Saturday, October 1 marked the beginning of fiscal year (FY) 2023 for the federal government. (Unlike calendar years, federal fiscal years run from October 1 through September 30.)
According to the nonpartisan Congressional Budget Office (CBO), the fiscal year that just closed (2022) is likely yet another year in which the federal government spent $1 trillion more than it brought in.
Congress has approved more than $3.3 trillion in new spending since President Biden took office, according to SpendingTracker.org.
The government closed out the fiscal year with $30.87 trillion in outstanding gross debt, including $6.62 trillion in debt the government owes itself and $24.25 trillion in debt held by the public. That’s more than $195,000 for each of the 157 million taxpaying households in America.
Unfortunately, the fiscal picture isn’t looking much prettier for FY 2023. After the midterm elections in November, Congress is likely to return for a “lame duck” session in which they will approve:
- Defense spending at levels tens of billions of dollars higher than FY 2022;
- Non-defense spending at levels tens of billions of dollars higher than FY 2022;
- Emergency spending on Ukraine, public health challenges, and disasters that likely will not be paid for; and
- A tax package that may be small in size but could, pending negotiations between the two parties, end up increasing deficits by tens of billions of dollars.
And, if past is prologue, the 118th Congress beginning in January 2023 will bring even higher levels of spending and more debt, regardless of who is in charge.
Instead of continuing this trend, NTU Foundation encourages Congress to commit to some Fiscal New Year’s Resolutions that, while not fixing all of America’s budget woes, would leave taxpayers in a much better place a year from now when the clock strikes midnight on FY 2024:
- Go on a discretionary spending diet: For years, NTU and NTU Foundation have asked Congress to reinstate discretionary spending caps; the previous caps were in place from FY 2012 through FY 2021. Rep. Jodey Arrington (R-TX) just introduced the Controlling America’s Perilous Spending (CAPS) Act, which would reinstate discretionary spending caps from FYs 2023 through 2032 and save taxpayers $467 billion over the next decade relative to current CBO projections. Discretionary spending caps are not easy to enact or implement, and require sacrifices in areas of spending traditionally favored by Democrats (e.g., health care, education) and Republicans (e.g., military spending, law enforcement). New caps are the only responsible path forward for Congress, though, given historic and unsustainable debt and deficit levels.
- Work out a new budget process: In 2020, at the end of the 116th Congress, the Senate Budget Committee advanced Congressional budget process reform legislation on a bipartisan basis, led by the late former Chairman Mike Enzi (R-WY) and Sen. Sheldon Whitehouse (D-RI). Unfortunately, there has not been a robust, Committee-led budget process reform effort in the current 117th Congress. Congress should make it a priority in FY 2023, in both the 117th and the 118th sessions, to fix lawmakers’ broken budget process. Reforms NTU and NTU Foundation have previously highlighted include a move to biennial (once every two years) budgeting, debt-to-GDP targets, and a special budget process for legislation to reduce deficits. NTU has also supported elimination of off-budget slush fund accounts (like the Overseas Contingency Operations account), reforms to the definition of emergency spending, and strengthening the mandatory sequester when Congress doesn’t play by the budget and spending rules.
- Save up for emergencies: In September, NTU Foundation analyzed emergency spending by the 117th Congress and found that lawmakers had approved over $100 billion for emergencies – without corresponding spending offsets – from January 2021 through September 2022. (We included emergency spending from President Biden’s $47 billion August 2022 request to Congress in our analysis; ultimately Congress approved just $13 billion of that request, for Ukraine, for $112 billion in total emergency spending.) It is irresponsible for Congress to keep putting emergency spending on the taxpayers’ credit card when lawmakers know that emergencies will come up each and every year. Congress should explore pathways for the federal government to begin saving up more for emergencies, including a possible ‘rainy day fund’ that is pre-funded so lawmakers no longer have to pay for new emergencies by issuing even more government debt.
- Spend less on Pentagon ‘wish lists’: One of the worst discretionary budget practices in the federal government today – and fortunately, one of the most fixable – is the annual Department of Defense (DoD) ‘wish list’ process. Congress has effectively required DoD branches (e.g., Army, Navy, Air Force, Marines) and combatant commands to send them unfunded priorities lists (UPLs, or wish lists) each and every year. The lists totaled at least $24 billion for FY 2023, a larger total than some entire federal agency budgets. Fortunately, Sens. Elizabeth Warren (D-MA), Mike Braun (R-IN), and Mike Lee (R-UT) have bipartisan legislation to 1) stop the Congressional requirements for UPLs, and 2) require any future and voluntary wish lists to contain spending offsets within a given branch or command budget. Congress should curb DoD wish list practices in the upcoming NDAA.
- Quit the budget-busting ‘Christmas tree’ legislation: A now-regular process for lawmakers is to move major tax-and-spending legislation to the end of the calendar year, when many in Congress would rather be going home for the holidays. The end-of-year pressure cooker, and efforts by Congressional leadership in both parties to stuff multiple, expensive priorities into one single bill and vote, often lead lawmakers to swallow lots of bad spending and debt accumulation in order to wrap up business for the year and go home. No one wants a government shutdown, but A more responsible budget choice for lawmakers would be to enact a continuing resolution (CR) lasting through mid or late January, so that lawmakers have the opportunity to work out more responsible spending legislation in the new year.
- Budget better by reflecting gross (not just net) spending: With one simple reform, Congress can shed more light on how much the government actually spends. The annual spending totals that are reported in CBO's major budget documents generally reflect net spending, after accounting for offsetting collections such as user fees and Medicare premiums. Having CBO show gross spending amounts would reveal the true fiscal footprint of the federal government.
- Be more honest about scorekeeping: At the beginning of the 2021 calendar year, NTUF noted that Senate Budget Committee Chair Bernie Sanders (I-VT) issued his very first scorekeeping report since he was given the gavel in the 117th Congress. Law requires that the House and Senate budget chairs make periodic scorekeeping reports to their chambers. These reports, produced by CBO, tabulate up to date spending and revenue totals, including the most recently enacted legislation. If the chairs lapse in sharing the reports, CBO should be able to make the data publicly available.
- Take up an interest in debt interest: CBO's cost estimates of legislation do not take into account impacts on financing the federal debt. As interest rates are rising, these costs are set to dramatically rise. Rep. Michael Cloud’s (R-TX) Cost Estimate Improvement Act would require that CBO include calculations of debt interest payments in its legislative cost estimates.
- Adopt fair-value accounting in federal credit programs: The recent controversy over the cost of President Biden's student debt loan forgiveness brightly illustrates that the federal government does a poor job of accounting for the risks of its loan and credit programs. The Department of Education had projected that the Direct Loan program would more than pay for itself. But the Government Accountability Office revealed that instead of generating a windfall, the loans issued over the past 25 years cost taxpayers $197 billion. Annual reports by CBO show that the same problem occurs in other federal credit programs because the statutory method does not adequately account for the market risk of default. Congress should require that the fair-value accounting method is used to score these programs.
If Congress adheres to these Fiscal New Year’s Resolutions, we believe taxpayers would be in much better shape a year from now. Following these resolutions won’t be easy, but no New Year’s resolution worth pursuing ever is easy. NTU Foundation encourages lawmakers to see the new fiscal year as an opportunity to start fresh on fiscal responsibility. It’s not yet too late to start.