Budget Troubles

A recent Washington Post article reported on Congress’s own frustration in meeting its budget deadline. While technically Congress should have a budget put together by April 15, this deadline is now reportedly “routinely blown.” The article outlines how the budget process is supposed to work: the House and the Senate each come up with twelve separate budgets (each one for a different agency) and then Congress comes back together and negotiates on the differences between the two to come to an eventual decision. However, in recent years, this system has failed and Congress has relied on short-term spending bills and omnibus bills that “allow greater speed but less scrutiny of agencies and programs.” This is a solution that Weingast and Moran predicted in their paper because it allows many issues to be voted on at once and thus, minimizes the chance of reneging so many people will agree to it. As a result, Congress has started to propose new solutions to help solve the problem. The ideas include shutting down Congress completely until something is passed, giving Congress two years to approve budgets, and most currently, a bipartisan super-committee.

Although the solutions to this budget deadlock seem logical and helpful, the solutions may not end up offering any relief. As we discussed in class, committees are budget-maximizing groups. That is, unlike the market sector, they do not have any incentive to keep their costs low – rather, just to keep their spending high so their budgets remain large. This obviously creates huge inefficiencies within the American bureaucracy. The current problem Congress is now facing is the simple fact that money is limited and the budgets must be more carefully constructed while each of the agencies have that continuing incentive to be budget maximizing. However, the solutions that Congress is offering to help speed up the problems may not be all that beneficial. If the three assumptions outlined by Weingast and Moran hold that agencies are monopoly suppliers, are the only ones who know the cost schedule and they follow the institutional rule of “take-it-or-leave-it” offers, merely offering more time for Congress to approve the budgets is not going to make a difference. If Congress however, could get knowledge of the 12 committees separate marginal costs, then perhaps, the budgets could become more efficient and Congress could slash budgets and start passing bills again. However, since agencies themselves cannot predict and in some cases, quantify, these costs with complete accuracy, this would be nearly impossible.