The Congressional Institute
1700 Diagonal Road. #730
Alexandria, VA 22314

Phone: (703) 837-8812

The Sausage Factory

The Sequester, Flexibility, and Washington’s Continuing (Ir)resolution

On March 1, supporters of the President might have been forgiven had they been seen walking outside with hardhats.  After all, his prognostications of fiscal doom and gloom sparked by a two percent budget cut had begun to sound a little bit like a chapter from the Book of Revelations.  The budget sequester, automatic spending cuts to a majority of the Federal Government’s discretionary spending, did take place, but the world did not end.  But, just because nothing dire happened, does not mean the sequester is without consequence, nor that that it is a wise way to manage the Federal budget.

Since it is obvious that sequesters are a poor way to control the budget and deficit, Congress has been considering giving the President greater autonomy to prioritize the budget cuts required by law.  The continuing resolution to complete the budget process for the current fiscal year is likely to grant the President the flexibility to manage budget reductions in the Departments of Defense and Veterans’ Affairs.

This is actually quite extraordinary.  The Congress is offering to delegate its authority under the Constitution to appropriate money to the Executive Branch – an unheard of offer, but the Presidency, which has never been shy about pushing the boundaries defining separation of powers, has thus far refused it.  What gives?

Let’s start with a little review.

In August 2011, Republicans and Democrats agreed to reduce the Federal deficit by $1.2 trillion over the course of a decade. They empaneled a “Supercommittee” to produce a compromise bill. If, by the end of the year, Congress and the President could not reduce the deficit by $1.2 trillion, then the Federal discretionary budget would be decreased by that amount in automatic, across-the-board cuts, a process known as “sequestration”. (Such a cut is called a “sequester”.) The sequester was suggested, according to noted journalist Bob Woodward, by the President as a means of enforcing the agreement.  The sequester should have gone into effect on January 1, 2013, which was the same day the Bush tax cuts were set to expire, along with the payroll tax holiday—a confluence of events known as the “fiscal cliff”. Taken individually, either a tax increase or a spending cut is unpleasant for most politicians; taken together, they are a nightmare, even on a good day. To make matters worse, economists predicted that the fiscal cliff would send the economy back into a recession, but deferring it would leave the nation’s long-term economic prospects very dim.

Political leverage determined how these issues would be resolved.  The President had greater political leverage—he had the upper hand—because the Republicans did not want to see tax hikes.  Since all of the Bush tax cuts were set to expire, the only question for Republicans was how much of the tax rate cuts they could persuade the President to allow them to keep.  In the end, they kept about 98 percent of the tax cuts, allowing the tax rates to rise on those earning more than $400,000 per year.  In addition, the President secured additional revenue — for a total of about $600 billion in revenue over the next ten years — by discontinuing the payroll tax holiday and certain tax deductions.

The sequester was also deferred until March 1.  But now the political leverage had shifted because the Democrats did not want to see deep domestic spending cuts.  Since the spending cuts were automatically scheduled to go into effect, the only question was whether the President could entice Congress to substitute tax hikes or alternative cuts for the budgets targeted by the sequester.  This did not happen, mostly because Congress was still smarting from the President’s strong-arm tactics in December, and the sequester went into effect as scheduled.

Now that you’re up to speed—although “speed” is probably not the best term to describe this process—we can delve into the solutions that Congress has proposed to better manage the across-the-board cuts that they and the President had enacted.

Most people on both sides of the political aisle agree that across-the-board cuts are not a very wise way to manage the budget.  Reasonable people would agree that essential programs should be fully funded, and wasteful programs should be eliminated. But this is not a reasonable time in Washington, DC.

To try to bring some sanity to the process, shortly before the end of February, Republican Senators James Inhofe and Pat Toomey introduced a bill that would make the sequester less onerous. Under their proposal, the President would have the authority to prioritize domestic programs, sparing the more important ones, while putting the less consequential on a diet. To protect Republican military constituencies, the plan would hold the President to the budget levels of the National Defense Authorization Act for fiscal year 2013; further, the President could spare military cuts by taking more from non-defense programs, but he could not do the opposite. To top it all off, he could not raise taxes.

