There is widespread recognition that the federal budget process is in shambles and that this is a major reason why it is so difficult for Washington to get the nation's finances under control. In his budget proposal this year, President Bush called for important changes to the budget process, as he has done before. Many House Republicans, particularly members of the Republican Study Committee (RSC), have been pressing for rule changes to make it more difficult to expand programs.[1] And moderate Democrats have been working with Republicans in the Senate to explore how the budget process could factor in unfunded federal obligations.

This week, the prospects for a bipartisan consensus became ever stronger when the House "Blue Dogs" unveiled their proposal for budget process reform. The Blue Dogs are a group of 35 moderate Democrats in the House. Their budget process proposal is very consistent with proposals from the Administration and RSC Republicans.

This latest package of ideas reflects a growing bipartisan consensus that budget process reform is essential. Both the RSC and Blue Dogs, like the Administration, understand that a commitment to restraint is not enough. Lawmakers also need a budget process that helps them set priorities and make necessary trade-offs.

Congress remains saddled with an outdated budget process created in 1974 to maximize federal spending. Meaningful spending caps are absent, and the few remaining restraints are routinely bypassed through large loopholes. The Blue Dogs' proposal focuses on capping spending increases, closing loopholes, and providing lawmakers with tools to spend tax dollars more effectively and efficiently.

The Blue Dogs' 12 proposals fall into the following general categories:[2]

• Impose discretionary spending caps that are even tighter than the President's. The Blue Dogs propose capping annual increases in discretionary spending at 2.1 percent for the next three years, below even the President's proposed average annual increase of 2.5 percent.
  
• Justify each earmarked project. Since 1998, the number of annual earmarks has jumped from 2,000 to 11,000, and these projects now cost taxpayers $23 billion each year. Requiring that lawmakers provide a written justification for each earmark should lead to fewer lawmaker requests to use tax dollars to study teenage "goth" culture in Missouri or subsidize the Rock & Roll Hall of Fame.[3]
  
• Demand accountability from federal agencies. With waste, fraud, and abuse costing taxpayers billions of dollars annually, the Blue Dogs propose freezing the budget of any agency that cannot pass an audit. They would also strengthen Congress' oversight role by requiring semi-annual oversight reports from each congressional committee.[4]
  
• Demand accountability from Congress. Too often, Congress hides behind unanimous consent requests and voice votes that prevent constituents from knowing how their own lawmakers voted. The Blue Dogs would impose a mandatory roll call vote on any bill that would cost more than $50 million. In addition, they would require that a full cost estimate accompany any bill or conference report that comes to the House floor and that lawmakers have at least three days to review the final text of any bill before voting. These reforms would help prevent the too-frequent occurrence of lawmakers voting on bills when they are not sure of the real cost and do not have sufficient time to investigate the legislation.
  
  Additionally, the Blue Dogs ask that the House Budget Committee prepare budget compliance statements for all bills reported out of committee to indicate whether they are consistent with the spending levels in the budget resolution.
  
• Create a rainy-day fund for emergencies. Lawmakers today can evade any budget cap by classifying excess spending as an "emergency." Congress has used this loophole to add hundreds of billions of dollars in routine spending. The Blue Dogs would better define an "emergency," require a separate vote on emergency spending, and set aside money in a rainy-day fund, just like 45 states currently do.
  
• Repeal the Gephardt rule. This rule allows House lawmakers to raise the federal debt limit automatically with the budget resolution, avoiding an embarrassing separate vote to increase the nation's indebtedness. Lawmakers should no longer be able to avoid this debate. Raising the debt limit is a sufficiently important activity to require a separate roll-call vote. The Blue Dog proposals would eliminate the Gephardt rule.

There are other elements in the Blue Dog proposal that could gain bipartisan support if carefully designed, such as a balanced budget amendment. On the other hand, there are elements that will be hard to include in a bipartisan consensus, such as renewal of Pay-As-You-Go (PAYGO) rules. PAYGO requires that new legislation to increase entitlements or reduce taxes be balanced by a choice of tax increases or entitlement reductions. Congress should examine these two ideas very carefully. A balanced budget amendment, for instance, should not include loopholes or be a tool for tax increases.[5] Similarly, PAYGO may simply force damaging tax increases if it does not include realistic steps to rein in the massive cost increases projected in major entitlement programs like Social Security, Medicare, and Medicaid.[6]

The Blue Dogs deserve credit for putting out a strong, serious proposal to restrain runaway spending. Taken together with the Republican Study Committee's similar proposal and Administration initiatives, this proposal represent a growing bipartisan consensus that sanity must and can be restored to the federal budget process. While a few elements of the proposal will be problematic, most of it could form the foundation of a bipartisan improvement of the budget process and should be considered swiftly by Congress.

Brian Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.