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Courting Disaster: Two Gaping Loopholes in the Debt Deal That Will Drive Up Spending

Posted By Patrick Louis Knudsen On November 7, 2011 @ 2:26 pm In Economics | Comments Disabled

Among the more egregious failings of the Budget Control Act (BCA)—the proxy fiscal plan spawned by the summer’s debt ceiling debate—are a pair of gaping loopholes allowing Congress effectively to blow through the agreement’s advertised spending limit. The Senate has already begun to exploit one of these openings. The House should not let it happen.

Loophole No. 1, little noticed when the BCA was enacted, is called “disaster relief.” It allows Congress to “adjust” the BCA’s $1.043 trillion discretionary spending cap for fiscal year (FY) 2012—that is, to simply raise the limit—for weather events the President terms “disasters” (an exceptionally popular practice in the current Administration). In the text of the BCA law, the “disaster” amount is defined as the annual average of the past 10 years’ disaster funding; on that basis, the Office of Management and Budget has calculated [1] it to be $11.3 billion for FY 2012.

If this subterfuge were used to its full extent, it would push total FY 2012 discretionary budget authority to $1.054 trillion, increasing spending by $4 billion above FY 2011 and falsifying the previous claim that the BCA would reduce spending in FY 2012. Senate appropriators already have planned a total of $8.6 billion in “disaster relief” in their spending bills. They included $3.2 billion in the “minibus” that passed the Chamber November 1, as noted by Senator Jeff Sessions (R–AL) [2], ranking member of the Budget Committee. House appropriators have not employed the disaster exception; they should not follow the Senate’s example.

Also noteworthy is that, unlike the sieve for “emergency” spending—usually employed in the middle of a budget year, ostensibly for unexpected events—the disaster funds are to remedy damage and loss from episodes that already have passed. These include Hurricane Irene and, yes, even Hurricane Katrina (which was six years ago), as well as this year’s Missouri floods. Because all these supposed needs are known, the additional spending should be budgeted for under the BCA cap and, at a minimum, offset by reductions elsewhere. The authors of the BCA, prodded by the Administration, simply chose not to.

Most “disasters”—tornadoes, snowstorms, fires, floods—are state and local issues. But the current President has effectively nationalized them, much as he has sought to nationalize health care, with a downright extravagant use [3] of “disaster” declarations [4] that open the spigot for federal spending wider still. The Administration should instead adhere to the strict legal definition [5] regarding the severity and magnitude of disasters.

Then there is Loophole No. 2: In addition to the “disaster” funds, the BCA still retains the uncapped “emergency” credit card. So Congress could obligate all the $11.3 billion for “disasters” and still spend without limit later in the year on other “emergencies”—making a total mockery of the BCA spending caps.

These two flagrant gimmicks are among six spending limits exemptions in the BCA. The others are overseas military activities, technical changes in concepts and definitions, continuing Social Security disability reviews, and efforts to control health care fraud and abuse. But the disaster and emergency maneuvers are worse than the others, because they are so easy to abuse and because lifting the spending caps for them leaves more room to maintain status quo spending levels for everything else. Congress can pretend to be disciplined [6] and claim austerity, but never really cut spending and reduce the size of government—demonstrating flagrant disregard for the budget crisis that the debt ceiling confrontation was supposed to address.

Members of both Chambers are now negotiating the “minibus” of three appropriations bills—Agriculture, Commerce-Justice-Science, and Transportation-Housing and Urban Development—and it appears House negotiators may yield to the higher Senate levels, accepting an increase of $5.2 billion above House bills, for a total of about $128 billion [7]. That is highly problematic, because—as shown in the Heritage Foundation Appropriations Tracker [8]—all 12 Senate bills taken together would breach the BCA spending cap by nearly $1 billion, even while forcing a debilitating freeze in the defense spending bill—and this is before counting the disaster funds.

[9]

The Budget Control Act was a deeply flawed outcome of the summer’s debt ceiling debate, and the more its elements come to light, the more grossly deficient it appears. The gaping disaster and emergency exceptions could open the floodgates to all but unlimited spending—a true disaster that the House should not allow.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/11/07/courting-disaster-two-gaping-loopholes-in-the-debt-deal-that-will-drive-up-spending/

URLs in this post:

[1] calculated: http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/disaster_relief_report_sept2011.pdf

[2] Senator Jeff Sessions (R–AL): http://www.budget.senate.gov/republican/public/index.cfm/press-releases?ID=85d1e553-497b-43e6-9cb0-1b7b0206a5e5

[3] use: http://www.heritage.org/Research/Reports/2011/09/Federal-Budget-Makes-Case-FEMA-Reforms-Needed

[4] declarations: http://www.heritage.org/Research/Reports/2009/09/States-Stop-Subsidizing-FEMA-Waste-and-Manage-Your-Own-Local-Disasters

[5] definition: http://www.fema.gov/pdf/about/stafford_act.pdf

[6] pretend to be disciplined: http://www.nationalreview.com/corner/282050/mini-bus-deception-veronique-de-rugy

[7] $128 billion: http://public.cq.com/docs/news/news-000003973163.html

[8] Heritage Foundation Appropriations Tracker: http://www.heritage.org/research/reports/2011/11/appropriations-tracker-fy-2012

[9] Image: http://blog.heritage.org/wp-content/uploads/appropriations-tracker-FY2012-table2-20111107.pdf

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