It is difficult to explain the recent government shutdown to citizens of other nations. In most of the world’s democracies, this kind of disruption can’t happen. Rules are in place to keep the government running even if a new budget isn’t passed on time.
The U.S. needs to reform its budgetary processes to prevent the kind of crisis we saw recently.
Currently, budgeting differs from almost every other area of federal policy. When Congress and the president cannot agree on other kinds of legislation, existing law remains in effect. But with budget-making, there is no automatic default policy in the absence of congressional action. The government simply stops functioning.
In today’s highly partisan political climate, passing a budget on time has become increasingly difficult. And in that, the federal government is hardly alone: California, New Jersey, Pennsylvania and Minnesota in recent years all have gone through costly budget delays that furloughed workers, postponed or canceled state payments and, in some cases, shut down state offices.
It doesn’t have to be that way. State and federal legislators should follow the lead of Wisconsin and Rhode Island and enact provisions for automatic continuing appropriations. Under such rules, if lawmakers fail to negotiate a new budget on time, the previous year’s budget automatically carries over until a new spending plan is passed. This gives legislators the opportunity to negotiate without the threat of a looming and costly shutdown.
These rules have worked well for Wisconsin and Rhode Island. With pressure to pass a budget by a specific date removed, legislators seem more inclined to give competent, careful and thoughtful consideration to their states’ financial futures. And removing this pressure hasn’t led to a longer budgeting process. Wisconsin and Rhode Island have better records of passing on-time budgets than many other states.
This shouldn’t be a partisan issue. Both those who would like to see a smaller government and those who would like an expanded welfare state should be alarmed by the consequences of budget impasses. Economists estimate that a one-week government shutdown reduces annual economic growth by 0.1 to 0.2 of a percentage point, and that a one-month shutdown would reduce annual economic growth by 1.5 to 2 percentage points. This represents billions of dollars of economic harm that is felt throughout the economy.
If the federal government had adopted a default budget mechanism, House Republicans and Democrats might still be bickering over the passage of a timely new budget. But the government would continue running while lawmakers negotiated.
Congress has considered adopting automatic continuing appropriations reforms. In 1999, 164 House Republicans voted to enact an automatic continuing appropriations provision, but they were joined by only eight of their Democratic colleagues and the bill failed. Sen. Rob Portman (R-Ohio) has more than once introduced the End Government Shutdowns Act, which would implement a form of automatic continuing appropriations.
Although we do not necessarily endorse Portman’s specific proposals, reforms along these lines are urgently needed. As a 2012 news release from his office noted: “Since 1997, Congress has failed to pass its regular appropriations bills by the October 1st deadline, which has caused rushed budget agreements, the threat of government shutdowns, and unpredictability for government agencies and the people who rely on them.” Maybe now such a proposal will get some traction.
But first, both Democrats and Republicans will need to see that reforming federal budgeting rules can’t be a matter for partisanship. Government shutdowns are chaotic, damaging and unnecessary. And as recent polling has shown, they damage the reputations of both political parties.
If the U.S. is to remain a world leader, it needs a government that functions rather than lurching from crisis to crisis. Implementing a default budget policy would take pressure off legislators to make last-minute bargains and would help restore and maintain the people’s confidence in their elected officials to keep government running.
David Gamage is an assistant professor at UC Berkeley School of Law. David Louk is a law student at Yale Law School and a doctoral student in the Jurisprudence & Social Policy Program at UC Berkeley School of Law. This op-ed is based on their forthcoming research paper.