Government Spending

Congress' Continuing Resolution Is an Opportunity for Reform

Budget negotiations offer lawmakers the opportunity to ditch tax carve-outs and cut spending.

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Once again, Congress failed to pass its budget before the end of the fiscal year on September 30. It also failed to do this critical part of its job before the continuing resolution, or CR—which they enacted in September to fund the government—expired on November 21. The sorry result is that Congress compelled itself to adopt yet another CR, one that will run through December 20. If this tale sounds familiar and irresponsible, that's because it is.

As of now, Congress finds itself, yet again, in the same position it was in last year when it faced a year-end shutdown. Unfortunately, this combination of budgetary cowardice and irresponsibility is not new. As the Pew Research Center explains, "in the four decades since the current system for budgeting and spending tax dollars has been in effect, Congress has managed to pass all its required appropriations measures on time only four times: in fiscal 1977 (the first full fiscal year under the current system), 1989, 1995 and 1997."

Always the optimist, I hope that Congress will, this time, use the remaining days on the CR to do the right thing on a few items.

First, leave the tax-extender package as it is, i.e., dead. Almost two years ago, a package of temporary business tax breaks known as "tax extenders" were allowed to expire. Not surprisingly, the special interests who benefit from these temporary tax giveaways would like to see them revived. But legislators must resist the call to bring them back, particularly on a retroactive basis. The randomness of the exercise breeds uncertainty, in addition to being bad fiscal, economic and tax policy.

What's more, most of these tax breaks are corporate welfare. The work of Adam Michel at the Heritage Foundation explains it best. With rare exceptions, he writes, the tax extenders "grant economic privileges to well-connected industries and allow the government to pick winners and losers in the market. This reduces economic growth and opportunity for those individuals and businesses not granted a competitive advantage by Congress." In other words, Congress would do well to let the dead extenders rest in peace and move on.

Second, legislators could take the couple of weeks they have ahead of them to implement serious reforms of the U.S. Export-Import Bank. This New Deal-era credit agency is the mother of all cronyism and should be abolished altogether. However, too many in Congress eagerly pander to the special interests that benefit from the bank, most of which are large U.S. and foreign companies. This weakness of members of Congress might be somewhat easier to swallow if, at the very least, they agreed to reform the bank during the CR.

Congress could, for example, lower Ex-Im Bank's lending cap, which would result in a greater share of the bank's largesse going to the small businesses that legislators claim they want the bank's activities to benefit. They could also require that a majority of the lending be done in lower-income countries—as opposed to higher-income nations where companies have plenty of access to capital. This change would better meet the bank's ostensible purpose of directing capital to companies that arguably have inadequate access to it.

There are many more reforms Congress could implement. However, under no circumstances should legislators agree to a 10-year reauthorization of Ex-Im Bank. The shorter the reauthorization, the better; it would encourage the agency to be more accountable.

Finally, legislators could use this time to come up with a list of spending cuts that will allow them to abide by the spending caps they agreed to back in 2011. Back in July of this year, Congress and the president announced a plan to raise discretionary spending caps for fiscal years 2020 and 2021. But that move would increase spending by $320 billion over two years. With the deficit soon to be permanently above $1 trillion, Congress should find the courage to abide by the budget caps rather than, yet again, kick our debt bomb down the road.

There's a saying that that when life gives you lemons, make lemonade. This time around, let's hope Congress' inability to pass a budget on time is a pile of lemons that they can turn into a lemonade of genuine reform and lower spending.

NEXT: At House Impeachment Hearing, Legal Scholars Disagree on the Meaning of 'High Crimes and Misdemeanors'

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  1. “Budget negotiations offer lawmakers the opportunity to ditch tax carve-outs and cut spending.”

    They offer the opportunity for space aliens to beam down, doesn’t mean it will happen.

    1. +1 Art Bell. Loved the guy. The two parties are like dragons with matches that are loose on the town. It’ll take more than a whole pail of water just to cool them down.

      1. I think they are more like rats in a drain ditch, caught on a limb, you know better but I know them. Like I told you, what I said, steal your face right off your head.

        1. I got into the whiskey last night. The bottle was dusty but the liquor was clean.

  2. Forever the optimist. Thank you Dr. de Rugy for posting these notes.

    1. Not obsequious enough
      You can do better

  3. Well, I’ll admit that with New Year’s coming up it’s a good time for resolutions and it would be nice to see Congress making a continuing resolution to spend less, but I’m afraid this is more like a Christmas wish list than a set of resolutions in that you’re going to need a miracle or a magical elf to pull it off. CR’s aren’t just an opportunity for bipartisan horse-trading in budget cuts, they’re an opportunity for bipartisan horse-trading in shoving a little more lard in the pork barrel. Guess which route Congress is more likely to take?

  4. “Budget negotiations offer lawmakers the opportunity to ditch tax carve-outs and cut spending.”

    Best joke of the week.

  5. The is no doubt that Continuing Resolutions (CRs) are an abomination. That not to say they may be needed occasionally but they seem now to be the rule. They continue funding at present levels but never determine if the level of funding is still needed. Think in terms of two programs. One is necessary and one could be retired. With CRs both get funding at the same level as before. It is also difficult for programs to budget because instead of knowing your funding for a year, you have to work in weeks or months. This is inefficient and likely leads to more spending rather than less. We need budgeting and that means a working Congress. It also means compromising. You get some things you want and I get some things I want, but neither gets all we want.

    1. CRs are never needed.
      They are a sign that the House of Representatives has massively failed on the one task specifically assigned to them in the constitution. Accordingly, any year where a true budget is not passed should be a year in which no member of the legislature receives retirement credit, and all are assumed to have violated their oath of office and resigned.

      1. Your suggestion is a bit drastic but understandable. As an alternative let me suggest this idea. Congress must pass a budget for each fiscal year. If the budget is not completed before the fiscal year start no other work may be done until the budget is completed. So no other bills are passed, no appointments are confirmed, and no travel other than to your district or state. All legislative work must focus on the budget.

  6. Every year is another year closer to 21st Century Civil War. Republicans will win again just like they did the first time around because they will fight for a moral cause (like ending slavery) and the Democrats will fight for the immoral cause (like insisting on stealing/enslaving/slavery).

    Unless of course by some miracle — The GOV-Corporate plantation owners ( i.e. [D] Team ) realizes the error of their ways and starts to allow Individualism instead of [WE] foundation Slavery.

  7. “Budget negotiations offer lawmakers the opportunity to ditch tax carve-outs and cut spending.”

    Have you been noticing what the Democratic majority is currently wasting its time on? They can’t even pass USMCA.

    1. The Democrats have pass a plethora of bills, problem here is Senator McConnell.

      1. If by problem you mean “the dire shitstain of a human being who has nonetheless prevented the other dire shitstains from passing their socialism” then sure.

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