The Corner

Abusing Emergency Spending

CQ had a story today explaining how the battle over offsetting disaster aid is the main thing preventing lawmakers from finishing the fiscal 2012 appropriations process by mid-November.

The current version contains $3.6 billion in aid, including $1 billion immediately for the federal Disaster Relief Fund , and the Army Corps of Engineers’ flood control program. It also would appropriate $2.6 billion in further disaster funding for the coming fiscal year. The continuing resolution would offset the additional $1 billion in emergency spending by taking away unobligated funds from the Energy Department’s advanced technology vehicles manufacturing loan guarantee program. Democrats in both chambers oppose the offsets sought by House Republicans. Senate Democrats signaled Thursday they have the votes to strip the offsets when they adopted, 62-37, Majority Leader Harry Reid’s $6.9 billion disaster aid measure (H J Res 66) without any payfors. The vote came after the chamber rejected two GOP proposals to offset the cost of the funding, which Reid’s legislation designates as emergency spending.

If you remember, earlier this month House Majority Leader Eric Cantor received a lot of heat for suggesting that new emergency spending on hurricane disaster relief should be offset by cuts elsewhere. Some Democrats were fast to denounce the tea party as being behind the offensive idea that we should pay for new emergency costs. One such critic was Senate Majority Whip Dick Durbin, who told CQ yesterday:

Eric Cantor’s political position here is an indication of how painful it can be to be a tried-and-true tea party member when Mother Nature is bringing things crashing down.

Tea-party activists are hardly the first ones to call for changes in the way the federal government handles disaster-relief spending. For instance, the Committee for a Responsible Federal Budget supports changing Congress’s habit of shortchanging initial disaster-relief appropriations in bills that are subject to annual budget caps, and later backfilling the disaster fund through emergency supplemental spending, which falls outside of the caps. In a press release earlier this month, CFRB wrote:

In the wake of Hurricane Irene and last week’s job report, calls for Washington to enact some form of emergency spending measures have intensified. Given recent events and the weak economy, such measures may indeed be warranted. Given our country’s fiscal situation, however, we cannot afford to add to our already massive debt burden.

On that note, CRFB’s latest press release urges policymakers to offset any short-term emergency spending measures with gradual spending cuts or revenue increases over the next five to ten years.

I have long been a fervent — and unfortunately ineffective — advocate of changing the rules governing emergency spending. Supplemental spending, and “emergency” spending in particular, has become Washington’s tool of choice for evading annual budget limits and increasing spending across the board. Whether through funding predictable, non-emergency needs through supplemental bills or refusing to offset legitimate emergency spending, the result has been a significant increase in government spending across the board — without adult supervision.

How much are we talking about? Except for a sharp spike in 1991 to fund the first Gulf War, supplemental appropriations remained at roughly 1 percent of new discretionary spending during most of the 1990s. After 1998, they started to rise as the federal budget began running surpluses and politicians looked for ways to spend the extra money. But in those days, the United States still enjoyed the benefits of divided government. After 2002, when they regained control of the Senate, Republicans conveniently allowed the few budget rules meant to constrain their behavior to expire. Supplemental appropriations designated as emergency spending no longer count against the annual budget limits set by Congress and do not trigger automatic cuts if they push outlays above spending caps. In fiscal year 2009, supplemental appropriations represented roughly 14 percent of new discretionary spending and reached an all time high of $174 billion — up from $7 billion in fiscal year 1998, when supplementals accounted for 0.9 percent of new discretionary spending.

Obviously, Republicans share much of the blame for the recent increase in emergency spending, since the wars in Iraq and Afghanistan have been largely funded through emergency appropriations. However, lawmakers such as Sen. Mary Landrieu (D., La.) — a vocal advocate for more disaster spending without any offsets — should also be held responsible for the recent abuses. As you may recall, Louisiana has massively benefited from emergency spending in the past, since most of the Katrina relief went through supplemetal bills.

In this recently updated paper, I look at the problem of the “never-ending emergency” and the spending abuses of recent years. I have to say that I find it outrageous that in the current financial state of this country, lawmakers still feel entitled to spend more without having to pay for it one way or another.

Fixing the emergency loophole should be a priority for fiscally conservative lawmakers. Failure to do so would make a joke out of any budget caps, since Congress can always label spending above the cap “emergency spending” and get away with it. Offsetting emergency spending makes fiscal sense. In 2009, the Congressional Research Service noted that “had supplemental appropriations been fully offset since 1981, federal debt held by the public could have been reduced by 23 percent or $$1.3 trillion.” That’s not small change.

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