Wishful Thinking

It is day 10 of the government shutdown when this issue goes to press. The shutdown was triggered by the demand of Republicans in the House of Representatives to defund the Affordable Care Act—Obamacare—as a condition to funding the federal government in the absence of a final 2014 budget. Now, shutdown paralysis threatens to morph into economic catastrophe as Republicans’ chest-thumping shifts to the debt ceiling.

How much the U.S. can borrow is limited by a cap—the debt ceiling—determined by Congress. Unless the U.S. raises that ceiling, the country will likely default on its financial obligations before the end of the month. Most observers believe that a U.S. default would put global financial markets in turmoil and plunge the country into another severe recession, perhaps even a depression. Giving up on defunding Obamacare, Republicans now insist on negotiating the debt ceiling as a condition to funding the government and ending the shutdown.

The shutdown is causing enormous disruption (see page 9). It is especially distressing for citizens who are unable to access government services and for furloughed federal employees who live from paycheck to paycheck. The harm from a debt default would be many times worse.

It is time to go back to the basics of working together. If I had a magic wand, I would banish the ability to fund the government through a continuing resolution—which is legislation to keep the government funded at existing rates until a final budget is set. And then I would imbue all parties to the budget process with a zeal to complete the task collaboratively and on schedule, by Sept. 30 each year.

Setting a budget for the U.S. government is a complicated exercise by the Office of the President, the House of Representatives, and the Senate. It requires the President to submit to Congress a budget proposal by the first week of February each year. In spirit, that proposal should fully reflect reasonable forecasts of revenues and spending. Not surprisingly, it will reflect the President’s policy initiatives.

The proposal then goes to budget committees in the House and Senate. The committees review the President’s requests, and within six weeks, each drafts a budget resolution, reflecting the chamber’s own projections and priorities. After each chamber of Congress passes its budget resolution, the two chambers form a joint conference to settle the differences, if any. Each chamber then votes on the reconciled budget resolution.

Next, appropriation subcommittees in both chambers appropriate funds to federal agencies in their jurisdictions. And after each chamber passes an appropriations bill, the House and Senate form a conference committee to resolve the differences, if any. The reconciled bill then goes back to each chamber for a vote. When approved by both chambers and signed by the President, an appropriations bill becomes law.

Although the process is excruciatingly laborious, it has worked for more than 200 years because the parties involved have made it work. Reconciling differences now seems impossible in Washington. Political extremism is choking the process to death.

To avoid gridlock, each step of the federal budget process requires people to work together in the spirit of compromise for the common good. At the very least, the members of both political parties that compose the appropriations panels must talk to each other. In addition, the work of budget panels in Congress is informed by the many sources, negotiations, and hearings on specific programs.

Compare that with passing a continuing resolution, which becomes necessary when a budget is not set by Sept. 30. A continuing resolution requires almost no work. Agreeing to the status quo, not having to review budget items line by line, not having to compromise—that’s so easy, legislators can do it in their sleep.

Unfortunately, continuing resolutions have been the norm in recent years. For fiscal 2013, for example, many discretionary federal operations were funded by a continuing resolution for the entire year. One wonders what old programs could have been deleted in favor of new ones had legislators gone through the rigor of the budget process.

Where is that wand?