Report: Fix Federal Budget Process...or Expect More Debt & Less Confidence in US

NEW YORK, Feb. 25, 2025 /PRNewswire/ -- The Federal budget process is broken. Since 1977, only on four occasions has Congress passed all appropriations bills on time. Delayed action sets the stage for fiscal irresponsibility, undermining the ability to address the national debt and breeding economic alarm with looming government shutdowns.

A new report from the Committee for Economic Development (CED), the public policy center of The Conference Board, recommends urgent reforms to rebuild a predictable annual budget process. The report calls for comprehensive solutions that improve the timeliness of the process, mitigate challenges to regular order, permit greater debate on important topics, and incorporate longer-term planning into budget development.

The report sounds the alarm bells: As CED warns, without reform the national debt and net interest spending will continue to increase, crowding out other national priorities and reducing confidence in the Federal government's ability to repay the debt. This will damage the Federal government's credit rating, result in higher interest rates that the US Treasury must pay investors to compensate for the greater risk of default, and devalue the US dollar as investors seek safer investments.

"We are facing $36 trillion in outstanding national debt and an annual budget deficit of $1.9 trillion. As our fiscal trajectory worsens, the broken budget process will only stand in the way of the bipartisan solutions needed to address these long-term fiscal challenges. Congress should act now to end the dysfunction before current government funding runs out in March or we default on the debt," said David K. Young, President of CED.

The Game Plan for Congress

Improve Timeliness

• Require lawmakers to pass a budget on time by prohibiting legislation with any fiscal effect from being considered until a budget is passed. Congressional leadership may prevent Members of Congress from leaving for scheduled recesses to enforce this requirement (with exceptions for genuine emergencies).
• Consider moving from an annual budget process to a biennial one (respecting the rule that one Congress cannot bind a future Congress), which can include a two-year budget resolution, two-year appropriations, and/or multi-year authorizations of Federal programs.

Mitigate Dysfunction and Challenges to Regular Order

• Strengthen budget enforcement mechanisms, including enforcing pay-as-you-go statutes, capping increases in discretionary spending, and utilizing sequestration as a last resort.
• Reform the debt limit. Options include automatic increases if fiscal targets in the budget resolution are met or requiring a debt limit increase or suspension vote with any legislation with a significant fiscal effect.
• Consider implementation of automatic continuing resolutions at the start of a fiscal year if Congress has failed to pass the Federal budget on time.

Incorporate Longer-Term Planning

• Extend the time horizon for Congressional Budget Office (CBO) baseline budget projections from 10 years to 25 years and require CBO to assess the long-term impact of budget proposals and include interest costs in all scoring.
• Require statutory medium and long-term targets for regular appropriations and for the national debt as a share of GDP, with the goal of reducing the national debt to a more sustainable 70% of GDP.
• Establish long-term targets for capital financing activities.
• Consider an emergency reserve fund to respond to natural disasters, geopolitical events, and other unanticipated crises, perhaps financed by issuing long-term bonds coupled with plans to mitigate these risks.

About The Conference Board
The Conference Board is the member-driven think tank that delivers Trusted Insights for What's Ahead.™ Founded in 1916, we are a non-partisan, not-for-profit entity holding 501(c)(3) tax-exempt status in the United States. ConferenceBoard.org

The Committee for Economic Development (CED) is the public policy center of The Conference Board. The nonprofit, nonpartisan, business-led organization delivers well-researched analysis and reasoned solutions in the nation's interest. CED Trustees are chief executive officers and key executives of leading US companies who bring their unique experience to address today's pressing policy issues. Collectively, they represent 30+ industries and over 4 million employees. ConferenceBoard.org/us/Committee-Economic-Development

SOURCE Committee for Economic Development of The Conference Board (CED)