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Section 404 and JSC's Power

The reality of very slow growth in America’s economy, reinforced by the Friday jobs report, finally has established itself in the collective minds of Congress. One reason that so few members of Congress held town halls during the just-concluded August recess was that so many Americans have moved from anger and disgust at government to anger and fear about government.

The overriding question seems to be, polling data suggests, “can America govern itself intelligently anymore?”

This is where the Joint Select Committee on Deficit Reduction (JSC) must assert itself over the next three months. The mandate for the JSC seems simple: find $1.2-1.5 trillion over the next decade in debt reduction. Yet, our interpretation of the Budget Control Act (BCA) of 2011 gives the JSC substantial – almost unprecedented – power to recommend almost whatever it wants. That is, IF the Congressional Budget Office (CBO) scores the entire legislative package as saving on net $1.2-1.5 trillion over the next decade.

Here is the text of the broad powers given to the JSC in the BCA:

SEC. 404. RULEMAKING.

The provisions of this title are enacted by Congress— (1) as an exercise of the rulemaking power of the House of Representatives and the Senate, respectively, and as such they shall be considered as part of the rules of each House, respectively, or of that House to which they specifically apply, and such rules shall supersede other rules only to the extent that they are inconsistent therewith; and (2) with full recognition of the constitutional right of either House to change such rules (so far as relating to such House) at any time, in the same manner, and to the same extent as in the case of any other rule of such House.

To the average person, this text is probably incomprehensible, and would be dismissed as an unimportant footnote in the legislation. Put it this way: it’s not making any newspaper headlines. But it probably should.

Just as creative use of the 1974 Budget Act allowed broad utilization of the Reconciliation process (which has become a permanent feature of Senate floor activity) in 1981, we believe that the JSC could use the legislative language above in a creative fashion for three purposes:

A—change current law to save $1.2 trillion during the next decade;

B—instruct congressional committees to undertake significant additional deficit reduction; and

C—enact economic growth legislation to boost the enervated American economy.

BPC’s Debt Reduction Task Force envisioned just this approach in its major report on debt last year.

In short, the JSC should enact relatively small savings provisions that will save the $1.2 trillion mandated; require fundamental tax and entitlement reform that begin to take hold two to five years from now in order to stabilize the nation’s debt trajectory over the next several decades; and implement a complete full-year payroll tax holiday for both employees and employers beginning as soon as the JSC legislation is signed into law.

As Ezra Klein wrote this morning, Rep. John Larson (D-CT) is introducing a bill that would either enlarge the mandate of the JSC to include job creation legislation, order a sub-committee of the JSC to create such legislation, or establish a second select committee focusing strictly on job creation.

Our interpretation of the BCA, as outlined above, makes Rep. Larson’s legislation unnecessary. We believe that the JSC already has the power to do what Rep. Larson intends.

We at BPC have spent many hours internally and externally with other budget procedure experts. The unanimous opinion of all, most of whom were in senior government positions when the 1981 Reconciliation Act was devised and passed, is that the JSC faces a quandary, but one that creativity can resolve.

Remember that the BCA requires the JSC to report back its recommendations in legislative language. As a practical matter, this severely constricts the JSC’s ability to change current law. It took months of work to enact each of the 1981 Reconciliation Act, the 1985 Gramm-Rudman-Hollings Act, and the 1986 Tax Reform Act, for example. How can the JSC, in three months, make all the legislative changes that would be needed to carry out what we recommend?

The answer lies within the Act itself—sec. 404, above.

If the JSC reports legislative language that saves $1.2-1.5 trillion as scored by CBO and, in addition, uses either a Super Reconciliation Process or even the language already in the BCA, it can order committees of the House and Senate to amend legislation within their jurisdictions in order to carry out the longer-term reforms necessary to stabilize national debt. After all, the BCA itself created the 302(a)s needed for a budget resolution. So, all that is needed is this: produce a budget resolution for Fiscal Year 2012 that uses the 302(a)s in the BCA, and add reconciliation language ordering committees to amend legislation and report those changes back in legislative language by a date certain.

In short, the JSC can combine already established procedure with a newly-devised Budget Resolution to charge the economy and stabilize the debt.

Yes, it sounds complicated, and it is. But, it has been done before and can be done again.

If the JSC seizes this moment, and proves that the national government can walk and chew gum at the same time, it will have done more than help the economy. It will have begun restoring some faith in our government’s fundamental competency.

2011-09-02 00:00:00

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