How the Federal Budget Process Intensifies Partisanship
Concern for the health of American democracy is usually directed toward election-related questions such as campaign financing, voting procedures, participation rates, and gerrymandering. Yet it ought to also extend to reconsideration of the obscure congressional procedures now exacerbating the partisan divide. The winner-take-all mentality these rules reinforce is powerful, widely held, and increasingly entrenched.
The problem stems from a reductive view of the congressional budget process. Instead of seeing the rules as facilitating approval of a fiscal blueprint that allows for orderly decisions (its original purpose), Congress now assumes that passing a budget only makes sense if it helps the party in control advance its agenda without having to compromise with the other side. Recent history confirms this logic, and the parties now plan accordingly.
The original authors of these rules would be surprised, and probably dismayed, by this turn of events.
Rules for Different Eras
Congress’s current budget process was enacted in 1974 as a response to executive ascendancy in fiscal planning and decision-making, which was itself a reaction to a long era of congressional dominance. President William Howard Taft wanted to strengthen the president’s role in fiscal decisions and pushed Congress to create a study commission to recommend changes, which was completed in 1912. While his effort did not produce immediate results, it did lead to the enactment in 1921 of the Budget and Accounting Act (BAA) during the presidency of Warren G. Harding (the first Republican after Taft to hold the office).
The BAA placed on the president the duty of submitting to Congress an annual budgetary blueprint for the federal government and created the Bureau of the Budget—now the Office of Management and Budget—to provide institutional support for carrying out this responsibility. Among the bureau’s main functions was coordination of budget development across the scores of departments and agencies under the president’s authority. The law also established the General Accounting Office—now the Government Accountability Office (GAO)—within the legislative branch and assigned to it the task of auditing and scrutinizing federal programs.
By the early 1970s, it was clear to members of both parties in Congress that the absence of a parallel process under their control had shifted power to the executive branch. A major factor was that the BAA created a significant information and expertise imbalance between the branches, with Congress becoming increasingly and uncomfortably reliant on executive personnel when making spending and tax decisions. There was also a prevalent sentiment that Congress was increasingly incapable of making timely and orderly budgetary decisions because the regular legislative process is too unwieldy.
To lay the predicate for the creation of a counter process to the BAA, Congress constituted its own internal advisory panel, called the Joint Study Committee on Budget Control. Its deliberations led to the enactment of the Congressional Budget and Impoundment Control Act of 1974.
Among the significant changes included in the 1974 law was the creation of the Congressional Budget Office (CBO) and the House and Senate Budget Committees, which, as a group, went some distance toward rebalancing the power relationship between the elected branches.
The Budget Act also carved out an entirely new legislative pathway for approving congressional budget plans (called budget resolutions) and then for enacting budget-related laws to implement these fiscal blueprints (called budget reconciliation bills). Unfortunately, the internal congressional rules governing consideration of these measures are what have evolved into unlikely accelerants of hyperpartisanship.
What sets the budget resolution and budget reconciliation processes apart are their time-limits on Senate debate, which means no filibuster. Once the allotted time for discussing these measures, and amendments to them, has expired (which, in the case of initial Senate consideration of a reconciliation bill, is 20 hours), both can pass with a simple majority instead of the supermajority that is the norm for regular legislation. As a practical matter, that is a difference of nine votes—51 instead of 60.
Initially, Congress did not see the Budget Act as supercharging the possibilities under one-party rule. Indeed, as the law was being drafted and debated, very little was said about the limitation on debate in the Senate. Instead, there was a focus on making sure Congress could move ahead expeditiously with budgetary decisions without being sidetracked by the usual stalling tactics of aggrieved minority factions. The aim was a more efficient Congress, not one with more intensive partisan warfare. And there was an overall tone of using the process to enforce more discipline and put a halt to freewheeling decision-making on spending measures.
