Congress Once Constrained Government Debt
In 1920, lawmakers curbed spending by putting a single committee in charge of the overall budget.
By John F. Cogan
Jan. 23, 2023 2:03 pm ET
The U.S. Treasury began taking steps last week to avoid default on the nation’s $31.4 trillion national debt. The government has been here before, and it will keep arriving here until Congress finds a way to control its voracious appetite for spending. The political will to cut spending is hard to muster. Congressional history shows that the budget process itself creates incentives for excessive spending and budget deficits.
Entitlement programs have accounted for all the growth in federal spending relative to gross domestic product in the past 60 years, causing the persistent budget deficits during that period. Entitlement expenditures are determined differently from so-called discretionary programs. Spending on the latter programs is set by fixed appropriations of money. Entitlement expenditures aren’t fixed in advance but determined by the program’s level of benefits, its eligibility rules and economic factors.
Jurisdiction for entitlement legislation is dispersed among more than a dozen committees in each congressional chamber. In the House, the Agriculture Committee has jurisdiction over farm-support payments and food stamps, the Education and Workforce Committee over student loans and grants, the Ways and Means Committee over Social Security, Medicare hospital insurance and welfare programs, the Energy and Commerce Committee over Medicaid (sharing responsibility for ObamaCare and Medicare Part B with Ways and Means).
In this system, no committee is accountable for total spending. Each committee has a reason to expand its programs and resist attempts to restrain them, but none have an incentive to keep overall spending down.
It’s analogous to the classic tragedy of the commons. Imagine a situation in which many fishermen have access to a commonly owned body of water. Each fisherman has an incentive to catch as many fish as possible, and no fisherman has a reason to restrain his catch. The area is eventually depleted of fish. But there’s one notable difference: Unlike the fisherman, once Congress has exhausted its supply of tax revenue, it can borrow from the future.
Earlier Congresses saw the consequences of dispersed spending authority and used expert committees with specialized knowledge (called authorizing committees) to create programs and their rules of operation. For most of the 19th century, a single committee in each chamber determined the total annual budget. The use of a single committee provided accountability and made possible the necessary funding trade-offs among programs. Except during wars and recessions, annual budgets were balanced with a suitable allowance.
But in the late 1870s to the mid-1880s, the House began dispersing spending authority. Former Speaker Samuel Randall delivered a prophetic warning in 1885: “If you undertake to divide all these appropriations and have many committees where there ought to be but one, you will enter upon a path of extravagance that you cannot foresee the length of or the depth of, until we find the treasury of the country bankrupt.”
The House dismissed these warnings and dispersed appropriations jurisdiction to eight committees. The Senate later followed suit. The new incentives caused expenditures to grow rapidly. From the 1890s to World War I, budget deficits were more frequent and larger than ever before in U.S. peacetime history.
After World War I, Congress recognized the source of its budget problem and solved it. A House select committee, established to create a new process in which the president would submit his own comprehensive budget request to Congress, recommended that the chamber consolidate all appropriation authority into a single committee. The remarkable resolution stripped seven House committees of their spending authority. Citing past support from some of its most respected former members, including Appropriations Committee Chairman James Garfield (1871-75) and Speaker Joseph Cannon (1903-11), the select committee urged members to “submerge personal ambition for the public good.” The House did so and consolidated appropriations in 1920. Two years later, the Senate changed its rules to match.
That restored budget accountability and eliminated the pre-existing system’s incentives for higher spending. From 1921 to 1930, when the Great Depression hit, federal spending was restrained and the annual budget was balanced.
Starting in the 1930s, however, Congress began creating entitlement programs for people other than those who had performed some government service related to defense. (The only previous entitlements were pensions for servicemen.) The consequence is the return of dispersed committee jurisdiction in which entitlements now account for two-thirds of federal program spending.
Since the 1970s, Congress has made several failed attempts to change the budget process, most notably the 1974 Budget and Impoundment Control Act and discretionary appropriations caps and pay-go rules under the 1990 Budget Enforcement Act and subsequent laws. None of these reforms have overcome the powerful spending incentives created by the current system.
Many other ideas have been floated by individual lawmakers. In June 1979, Sen. Joe Biden urged that almost all spending be subject to annual approval by the Appropriations Committee. Mr. Biden said in a floor speech that his bill would make “new and existing entitlements subject to the appropriation of funds, thus effectively ending their entitlement status,” with exceptions only for then-existing Social Security and Medicare benefits.
In the current arrangement, the House and Senate Budget Committees may appear to provide accountability, but they have no independent authority to change entitlements. Similarly, the omnibus appropriations laws of recent years may give the appearance that the congressional leadership is in charge. But these bloated bills fund only discretionary spending and represent a failure of the appropriations process.
In 1917, President Woodrow Wilson advised Congress that “it will be impossible to deal in any but a very wasteful and extravagant fashion with the enormous appropriation of public moneys . . . unless the House will consent to return to its former practice of initiating and preparing all appropriations bills through a single committee.” The same is true more than a century later. Consolidating appropriations will be difficult for Congress, but no more difficult than it was in 1920. Lawmakers should again “submerge personal ambition for the public good.”
Mr. Cogan is author of “The High Cost of Good Intentions” and a senior fellow at Stanford University’s Hoover Institution