Roses bloom in January more frequently than congressional Republicans propose giving a Democratic President greater authority over budget priorities. And it’s equally rare that a Democratic President would decline such an offer. But that is precisely what happened. Additionally, Senate Democrats, especially Majority Leader Harry Reid, supported the President.

The reasons for rejecting the offer are actually not too surprising. Even liberal blogger Ezra Klein was blunt about why Democrats would reject the proposal: The Obama Administration would be responsible for how the cuts are apportioned. In essence, Obama would be picking which constituencies of Americans would be spared from sequestration, which is already a no-win game politically for the White House. And since he couldn’t harm Republican priorities, he would have little leverage in future negotiations over budget cuts.

This was a clever move on the part of Senators Toomey and Inhofe. From a policy perspective, there is some benefit—small, perhaps—to both parties. In offering this plan, the Republicans are essentially saying: We don’t trust you to protect our priorities, but we are confident you can do so for your own. Certainly the President would prefer exclusive authority over domestic spending rather than let the conservative-controlled House have a stab at it.

The idea behind all of this is that, somehow, someone should be able to manage something in the Federal Government.  After all, the President is the Chief Executive of the Federal Government.  Certainly a CEO, or even, for that matter, a head of household, would be able to manage a budget cut of two percent if they had to.

The managerial competence of the Federal Government aside, this proposal and others like it are very interesting precisely because they provide the President with significant authority over the budget process and allocation of monies. Constitutionally, this prerogative belongs to the Congress.  Congress once tried to give the President the authority to use a line-item veto, where he could reject individual parts of appropriation bills. The Supreme Court put the kibosh on this, ruling that the line-item veto was unconstitutional since it ceded too much of the Legislature’s power to the Executive.  If it ever reaches that far up the judiciary, it’s not likely the Supreme Court would show any more tolerance for this latest scheme.

But Congress does not need to wait until a Supreme Court decision.  Some Members of Congress have publicly rejected Toomey and Inhofe’s legislation precisely because it places so much control in the hands of the Executive. Republican Senators Kelly Ayotte of New Hampshire and John McCain of Arizona have expressed that sentiment. Other Republicans have offered competing plans as well.

The concerns over too much Executive control over appropriations are valid and even grave. Having legislative control over spending is an important safeguard of liberty in our country. Congress must execute its enumerated powers faithfully, which includes directing the way Federal funds are spent. Whether it is genuinely trying to give budget flexibility to ease the budget cuts, or trying to merely avoid the political fallout from furloughs and layoffs, Congress would be playing a dangerous game when its constitutional prerogatives are at stake. Senator Ayotte drove this point home when she said the compromise was a “cop-out”.

Senator Ayotte is right, but her criticisms highlight a particular strength of the Toomey-Inhofe plan. It forces someone to make hard choices, and that’s just the point.  We elect Presidents and Members of Congress to make tough choices.  Too often, when it comes to the budget and spending, leaders have abdicated their responsibilities. Unfortunately, this scenario is no longer tenable, since the country is at an electoral stalemate.

Although Washington has been at a budgetary impasse for several years now, fortunately, Congress and the President have the opportunity to start anew every year.  There is a budget process, prescribed by law that allows the two political branches of our Federal Government to craft a budget outlining the nation’s priorities and determining the levels of revenues, spending and debt.  It has not worked according to plan since 1997, but that is no excuse for it not working in 2013.  The only way out of the “crisis-of-the-month” budget battles is to go to regular order — with the President proposing a budget, the House and Senate passing their budgets as required by law, compromising and making tough decisions, and creating a fiscal blueprint for the government.  After all, isn’t that what the President and Congress were hired to do?

Hope springs eternal.

Mark Strand is the President of the Congressional Institute and Timothy Lang is a research assistant. The Sausage Factory blog is a Congressional Institute project dedicated to explaining parliamentary procedure, Congressional politics, and other issues pertaining to the legislative branch.

Sign up for email updates