TESTIMONY OF
MITCHELL E. DANIELS, JR.
DIRECTOR
OFFICE OF MANAGEMENT AND BUDGET
BEFORE THE
COMMITTEE ON RULES
UNITED STATES HOUSE OF REPRESENTATIVES
on
Biennial
Budgeting
July 25,
2001
Mr. Chairman, and Members of the
Committee, I am pleased to be here this morning to discuss
the issue of converting the annual budget and appropriations process to a
biennial cycle.
President Bush strongly supports converting the Federal Government
to biennial budgeting. The
President is very familiar with this issue, having been the Governor of
Texas, which is one of the
States that has such a process. As the President explained last February
in the Budget Blueprint,
he supports this reform along with a number of other budget process reforms
including the
extension of the discretionary spending limits and the PAYGO requirement,
the restoration of the
President's line item veto authority, the conversion of the non-binding
budget resolution into a
binding law and the enactment of an automatic continuing resolution to
avoid government
shutdowns.
The potential benefits of biennial budgeting have been outlined in
testimony presented by at least
three of my predecessors as OMB Director - Leon E. Panetta,
Franklin D. Raines, and Jacob J.
Lew - in their testimony before the House Governmental Operations Committee
(in 1993), the
Senate Rules Committee (in 1994), the Senate Governmental Affairs Committee
(in 1997), and
this Committee (last year). Mr. Chairman, I would hope to see more
progress on this issue than
just the addition of another name to this list. This idea has had the
support of at least two
Administrations and Members of Congress from both parties. We should not
spend a whole lot
more time talking about the pros and cons. Biennial budgeting has become a
perennial idea. It is
time to enact the legislation to implement it or to admit that the forces
against it are just not going
to let it happen.
As has been said many times, the main benefit to be gained through a
two-year process is that it
will enable the Executive Branch and Congress to devote more time to the
oversight and
implementation of the appropriated programs. The annual process, as it has
been operating, has
prevented my predecessors from conducting an adequate review of program
performance. We
have resolved to spend more time on such reviews, but it has been very hard
to do that while at
the same time we have had to prepare a supplemental request for the 2001
budget, engage in a
dialogue with Congress on the 2002 budget, and prepare guidance to the
agencies for the 2003
budget.
In the limited time that we have for review and oversight, we tend
to concentrate on annually
appropriated programs to the exclusion of the growing portion of the budget
that is funded under
the entitlement laws on a permanent basis. We need to carve out
more time to review and reform
these mandatory programs. Our review should challenge the assumption of
automatic spending
for these programs and, where appropriate, we should subject them to the
rigors of the budget and
appropriations process.
Simply passing a two-year budgeting requirement will not be enough.
It will require the will of
the Congress to make it work. The experience to date is not promising.
For the past 15 years, we
have had a requirement for the President to submit biennial budget
requests for the Defense
Department, and Congress has routinely ignored these requests. I also urge
the Congress to build
additional flexibility into the process. Without it, there is a danger
that this process will dissolve
into a series of ad hoc supplemental appropriations bills. I think that we
should consider
providing appropriations for each year of a two-year period and allow the
unobligated amounts
from the first year's appropriation to carry over into the second year of
the period. At the end of
the two-year period, unobligated balances should be allowed to lapse. I
also urge that there be
less earmarking, less micro-management, and more reprogramming flexibility,
in order to
accommodate the changes in need that are bound to occur over the two-year
time frame.
In sum, annual budgeting is a very inefficient process. Each year
it consumes a great deal of time
and energy that could be better spent on grappling with programmatic issues
in greater detail and
on a longer time frame. Under a two-year budget, the funding decisions
would be made in the
first year of each two-year period, thereby freeing-up the second year for
greater attention to
management, long-range planning, and oversight.
There can be no doubt but that biennial budgeting will require a
fundamental change in how the
Federal Government operates. The implementation of this reform will
require conforming
changes to those laws that are premised on the annual budget process and
will require Congress
and the Executive Branch to develop and implement new practices for
proposing, considering,
and enacting biennial budgets. For example, we will need to ensure that an
incoming President
has sufficient time, after taking office, to prepare and submit a budget
proposal that will cover
two years rather than only one. Moreover, because of the magnitude of the
change, the beginning
of the conversion process will likely pose significant challenges to
confront and overcome. The
implementing legislation needs to address these challenges.
Let's make this the year we finally act on this reform proposal.
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