How To Cut Congressional Spending

Late yesterday, I stumbled upon this piece over on Andrew Sullivan's Daily Dish. The post refers to an article written by John Steele Gordon in the The American, the Journal of the American Enterprise Institute. In it, he explores the national debt problem. He does a sort of historical tour of U.S. debt over the past 100 years and attempts to explain why it's grown out of control. His essential conclusion is unsurprising: Congress just can't control itself. He offers three ways to reduce the debt through curbing spending. All are on the right track; none will do the trick.

Power of Impoundment

His first suggestion is to bring back the presidential power of impoundment. This is kind of like the line-item veto, which the Supreme Court struck down shortly after its creation in the 1990s. Impoundment accomplishes some of the same goals. He explains:

Instead, presidents from Thomas Jefferson forward have used "impoundment," simply refusing to spend moneys the Congress appropriated. In 1966, Lyndon Johnson impounded no less than $5.3 billion out of a total budget of $134 billion, including such politically popular items as highway funds, agriculture, housing, and education. As a Democratic president with a Democratic Congress, he was able to get away with it.

But when Richard Nixon vetoed a $6 billion water pollution bill and impounded the money after Congress overrode his veto, Congress reacted angrily. As Nixon's power slipped away in the Watergate scandal, Congress passed the Budget Control Act of 1974, which outlawed impoundment and created the Congressional Budget Office.

If this works, then it could help. I'm entirely unconvinced, however, that a few billion of impoundment here and a few billion there are going to make a sizable dent in trillions of dollars of government debt. Even if the president impounded $10 billion every year, it would take 100 years to impound $1 trillion. So while certainly a step in a decent direction, I don't think it's a silver bullet.

Independent Accounting Board

Gordon also suggests creating an independent accounting board to keep Congress' books, much like corporations do today with their independent auditors. He explains:

Taking away the power of Congress and the president to decide how to keep the government's books would also be a big step in the right direction and require only congressional action. Wall Street recognized more than 100 years ago that corporate managements could not be trusted to keep honest and transparent books and neither can the managers of governments because, like corporate managers, they are human and therefore self-interested.

An independent accounting board, modeled on the Federal Reserve (which keeps the power to print money out of the hands of Congress) would accomplish that. It should have the power to set the rules of accounting for the federal government, "score" the costs of new programs (which the Congressional Budget Office does now), and monitor all federal programs for cost-effectiveness (something Congress often forbids government agencies to do, obviously fearing what it might learn).

There are really two ideas here. The first is to curb that "self-interest" he refers to. In the case of corporations, that self-interest is what can lead to fraud, one of the major targets of independent auditors. That, and making sure the math is right. I don't doubt that there's some fraud going on in Congress today. But I doubt fraud has led to the excessive government debt. I'd bet (or certainly hope) the portion of debt that's been caused by fraud is relatively negligible.

The second is the cost-effectiveness rating system. Other than the dislike for shame, I'm not sure what Congress would have to fear from its programs scoring poorly under this scheme. It's already widely known that much government spending is inefficient, so I'm not sure if making this a bit more concrete will help that much.

Again, I would say that both of these outcomes of an independent accounting board are positive, but I doubt either would have a dramatic effect on deficits.

Spending Limits

Then, perhaps his most fundamental suggestion: what if Congress directly limits the amount of spending it allows itself:

Finally, the adoption by Congress of a limit on total spending, so that it could only increase to reflect population growth and inflation, unless a two-thirds majority agreed to suspend the limit, would force Congress to make the hard choices it now works so hard to avoid. Several states have similar provisions in place, and these are the states suffering the least from the downturn in revenues due to the current recession. California's budget began to go out of control in the early 1990s precisely because it effectively repealed such a law.

I find this proposal somewhat sensible, but puzzling. If Congress can't be expected to spend responsibly, how would they ever pass spending limits, much the less live up to them once passed? If he just means, theoretically, this would prevent Congress' spending from going out of control, then sure, that's true. But I would imagine that the chances of such a measure ever being passed are zero to none.

And that might be okay. I'm uncomfortable with Congress not having the flexibility to spend as they please, particularly in a time of crisis. You might think that a two-thirds majority would always be obtained in such situations. Yet, the bank bailout failed the first time and did not garner two-thirds support in the House when it did eventually pass (263 to 171). As unpopular a measure as it has become, I struggle to imagine what the world would look like today if it hadn't passed. They may have eventually gotten two-thirds, but time is everything during a crisis, and who knows the further damage to the financial system that may have been inflicted had it taken a few more weeks.

The solution to Congress controlling its spending actually quite simple: it must spend responsibly in times of economic prosperity so that it can spend a little more loosely in times of economic crisis. The reality of politics, however, precludes this possibility, at least according to my cynical outlook. Moreover, with the sizes of the deficits we're seeing, you'd have to cut spending with a butcher's knife, not a scalpel. Significant programs and/or entitlements would have to be eliminated. I just don't see this happening.

Does that mean that the U.S. is doomed to be in debt eternally? Maybe. Eventually higher taxes and inflation might reduce the burden; I'm just unconvinced that Congress will ever have the discipline to do so through spending cuts. But I strongly urge lawmakers in Washington to prove me wrong.