The Senate budget being debated this week includes only a two-year cap on appropriations, and continues Senate pay-go rules that apply to both entitlement increases and tax cuts. However, concern over other changes in budget rules remains.

Budget rules that could radically cut spending for years while making it easier to pass tax cuts may still be proposed as an amendment to the Senate budget. The rule could also be included in the House budget as an amendment to the conference report, or passed as separate piece of legislation all on its own. A particularly egregious example is (HR 3358) introduced by Rep. Hensarling (R-TX), titled "The Family Budget Protection Act of 2003" -- quite a misnomer.

Following are a few quick points about some potential budget process rule changes that could be harmful:

• Discretionary caps set limits on the yearly amount of discretionary (or appropriations) spending. Caps have been useful in the past in reducing the deficit, however, there are some important caveats. Discretionary spending did not cause the deficit, and it should not be the sole target of efforts to reduce it. Caps should only be included as one part of an over-all deficit reduction plan, which involves shared sacrifice, i.e., tax cuts for millionaires should also be on the cutting table. Second, caps should be set at reasonable levels that protect important appropriations and allow a rational appropriations process, rather than hidden gimmicks. Many experts also agree that there should be some protection of domestic appropriations from increases in military appropriations (especially when these costs are increasing so much), like a firewall that prohibits using domestic appropriations to make up for shortfalls in military spending. Finally, it is important not to set budget caps for too far ahead, since circumstances change rapidly.
• Pay-as-you-go rules require that spending increases in entitlement programs or the reduction of revenue through tax cuts must be offset by cutting entitlement spending or raising additional tax revenue. Pay-go has also been a useful way to reduce the deficit in the past, but any pay-go mechanism must apply equally to both taxes and entitlements. The administration proposed a modified pay-go, which would only require offsets for increases in entitlement spending while exempting tax cuts from the offset provision. The president's proposal would also not allow for increases in entitlement spending to be paid for by increases in tax revenue, for instance, closing corporate loopholes. This would make it harder to increase entitlement spending and easier to pass tax cuts.
• The president also proposed changes in the Congressional Budget Office "baseline." The baseline is a projection of the future costs based on current spending levels against which the cost of new programs or tax cuts is measured and "scored." The president proposed that CBO not adjust the baseline for inflation, and to include the 2001 and 2003 tax cuts as if they were permanent. These changes are primarily designed to hide reductions in spending and to make the cost of tax cuts appear to be zero.

A number of other changes have been proposed. Some of these include making the budget resolution an actual law (changing it from a concurrent to a joint resolution) signed by the president; who would be allow to use a line-item veto. Both of these changes would vest more power in the executive branch. Another proposal is for an automatic continuing resolution, which would only go into effect when appropriations are not passed by the beginning of the new fiscal year. As we have seen in the past two years, Congress is required to pass continuing resolutions -- as many as it takes -- for uncompleted appropriations. Most continuing resolutions set the spending level at last year's spending. With an automatic continuing resolution, Congress would not be required to pass yearly appropriations and funding for appropriations would not grow past the prior year's level. Finally, there have been proposals to change from an annual budget to a biennial budget and to require stricter rules on emergency spending.

Concern over budget deficits and the rising national debt bring issues of the budget process to the forefront. Budget process rules can help to reduce the deficit, but they can also be used as tools to accomplish ideological goals, like facilitating more and more tax cuts to ensure the radical reduction of government. For more information about some of these proposed rules changes, see federal budget analyses by the Center on Budget and Policy Priorities.