Events

Budgeting During Wartime: Dueling Priorities

September 13, 2002 // 3:00am5:00pm

Congress tends to defer to the President as Commander-in-Chief during times of war and give him most of what he requests. But Congress continues to insist on its oversight role and on some ability to make changes in spending to reflect its own needs and priorities. When presidents resist any congressional role or changes in wartime budgets and policies, a backlash can set-in that results in a deadlock over certain matters not directly affecting the war effort. This is particularly true in the post-9/11 era in which the budget picture has been turned upside down, and no replacement rules have been established to order priorities and establish fiscal discipline.

These were some of the major conclusions of a panel of experts September 13 at a Congress Project Seminar on "Budgeting During Wartime: Dueling Priorities." Former Clinton Administration Office of Management and Budget Director Jacob "Jack" Lew indicated that the best thing an Administration can do at the outset of a war is to give Congress an honest estimate of the costs. "A decision to go to war has to be predicated on paying the costs to see it through to the end. This is what I did when we committed troops to Kosova, and Congress responded with a full debate on the issue" and that eventually supported the commitment of troops. Lew, currently Executive Vice President of New York University, said in that instance Congress added to the supplemental spending request with spending of its own that had nothing to do with the war. Likewise, Lew continued, "responding to 9/11 has become a very large, spending catch-all and if this goes on for 3-4 years, it could produce a real budgetary problem." Emergency supplemental appropriations measures are necessary to begin with, he said, but "eventually the costs of a war have to be part of a fiscal policy debate and trade-offs– we need a full fiscal policy debate on priorities."

G. William Hoagland, Republican Staff Director of the Senate Budget Committee, observed that "defining this war is important in determining how you allocate resources and how you set priorities." It is particularly important in the face of growing deficits, said Hoagland, that Congress and the President must first understand what priorities are dueling for attention and then "find a balance between meeting the needs of this current shadowy crisis without exacerbating the certain clear funding crisis of. . .major entitlement programs" like Social Security, Medicare, and Medicaid. Hoagland said this balancing act is complicated by the fact that Congress has not agreed upon a budget resolution, has not renewed expiring budget enforcement provisions, has not enacted any appropriations bills, and faces an election this fall that could change party control of both houses of Congress. Unlike previous wars in which sacrifice was imposed through rationing, price-controls, production directives, and domestic spending cuts, there have been no comparable demands in the current war on terrorism. Whereas in World War II domestic spending was reduced by at least 38 percent over five years, Hoagland calculated, in the current conflict "non-defense spending has actually increased faster than defense spending these last two years." We have swung from a pre-9/11 projected surplus for this fiscal year of $176 billion to a post-9/11 projected deficit of $160 billion. It is not unusual for an Administration to dismiss the congressional budget process as a "nuisance" when it interferes with its policy goals, Hoagland said, but this Administration "has an outright disdain" for the congressional process, and "some in Congress appear to be reciprocating in-kind [with] the result [being] fiscal gridlock." While the temporary advantage may seem to go to the Executive, "I believe . . . . . .the congressional budget process, while in danger today, will nevertheless survive and may even become stronger for it."

Philip G. Joyce, Associate Professor of Public Administration at the George Washington University, says the Federal budget process has both changed and stayed the same since September 11 of last year. For one thing, the budget has moved from one of projected surpluses to one in which we are now in a deficit situation. The war on terrorism is responsible for only part of this change. Other factors include reduced revenues from the Bush tax cuts and the economic downturn and stock market decline. As in the past, budget deadlines are not being met, including the lack of a congressional budget resolution setting overall spending limits, the failure to enact any of the regular appropriations bills by the start of the new fiscal year on October 1, and so-called "technical re-estimates" from the changing economic picture. "Anybody who tells you it's only because of the tax cuts that we are now in deficit is wrong, just as anybody who says it's because of the events of September 11 is wrong."

Joyce said the stalemate over a set budget and an agreement on appropriations spending means "we're in the midst of an exciting game without any rules. There is no real deadline for completing action so long as Congress and the President are willing to pass continuing appropriations resolutions." The shift in emphasis to homeland security can be seen as both defense and domestic expenditures, said Joyce, and Congress will take advantage of the gray areas of homeland security to press for more of its own priorities. As for the future, Joyce predicted that the budget will not return to a balance on its own; "something will have to be done to bring it back into balance. A return to budget discipline will require a consensus on what budget discipline means. The budget process is only good at enforcing discipline once we have a clear path, but not before." Leadership will have to come from the President to chart that path, Joyce concluded. "In the past, the lack of budget discipline has led to budget discipline."

Jonathan Weisman, and economics and budget reporter for the Washington Post, argued that we are not at war in a traditional sense. More troops are deployed in the war on drugs and homeland defense than were sent to the Afghanistan conflict. Comparable deployments to Kosova, for instance, were not considered war in either a budgetary or a political sense. Weisman added, however, that the events of September 11 did change the terms of the political and budgetary debate in Washington. Before 9/11 there was much talk about the need to preserve the Social Security surplus in a "lock-box," but all that talk disappeared after September 11th. Now deficits are taken for granted given increased defense and homeland security needs, and "there hasn't been any political price to pay" for votes to increase spending in other areas as well, such as for farm programs and relief. "Deficits only become issues when Congress tries to do something about them," and that only happens when someone like a Ross Perot in 1992 calls attention to the deficit issue and the people begin to focus on the problem.

In the followup discussion to the panelists' presentation, Lew said that the line that was drawn over Social Security surpluses prior to September 11th by President Clinton's call to "save Social Security first," was a very important matter, but "that line has been blown away. There is blame on both sides for the current situation. There's something very destructive and dangerous that the two branches aren't talking and working together." Hoagland agreed and indicated that "deficits will become an issue again when interest rates start going up." On the current lack of budgetary rules, Hoagland warned that when Congress does not set the rules, "the only rule left is the veto pen, and that shifts the power from Congress to the President."

 

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