Crisis Budgeting: Last Minute Deals End Up Hurting Taxpayers

It is less than two weeks before Christmas and Congress has not finished work on fiscal year (FY) 2012 appropriations bills (they were supposed to be done by October 1).  This failure to get their work done should come as no surprise since 2011 has been filled with un-kept promises and crisis politics as Congress has waited until the last minute to finish most of their budgetary work in 2011.  The pseudo budget crisis in April when a government shutdown was threatened when Congress failed to pass a budget for FY 2011, the impending downgrade of the nation’s credit status in August with the raising of the debt ceiling (and the ensuing failure of the super committee in November), and the current looming government shutdown shows that when push comes to shove in Washington, D.C., the status quo pushes back and taxpayers get shoved.

The year started out with so much hope (I apologize for using the “H” word) when the newly sworn in Republicans promised to cut $100 billion from the budget.  Almost immediately, the Republicans backed away from that number when it was reported in The Hill on January 5, 2011 that “GOP aides say Republicans will still look to make significant cuts to spending, but the whole idea of cutting $100 billion was based on the premise that President Obama’s full-year 2011 budget would be enacted.”  The total cuts passed by the House amounted to $61 billion.  Not exactly the kind of start that taxpayers wanted.

Crisis #1

In April, there was a golden opportunity to cut spending with the impending government shutdown.   Speaker of the House John Boehner (R-Ohio) and Senate Majority Leader (D-Nevada) reached an agreement at the proverbial 11^th hour to avoid a shutdown and boasted that the deal would cut $78 billion.  According to CBS News, “In a statement, Republican House Speaker John Boehner and Democratic Senate Majority Leader Harry Reid said: ‘We have agreed to an historic amount of cuts for the remainder of this fiscal year, as well as a short-term bridge that will give us time to avoid a shutdown while we get that agreement through both houses and to the President.’”  The Congressional Budget Office (CBO) threw cold water on their party when they estimated on May 16, 2011 that “Total discretionary outlays in 2011 will be $3.2 billion higher as a result of the legislation, CBO estimates—an increase of $7.5 billion for defense programs, partially offset by a net reduction of $4.4 billion in other spending.”  Crisis #1 averted with an increase in spending.

Crisis #2

As part of the August 2, 2011 deal to raise the debt ceiling, the Joint Committee on Deficit Reduction (aka the “Super Committee”) was created to come up with an additional $1.5 trillion in deficit reduction.  This is in addition to an initial $1 trillion in spending cuts that was instituted immediately after the deal was signed.  This agreement once again came at the 11^th hour as Congress and the President warned the country that if a deal wasn’t passed that the country’s credit rating would be downgraded.  The deal was passed and the downgrade happened anyway.  The first round of spending cuts were nothing more than window dressing.  Chris Edwards of the Cato Institute warned of fake spending cuts in the deal to raise the debt ceiling in an August 1, 2011 blog posting, “The ‘cuts’ in the deal are only cuts from the CBO ‘baseline,’ which is a Washington construct of ever-rising spending. And even these ‘cuts’ from the baseline include $156 billion of interest savings, which are imaginary because the underlying cuts are imaginary.  No program or agency terminations are identified in the deal. None of the vast armada of federal subsidies are targeted for elimination.”  And, to add insult onto injury, the Super Committee declared failure and disbanded just before Thanksgiving.  Crisis #2 averted and spending increased again.

Crisis #3

Almost a month after the Super Committee failed to come up with a deficit reduction package, and less than two weeks before Christmas, the country is faced with another potential government shutdown.  A short term spending bill, known as a continuing resolution (CR), runs out on December 16.  The Megabus Appropriations Bill (mega because it contains 9 of the 12 appropriations bills) is now stalled and the oft-used words “government shutdown” are now back in fashion. Members of Congress were hoping that they could reach a deal and get out of town a week before Christmas.  That seems less likely and members of Congress are now complaining that they may have to work next week.  Taxpayers have very little sympathy considering that each rank and file member of Congress makes $174,000 per year or $285,000 per year when benefits are included (see joint report by Our Generation and TPA report here).  Crisis #3 and only time will tell what the price tag will be.

This past year has been an absolute failure for Congress and taxpayers are paying for it.  Congress needs to fundamentally change the way they do business and make the budget process more orderly and responsive and respectful to taxpayers.  Legislating and leading by crisis is no way to run a country.