will attack this year, but I am realistic about my chances, is the sugar program where the taxpayer is going to waste half a billion dollars subsidizing 11,000 politically connected sugar growers in what some people describe as a national defense program. I don't know how that is. And they have the votes.
If you can't kill the sugar program, what specific program can you kill?
The lesson of the 1980s, when we mounted several attacks against major programs, is that the body, the majority, a bipartisan coalition can be built around a systemic attack against the deficit, not each individual program. And it was from that systemic attack that grew, with the approval of Tip O'Neill and President Reagan, Gramm-Rudman-Hollings. And then the son of Gramm-Rudman-Hollings, and actually the grandson of Gramm-Rudman is the caps and PAYGO, which just expired last year.
Rather than have this body relearn the lesson of the 1980s, I think we should learn from the lesson of the 1980s and put together a bipartisan budget reform bill and incorporate a systemic attack on the budget deficit rather than on any specific program.
We will take many of the ideas from the study committee, the Tuesday Group and the Blue Dogs together and we can put together a bipartisan package.
When we do that -- I think we should do that, by the way, in a systemic way here -- we should not give leadership to the Budget Committee or the relevant other authorizing committee. We should set a deadline for them to mark up their -- the Appropriations Committee their portion of the deficit control budget, but all of the proposals should come to this committee and this committee should write the final package. That means that we can hit a deadline and actually bring a bill to the floor.
If the politics of now are similar to 1985, what is going to happen is pressure is going to build on this issue over the year. It will not go away with the budget debate. If you look at 1985, Gramm-Rudman-Hollings was not attached to the budget resolution. The pressure built and it was attached to the debt limit extension, which is largely what the vehicle will be for our budget reform package. It will be so difficult to get votes for a debt limit extension that we have to attach comprehensive reform, and good solid reform is what gives us the votes to do the responsible thing that the Treasury Department will though no doubt recommend.
To do that I think we need to do spending caps on discretionary and we need PAYGO for the mandatory items, and then let me just offer one compromise idea on PAYGO for tax relief.
There is not going to be Democratic or Republican disagreement about tax relief for extending the child tax credit and preventing the marriage tax from being reimposed. I think there is substantial agreement on both sides to do that. One way to do PAYGO on tax relief -- and I know the majority leader disagrees with this -- is to apply PAYGO to tax relief, which is not in the budget.
Therefore, we negotiate and work out tax relief on child tax credit, tax relief on the marriage tax penalty, substantial, in fact I think Democratic support is stronger than on our side for the tax relief extending the 10 percent tax bracket. So we agree on that and then we apply PAYGO to anything outside the budget. It could be a very good compromise package.
We have offered 12 principles now embodied in the bill cosponsored by 17 cosponsors, H.R. 3925. These coprinciples were jointly negotiated by the study committee and the Tuesday Group. So the hard-liners and the Red Cats, or whatever you want to call them. So it has broad based support within the Republican Conference. Our job now, and I have already started talking with the Blue Dogs about what we could do.
Let me mention one other reform in the 12 that we have negotiated on, and that is enhanced rescissions. Line-item veto: Illegal. Rescissions: The old way can't do it. How do you really do rescissions? You follow the example of military base closings.
What you do is you say that an unamendable set of rescissions comes from the White House. Could be a Bush White House, could be a Kerry White House. But these rescissions, it will be a lot of pork barrel spending in there, come up, up-or-down vote on both sides just like base closings. And because people do not see their base in the base list, they vote for it. Because their project will not be in the rescission package, they will vote for it and there will be an overwhelming vote for it. And it will be a powerful message that you need to work with the executive branch, no matter who is in the White House, to make sure that your project stays off that rescission list. That it makes sense. That people in OMB also support it.
With that I ask unanimous consent to put my prepared testimony in the record. Thank you.
[The statement of Mr. Kirk follows:]
Ms. Pryce. Doc?
STATEMENT OF THE HON. DOC HASTINGS
Mr. Hastings of Washington. This is a different view from here, Madam Chair, I have to tell you that. It is kind of bright back there.
Ms. Pryce. Wouldn't we love to be out there?
Mr. Hastings of Washington. First of all, I think this hearing is a very important hearing, and I heard most of the first panel speak, and the Blue Dogs and now Mark, and I am glad to join my colleague from Delaware, the former Governor on our bill.
As a member of the Budget Committee and the Rules Committee, I think I do get kind of a different perspective than most would have because we have a lot of meetings together and by party where we sit down and talk about frustrations and what we want to do, and of course we meet here all different times. So I can see both sides of it. And one of the conclusions that I have come to is -- by the way, we are marking up the budget. It is going to be a two-day process, today and the balance of it next week. And the reason it is going to take so long to do so is because we are getting down to the nitty-gritty of things that should fall to the appropriators. We are starting to make those decisions and frankly wasting a lot of time and not doing what we ought to be doing as was envisioned by the Budget Committee when it was formed in the 1970s, and that is to look at the large blueprint.
The bill that Mike and I are introducing essentially gets rid of the functions and allows the Budget Committee to set goals, based on their best information as to where the priorities ought to be.
