The federal budget: Serious issues and unserious politics

We have entered a time of outright denial and magical thinking.

Source: Yuval Levin in National Review.

There are serious issues with America’s federal budget. Very serious issues.

Where to begin?

Let me first start with the process of budgeting, that process of drafting a plan for raising revenue and spending it. Congress often does not adopt a budget. In 2024, the House of Representatives passed a resolution; the Senate did not. For his part, President Joe Biden delivered his budget late. These days, Congress tends to go through the bother of passing a budget only so that whichever party holds a majority can ram policy changes through the reconciliation process (which can evade filibuster in the Senate.)

Next, there are the spending bills themselves. The 1974 Congressional Budget and Impoundment Control Act would have Congress adopt a budget and enact all 12 appropriations bills before September 30. That rarely happens. None of the fiscal year 2025 spending bills were signed into law in 2024. As I write in January 2025, the country is under a continuing resolution adopted in December of 2024, which simply extends the previous continuing resolution, which extended the resolution adopted when Congress and the president could not sign the bills by September 30.

Failing to enact the spending bills has costs. It creates waste in the form of forcing agencies to spend time preparing for a government shutdown rather than the work they are supposed to do. It means that programs that are not working keep getting tax dollars, and that agencies that have legitimate needs for additional dollars (e.g., due to inflation or new tasks to complete) do not get them.

No discussion of the budget’s procedural troubles would be complete with mention of tax policy, which raises revenues. The code is a baroque mess because it is largely the product of lobbying. Nobody can argue that it collectively makes sense as a matter of principle or policy. But what’s really astonishing is that tax policy is crafted largely separate from the annual debates over spending, according to a former head of the House’s tax policy committee. Is it any wonder our revenues and expenditures are grossly out of kilter… (Read more)