Iowa’s five representatives in the U.S. House split on party lines over two more budget reform bills approved since last week’s effort to change cost scoring methods on some legislation.

The Pro-Growth Budgeting Act, approved by the House on February 2, was designed to reduce the apparent cost of tax cuts by instructing the Congressional Budget Office to analyze proposed bills differently. The other two Republican-backed budget reform measures tackle assumptions and methods used when Congress writes budget bills.

H.R. 3578, the Baseline Reform Act, came up for a vote on February 3. Pete Kasperowicz explained,

The bill would end the practice of setting budget baselines for discretionary spending that are equal to the prior year’s budget plus inflation. Democrats argued during Thursday debate that with this bill, Republicans are ignoring the fact that inflation exists, and that the bill would erode the purchasing power of these programs. […]

But Republicans argued that the bill would not prevent Congress from boosting budget items when needed, and would force Congress to look more critically at requests for increased funding.

“Let’s not err on the side of assuming every government agency automatically needs a spending increase one year to the next,” House Budget Committee Chairman Paul Ryan (R-Wis.) said Thursday. “If we think they need more money, then we should measure it on an honest basis and then legislate more money for those agencies.”

The baseline reform bill passed by 237 votes to 177, with no Republicans against the bill and only four Democrats crossing party lines to support it. Iowa Republicans Tom Latham (IA-04) and Steve King (IA-05) voted for the bill, while Democrats Bruce Braley (IA-01), Dave Loebsack (IA-02) and Leonard Boswell (IA-03) voted against it.

Richard Kogan of the Center on Budget and Policy Priorities made a strong case against the Baseline Reform Act last month:

Removing inflation adjustments from budget projections for discretionary programs would make the projections of deficits and debt look more favorable than they really are, by creating an unrealistic assumption that policymakers will cut funding for discretionary programs in real terms every year through a permanent, across-the-board funding freeze, irrespective of the level of inflation.

The number of staff whose salaries and benefits are paid, the goods and materials that agencies purchase, and the services that programs provide all would be assumed to be cut every year under the baseline.  This lack of realism could lead policymakers, the press, and the public to believe that deficits will be lower than is likely the case and thus to conclude that costly new proposals are more affordable than they actually are.  This could also lessen pressure to enact the unpopular budget cuts and revenue increases that will be necessary over the coming decade to bring the budget to a sustainable and prudent long-term path.

To illustrate this point, note that last spring CBO [the Congressional Budget Office] compared a ten-year freeze in discretionary appropriations – both defense and non-defense – with its ten-year baseline, in which appropriations grow with inflation.  Relative to the baseline, a freeze would reduce expenditures for these programs by $1.3 trillion over the next ten years.  Counting the resulting interest savings, the deficit would appear $1.6 trillion lower than if discretionary programs simply grew with inflation.  This extra room could suggest that the nation could afford $1.3 trillion in new tax cuts or expansions in mandatory programs. […]

To be sure, a simple inflation adjustment may not always be the ideal way to create a neutral benchmark.  Many programs and most administrative costs should be adjusted to account for changes in program caseloads.  The number of elementary school children will grow slightly over the next decade while the number of elderly people will grow rapidly.  These facts may suggest that some programs should be adjusted both for inflation and for the growth of segments of the U.S. population; if not, the benefits or services per person will likely erode over time.[2]

But even if the inflation-adjusted baseline is not a perfect benchmark because it ignores population growth where that is relevant, it is much more likely to approximate the funding levels needed to maintain the same overall levels of goods and services than a baseline that ignores inflation.

Yesterday the House took up a third budget reform bill, again summarized by Pete Kasperowicz for The Hill:

H.R. 3581, the Budget and Accounting Transparency Act, […] would make several changes to the federal budget process, including by bringing off-budget spending back onto the budget. Several government-sponsored entities, like Fannie Mae and Freddie Mac, would be formally brought onto the budget by this language.

The bill would also require the government to factor in the credit risk of its various lending programs into the budget, and require federal agencies to post annual budget justifications online.

During the House floor debate,

Rep. Scott Garrett (R-N.J.), the sponsor of the Budget and Accounting Transparency Act, said placing mortgage giants Fannie Mae and Freddie Mac on budget is a big reason to support the bill, as both quasi-government entities were put into receivership by the federal government in order to cope with the mortgage crisis. […]

Rep. Chris Van Hollen (D-Md.), the ranking member of the Budget Committee, said he would probably support the bill if it only put Fannie and Freddie onto the federal budget. But he cited other language in the bill that would make the government score federal lending programs as being more costly, in line with how the private credit markets account loan programs.

Van Hollen and others said this change would increase the cost of these programs, making it harder to justify spending. “The reality is that if you apply this methodology to student loans, you will systematically overestimate the cost in the budget in terms of outlays,” he said.

The Budget Accounting and Transparency Act passed by 245 votes to 180. Only seven Democrats supported this bill; Iowans Braley, Loebsack and Boswell stuck with the rest of their caucus, while Latham and King voted with the GOP majority.

It’s striking how few Democrats were willing to go along with the House Republican vision for reforming the budget process.

Along those lines, House Budget Committee Chairman Paul Ryan and others want to introduce biennial budgeting at the federal level. That proposal won’t go anywhere in the current U.S. Senate, even if it passes the House. I was intrigued to see the two-year budgeting concept criticized from the right as well as from the left in the Washington think tank world.

Any comments about the federal budget are welcome in this thread.