Winning Budget Fights

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Glenn Reynolds states that the Democrats lost the sequester issue.  He writes of the Obama strategy:

The idea was that even the comparatively minor cuts in spending caused by the sequester would be so painful that voters would demand higher taxes rather than endure cuts in spending.

Problem was, when the spending cuts came, nobody noticed. This led the Obama administration to try to up the pain by focusing cuts in places where people might feel the pain: canceling White House tours for schoolchildren, or furloughing air traffic controllers.

That didn’t work either. The tour-canceling just looked mean, and the problem with targeting air travel is that members of Congress, and their top donors, fly a lot. Huge bipartisan majorities in Congress thus quickly passed legislation forcing the FAA to make cuts elsewhere instead.

When there are budget fights, what happens when the fight is joined or the cuts occur is extremely important.  From the perspective of those who favor smaller government, the worst situation is for the costs on the public to be large.  Big government folks know this and so they have traditionally engaged in these type of Obama tactics.  What can be done about this in the future?  The next time there is a sequester, Congress might pass a law that requires the executive when cutting spending to do so in a way that is least disruptive on the public.  While this would not guarantee that the executive would comply, it would put pressure on the executive.  In addition, one might require that the executive to justify the cuts that they make in terms of this minimizing public disruption standard.

Similar issues arise when there are budget fights that deprive the government of overall spending authority – when there is a possibility of a government shutdown.  Again, the larger the costs on the public, the more public reaction there will be.

At the federal level, the law (the Antideficiency Act) ordinarily requires, when there is no spending authority, that the entire federal government close down except for a narrow class of emergency services.  This often requires a quick resolution to the fights and often requires the smaller government side to compromise significantly.  Similar issues can arise at the state level – as in California where there used to be a two thirds requirement to pass a budget.  While there was more flexibility than at the federal level, the costs to the public were large enough that Republicans often compromised significantly and eventually the public eliminated the two thirds requirement by referendum.

At the federal level, the best rule to address these problems would be to replace the Antideficiency Act with a statute that would allow spending up to 90 percent of the previous year’s amount in the absence of statutory authorization.  In this way, most of the government could continue without imposing large costs on the public.  A similar rule would have worked well in California.

Such a rule provides an advantage to smaller government fans.  Since the government is only spending at 90 percent of the previous year’s amount, the smaller government person will be more willing accept this default arrangement than bigger government advocates and therefore will be able to bargain for a better resolution to the budget dispute.