We all know that when budgets are formed, even in today's atmosphere, there is a lot of consultation with the appropriators, consultations on a bicameral basis. That will go on necessarily anyway. But this does give the opportunity to give the Budget Committee an opportunity to set the broad parameters and not worry about the details. That should be left up to the appropriators anyway.
Going back to your question that you have asked all the panels, is a Budget Committee necessary? Absolutely necessary. But we ought to give it the tools and the authority in the broadest sense to make the broad blueprint decisions and allow the Appropriations Committee to do the details. And I would go along and say there has to be an enforcement mechanism, and that is hard to do. But that can only be done, I think, if there is goodwill amongst all people. I am not sure given the right rules it would be that tough. We do not address that in our bill. We talk about the macro sense. As this process goes forward, I certainly hope that that would be part of your consideration.
I suspect that is one of the reasons this is attractive to Mike, and I will let him talk, but he has had an opportunity to see this from both sides, as chief executive and now as a Member of the legislative body.
I ask unanimous consent that my full statement appear in the record also, if you haven't already said that.
[The statement of Mr. Hastings of Washington follows:]
Ms. Pryce. Governor Castle.
STATEMENT OF THE HON. MICHAEL CASTLE
Mr. Castle. I will try to be brief. I would like to say, Mr. Chairman, the women almost took over this place. Be careful about that.
My little State of Delaware -- I know it is tiny and little -- this is ancient history but in the 1970s our State struggled greatly. We were not balancing budgets and were borrowing money and had the highest tax rate in the United States of America, 19.8 percent personal income tax rate in the State of Delaware. The business community got together with the then Governor Pete DuPont and decided they had to make procedural changes and they did, A lot of people, frankly, working with the State. They put in the rainy day funds and various other set-asides and other procedures which we have enforced ever since then, including estimates of revenue, and we balanced our budget every year since then.
We have generally about the healthiest economic reports of any State in the country as a result, I think, of process. But there is not much I have heard or read about that you have heard here today with which I will not agree. There might be details, but for the most part I agree with all of this. I did work with Mark closely on the points that were presented and were presented by a broad group in the Republican Party and worked with Doc on this other issue that we are talking about precisely today. But I would like to start by saying that I believe the process is important.
Unenforced process does not work. We all see that. We see so much unenforced process around here when it comes to budgets and appropriations that sometimes you wonder why you bother doing it. But enforced process could make a vast difference, not necessarily in balancing the budget. Perhaps some deficit is okay. The jury may be out on that. But certainly doing better than we are doing.
I would add oversight. That is the not the subject that we are here for today. That is something that we do not do well as the Congress of the United States.
I would like to touch on two or three of the subjects that were brought up today. One is the rainy day accounts and emergency reserve funds. I am a great believer in that. I realize we are at war and there has to be exceptions, but it frustrates me that we prepare a budget each year and each year we seem to come back for the hurricanes and the storms or whatever they might be. But that is not part of the deficit situation because that is beyond that and it goes to the debt anyhow, and I find that to be extremely frustrating and we need to build that in.
I am also for the enhanced rescission that Mark has spoken about, or the line-item veto, and any President that wants to veto Charlie Stenholm's pork project can go ahead and do so. I feel that way about all of our pork projects, and I don't think we should hesitate about that. I don't think this makes any difference who is in Congress or who the President is. I think it would have the lesson of making us be a little more thoughtful about what we ask for, and it is not going to balance budgets but I think it would make a difference.
And then I would like to read this because I think it is important in what Doc and I have presented today, which is the Macroeconomic Budgeting Act, which could, we believe, eliminate unnecessary layers of bureaucracy in the annual budget debate and provide more flexibility to the authors of the congressional budget resolution.
Increased flexibility could minimize the unnecessary and sometimes duplicitous debates on Federal spending priorities by eliminating the requirement of providing budget authority and outlays for the functional categories in the budget resolution. The Budget Committee could direct more of its attention to, for example, large aggregate numbers, total revenues, total budget authority, and outlays, the surplus, deficit and resulting debt. The committee would have the option of continuing the practice of budget functions; however, the number of functions and the makeup of each could be reconfigured to meet changing Federal priorities. Homeland security would be a good example of that.
In closing, I think all of these do promote good government practices. I do believe there should be a Budget Committee. I must admit sometimes I think we should combine budget and appropriation authorities, but I am not smart enough to recommend how to do that today. But you do need both and you do need the mechanisms in place and they do need to be enforced, and frankly I think you need clarity. We in Congress need to understand exactly what it is we are doing with the budget and appropriations, as well as the public. I am not sure all of us see.
This is a wonderful year to do all of these things. This has always been a progressive committee, which I hope will be the engine behind getting some of these things done.
[The statement of Mr. Castle follows:]
Ms. Pryce. Thank you, Governor.
Ms. Slaughter. Let me just make a comment. First I appreciate what you have done. Mark, I want to check on the number of your bill. That was 3925?
Mr. Kirk. Right.
Ms. Slaughter. Very thoughtful things that you said and there is a lot of concern here. You mention clarity and we do not have it here. I don't think out of 435 Members there are -- even the members on the Budget Committee who know what all those papers being passed over there mean. So much of it is done away from where we are, particularly the appropriations process, that we just get the news the best way we can on exactly what is going to be in it.