What Are the Goals of Congressional Budgeting? (with Paul Winfree)
What Are the Goals of Congressional Budgeting? (with Paul Winfree)  
Podcast: Understanding Congress
Published On: Tue Jul 05 2022
Description: The subject of this episode is, “What are the goals of congressional budgeting?”My guest is Paul Winfree. He is a distinguished fellow in economic policy and public leadership at the Heritage Foundation. Importantly for today’s discussion, Paul has a great deal of knowledge about congressional budgeting. He has had stints both in the White House and in the Senate, where he worked on budgeting firsthand. Paul also is the author of the book The History (and Future) of the Budget Process in the United States: Budget by Fire (Palgrave Macmillan, 2019). So I’m very excited to be here with Paul Winfree.Kevin Kosar:Welcome to Understanding Congress, a podcast about the first branch of government. Congress is a notoriously complex institution, and few Americans think well of it, but Congress is essential to our republic. It’s a place where our pluralistic society is supposed to work out its differences and come to agreement about what our laws should be. And that is why we are here: to discuss our national legislature and to think about ways to upgrade it so it can better serve our nation.I’m your host, Kevin Kosar, and I’m a resident scholar at the American Enterprise Institute, a think tank in Washington, DC.Paul, welcome to the podcast.Paul Winfree:Thanks so much, Kevin. Really happy to be speaking with you today.Kevin Kosar:My sense is that if we asked Americans, “What are the goals of budget policy?” they likely would say something along the lines of, “It involves the government figuring out what to spend money on—like defense, for example—and how to pay for this spending. Budget balance is the goal of budgeting.” While that's true, what your fine book shows is that our government has had a variety of goals for budgeting over the past two centuries, correct?Paul Winfree:That's exactly right. One of the reasons why I wrote this book in the first place was that there's this narrative amongst budget experts in Washington, DC, these days that the budget process is broken. What I wanted to do is start to unwind that and ask both, "Well, why is the budget process broken?” but also, “How did we get to where we are today?" It might be my own bias on how I approach problems, but one of the things that helps me understand current mechanisms is also understanding how we got to those current mechanisms, rather than approaching the current problem sets as if they happened exogenously and were not predetermined by other things that have happened throughout our history.So, what I do in this book is go back all the way to the very beginning and start with colonial America, and then walk us up to today. What you find throughout our history, in looking at both budget policy but also the formation of economic policy more broadly, is that there were lots of different goals, from debt eradication, to sending signals to European debt markets that we were a viable nation that they should take seriously, to macroeconomic management. The goals today are in some ways different than the goals 250 years ago, but in other ways similar. I think we'll probably talk about that a little bit in the next half hour.Kevin Kosar:All right. Well, let's start at the very beginning, which, as a wise person once sang, is a very good place to start. When the founders bargained out the U.S. Constitution, they had objectives for budgeting, didn't they?Paul Winfree:That's right. The founding generation was very practical in a sense, and they had to be. They were involved at the beginning of a new country, and like many founders of companies today, they didn't have a lot of time to prove to the world that their model was viable. Therefore, they tried some things such as the Articles of Confederation, which permitted the federal government to borrow money. But since the Articles didn't provide Congress with the power to raise revenue, they would apportion the cost of loans to the states based on their property values. This implicitly gave the states a veto over the terms of the loan agreements. Therefore, as a practical matter, you had officers of the federal government who had very limited power in negotiating the terms of these loans in Europe on behalf of the states, during a period when it took a typical mail ship one month to cross the Atlantic. Often, the state legislatures would have actually adjourned for the season by the time that the details of these agreements came back home for ratification. It's no wonder that James Madison wrote his friend Edmund Randolph saying that this created a bit of a struggle. These first trials, though, were a reaction to the world that they had been attached to. This is partially a level of the perceived tyranny of the British crown. The press at the time had done a really good job fostering such sentiment. It was also partially a derivative of colonial governing bodies, cultures, and practical issues like physical distance and poor internal infrastructure that had fostered this decentralized mindset. But they had a serious problem, ultimately, with securing credit and managing debt payments. And to get other nations to take the newly created United States seriously, which was a prerequisite to life, liberty, the pursuit of happiness, and all of that, they needed to get their finances in order. So they changed things up rather quickly. As Alexander Hamilton famously wrote, "Debt…was the price of liberty,” and more important than any natural resource in maintaining the nation's security. Interestingly, and contrary to what you may hear from many protectionists today, Hamilton, the practical treasury secretary, preferred relatively modest and flat tariffs so as not to spook international markets and get into trading wars for this very reason. But there was another goal that I talk about less in my book that I've become very persuaded by, primarily by the work of a guy at the University of Maryland named John Wallis, among others: that the avoidance of public corruption was also important for the founding, and also subsequent generations. This is because new Americans had witnessed instances where Parliament had provided special benefits to their political coalition, such as limiting market access through protected economic status in exchange for political support. This systemic corruption was in a sense intolerable, and would ultimately influence many of the budgeting reforms over our history. I think that this is something that may not make Americans different, but it is a characteristic of Americans. That is, for the entire existence of our country, there has generally been this populist intolerance to public corruption in a way that you don't see in other places such as China or Russia today. Public corruption seems to challenge the cultural notions of fairness and threaten virtues that are important to Americans, like liberty and freedom. This is also something that they would have learned from Adam Smith, who wrote about this very issue in particular in The Wealth of Nations, first published in 1776, that we know influenced the founding generation.Kevin Kosar:When I think about our Constitution, you won't find a section that says, "Here is the budget process and here are the objectives." Yet built into there, it seems to me, there's at least one objective, which is that the executive should not have independent authority to raise revenue, because the bad old kings of Europe did that and often started wars. I guess a second thing that's in there is the idea of revenue-raising—it should be done by the people in the government closest to the people. Therefore, revenue bills are supposed to start in the House, right?Paul Winfree:That's right. That was something that was learned and ultimately borrowed from the way that Parliament is structured in the British government. One of the issues that came about during the English Civil War was the king, King Charles at the time, was unilaterally executing his power as the monarch to raise taxes based on this threat of war. Ultimately, that upset people, led in part to the English Civil War. So when they went to go about putting things back together again during the Glorious Revolution, they made sure that essentially two things happened. The first thing that happened is that the Parliament had unilateral control over raising and lowering revenues—controlling revenues. The second thing is that they put that power with the House of Commons. That was adopted by the British colonists when they came to America, and ultimately was probably considered a truth when they went to go put together the Constitution. Of course this is the way we go about doing things. Kevin, I'm no expert in British history, and especially British parliamentary history. But one of the other interesting things that seems to be an American institution is this one of advice and consent, which actually also has to do with budgeting powers. One of the things that you saw within the colonial governments was this issue where oftentimes the governor, who was a royal appointee, would want to do something. And the local legislatures, made up of...