Taxpayers Want Honesty in Budgeting

David Williams

October 21, 2011

With a threatened government shutdown in April averted with a deal to cut spending and an agreement to cut spending as a requirement to raise the debt ceiling in August, budget hawks thought that there would be a decrease in government spending.  A recent article in Investor’s Business Daily threw cold water on that notion when it reported on October 17 that “In fact, in the first nine months of this year, federal spending was $120 billion higher than in the same period in 2010, the data show. That’s an increase of almost 5%. And deficits during this time were $23.5 billion higher.”  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.”  This makes taxpayers even more frustrated as politicians try to take credit for non-existent victories and continue to use one budget gimmick after another to try and confuse taxpayers and increase spending.

Above and beyond real spending cuts, taxpayers ultimately want honesty in budgeting (and all government).  It’s easy to find a member of Congress who supports this but the tough task is finding somebody who will put legislation where their mouth is.  Sen. Jeff Sessions (R-Ala.) has taken the first step in taking real action in trying to bring honesty in budgeting with his aptly named “Honest Budget Act.”  This legislation will get rid of budget tricks and lay the foundation for real budget reform to take hold.

According to Sen. Session’s office:

“The Honest Budget Act (HBA) would eliminate many of these gimmicks and restore truth and honesty to the budget process. Specifically, the Act would:

  • Make it harder to move appropriation bills unless a budget resolution is already in place;
  • Tighten the process for adding the ‘emergency’ designation to spending measures, an often-abused method for avoiding the fiscal restraints imposed by the budget resolution;
  • Improve current law by measuring the cost of loan and loan guarantees programs using a market default risk rate that reflects the loans’ fair value;
  • Adopt a rule that would prevent scoring rescissions of budget authority as savings unless they produce actual cash savings in the budget window;
  • Prevent changes in mandatory spending programs from being used as budgetary savings in discretionary (non-mandatory) spending bills;
  • Establish a new scoring rule that would prohibit the use of timing shifts for the purposes of producing phony budget savings;
  • Make President Obama’s two-year federal pay freeze real by eliminating automatic within-grade step increases through the end of 2012;
  • Require transfers from the General Fund to bail out the Highway Trust Fund to be scored as new spending. Since 2008, turning a blind eye has led to $35 billion in transfers that were scored as ‘budget neutral.’
  • Prevent abuse of advance appropriations by reinstating the budget point of order limiting Congress’ ability to defer increased spending to future years in order to make room for more immediate needs in the current year (and then argue later that the spending limits in subsequent years should be raised to accommodate the deferred spending).”

Instead of going through an intricate explanation of each item, National Review Online put it best when it wrote, “Known as the Honest Budget Act, the bill targets the budget tricks and abstract accounting that politicians of both parties have relied on for years to claim ‘savings’ that in reality never end up saving taxpayers a single dime.”

These recommendations don’t look very sexy but they are the first step in addressing some of the foundational problems with budgeting in Washington.  This legislation would not fix all the budgetary problems of the country but it would go a long way in bringing some honesty and common sense to the budgeting process.