Through the 1980s, the original understanding of the Budget Act’s purpose led to a series of budget reconciliation laws that were approved with bipartisan supermajorities. For instance, in 1981, President Reagan’s signature spending-reduction measure—the Omnibus Budget Reconciliation Act of 1981—was approved in the Senate by a vote of 80 to 14, with 31 Democratic senators voting in favor (the House at that time was under Democratic control, which meant it was not possible to pass the measure without some bipartisan support).
The reconciliation process also was used to pass significant bipartisan budget deals in 1987, 1990, and 1997.
However, during the latter part of this era, the political climate was beginning to shift. In 1993, the Clinton administration, with Democrats controlling both the House and Senate, successfully pushed through a budget reconciliation measure that passed without any Republican support. In 1995, after Republicans took over Congress, reconciliation was used again to pass an entirely one-sided budget plan, which President Clinton vetoed. Then, in 2001, the George W. Bush administration secured tax cuts via the reconciliation process, with only a small percentage of Democrats voting in favor.
All or Nothing
Both parties learned the same lesson from these episodes, which is that the congressional budget process can be a powerful tool for the majority to approve certain tax and spending policies over the objections of the minority. While non-budgetary provisions cannot be advanced using this expedited pathway, the partisan divide on taxes and spending is of such consequence that both sides are glad to forfeit progress on such matters if doing so is in service of passing their critical fiscal priorities.
The stripping away from the congressional budget process of all purposes other than advancement of one party’s schemes has transformed political calculations. In general terms, the parties’ ideological ambitions are now soaring because they both believe they are one election away from epoch-defining victories. It does not matter that inflamed partisanship makes governing more difficult in most years. When neither party is fully in control, the budget process is seen as useless anyway because ad hoc bipartisan negotiations will be needed no matter what to prevent government paralysis. The last time a congressional budget resolution passed with bipartisan support was in 2008, and even then only two Republican senators voted with the Democratic majority.
The norm now is to use the budget process for strictly partisan ends. In 2010, the Obama administration worked with the Democratic majorities in the House and Senate to pass a reconciliation measure that paved the way for the Affordable Care Act (ACA). In 2017, Republicans tried to repeal and replace the ACA using reconciliation but lacked sufficient votes in the Senate. After that defeat, they used the budget process to approve a large corporate tax cut over the unanimous objections of Democrats in Congress.
With President Biden’s election in 2020, and two successful Democratic campaigns for Georgia Senate seats, Democrats saw an opportunity to enact their own sweeping changes. In March 2021, Congress approved the $1.8 trillion American Rescue Plan Act, and then followed that up in August 2022 with the $0.8 trillion Inflation Reduction Act. Both passed only because Vice President Kamala Harris, in her role as president of the Senate, was able to cast the deciding 51st vote in support.
The budget resolutions that allowed the reconciliation bills of 2017 through 2022 to proceed were hardly budget plans as traditionally understood. Their only purpose was to authorize approval of expedited reconciliation procedures. As such there was no effort to lay out more comprehensive budget plans, or to specify, even in broad terms, the tax and spending changes they were designed to set in motion. Approval of these “shell” budgets proved to be so effective as to make it far less likely that either party will ever revert back to the previous norm.
The Biden administration and Democrats in Congress are exultant that they were able to secure passage of the Inflation Reduction Act, with its provisions subsidizing clean energy industries and imposing pricing restrictions on prescription drugs. They believe the bill that would have been approved if Republican support were required would have been much weaker, and maybe nothing at all would have passed.
That may be true. But it is also the case that passage of the Inflation Reduction Act is encouraging Republicans to be equally ambitious with their plans. And if Republicans secure control of both the White House and Congress in 2024, the pressure will be immense to use the reconciliation process to reverse as much as possible what Democrats have put in place since 2021, and to pass new provisions that move in the opposite direction.
For stability in policy, it certainly is not ideal. It also means the parties are less inclined than ever to strike compromises that would foster democratic stability in a divided society.
No one would contend that the congressional budget process is a primary cause of these problems. But it is clear at this point that it is exacerbating them.