Is Trump Taking The US Back To The 1970s? An Interview With Phil Joyce
Q&A with Phil Joyce on Tracing the Budget and Impoundment Control Act
Back in February, it emerged that President Trump is seeking to impound funds that have been approved by Congress and the President. This is viewed by many to be a violation, not only of the law, but of the procedures set up by the Impoundment Control Act of 1974. When the news broke, it left many scrambling to get their heads around this little-understood legislation.
Phil Joyce, a professor of public policy atthe University of Maryland School of Public Policy, has just published a paper on The Congressional Budget and Impoundment Control Act after 50 Years. I joined him to get some historical perspective and future insights on the actions of the Trump Administration.
Sarah Bromley (SB): Thanks for joining me today, Phil. I think we can all agree that the last few months have been an interesting time to observe governmental policy in the US, and incidentally, some of the legislation that has become a focus of media attention is relevant to your paper. To start things off, could you give a quick explanation of what exactly impoundment is and how it relates to the recent actions of the Trump administration?
Phil Joyce (PJ): The main impetus for the Congressional Budget and Impoundment Control Act of 1974 was the fact that President Nixon had a habit of refusing to spend money that Congress had appropriated and that the President had approved. If Congress provides money and the President signs the appropriation, but later on says, “Well, I don't really like that program, so I'm not going to spend money on it” — that's referred to as impoundment.
That made Congress mad, and it was illegal to boot. And so when Congress passed this law in 1974, it effectively created a process that a President could use if he wanted to cancel spending. The President would have to propose the cancellation of the budget authority, which is really the appropriation that's been provided by Congress. And if Congress did not act to approve what's called a “rescission proposal” under the Impoundment Control Act, the money was automatically released. So the only thing the President could really do was delay spending for 45 days while Congress decided whether it wanted to go along with him or not. That's the process we've been following for the last 50 years, and that process has really effectively constrained impoundments.
So, that brings us to what President Trump is doing. It’s very much like what President Nixon did. Actions like dismantling the agency for International Development should require him to go to Congress and ask if they agree. Instead, he’s unilaterally taking action.
SB: Some people have described the possibility of impoundment as unconstitutional, is that a sentiment you agree with?
PJ: Whether something is constitutional or not is really a function of whether the courts at a given point in time believe that it's unconstitutional. For example, there was a constitutional right to abortion, and now there is not. So, I don't think we know. I think what we do know is that in the past, impoundments have been viewed as unconstitutional.
There’s something called Unitary Executive Theory, which is what the Trump Administration is standing behind. It basically says that, when the President takes an oath to faithfully execute the laws, if he finds some law that he thinks is inefficient or wasteful, he doesn't have to spend money on it. And so that's ultimately what the courts are going to have to decide: Is this definition of executive power constitutional? Or are they going to return to what has been that historical interpretation, which is that the president can't pick and choose which programs he's going to spend money on and which ones he's not?
SB: That’s an interesting way of looking at things, so the way that the Impoundment Control Act has been understood for the last 50 years could actually change within the next few years?
PJ: That's right. And effectively, if the courts decide that the President has this power, then it will be a huge shift of power from the Congress to the president. Historically, Congress and the president have had big debates and disagreements over what is going to be funded in the budget process. If the president doesn't have to argue with Congress up front, he can just sign the bills. Then, later on, he can decide what he wants to spend money on and what he doesn't want to spend money on, and that very much weakens Congress.
One of the surprising developments to me is that the Congress (and I really mean the Republicans in Congress) so far is not really standing up for itself. Because once this power gets shifted to the president, it's not only President Trump that's going to have this power. It's also whatever President gets elected in the future. So if I were a Republican in Congress, I would think, well, what about the next Democratic president?
SB: Yes, that’s a good point. You mentioned in your paper that some people argue the presidential leadership promotes some fiscal responsibility rather than Congress. That would make these events less concerning. I’m curious on your thoughts.
PJ: I think it's easy to think that because, if you look at the Congress, it does not look like a body that's fiscally responsible. The problem that I have with that argument is that we have had fiscally responsible presidents and fiscally irresponsible presidents. I mean, I don't view President Trump as being a paragon of fiscal responsibility.
So I think it would be useful for the president to have more power if there was a fiscally responsible president. But to simply argue that presidents are inherently more fiscally responsible than Congress, I think that doesn't make sense. We can look at various presidents, and we can say, well, some of them were fiscally responsible. Like George H.W. Bush and possibly Bill Clinton. But we've also had presidents that clearly are fiscally irresponsible. So transferring power to the president in terms of getting control over deficits and debt is no panacea.
SB: So do you think that the measures introduced by the Impoundment Act were effective at moderating the more fiscally irresponsible Presidents, even if they limited the impact of the more responsible presidents?
PJ: Maybe it's useful to talk about a couple of other things besides impoundments. The more important thing historically is that the Act created a budget process that enabled Congress to look at the whole budget through something called the budget resolution. Prior to the Act, the congressional budget process was very decentralized. The Act created the budget resolution and budget committees, and the job of the budget committees was to look at the whole budget. Now, that has permitted Congress to do things we would view as fiscally responsible. But Congresses, just like presidents, are fiscally responsible when they want to be.
The other thing the law did was create the Congressional Budget Office (CBO). Prior to this, Congress had no independent mechanism for evaluating the effects of budget or economic policies. It had to rely on information coming from the executive branch, and that information could be slanted in favor of whatever a given president wanted.
So the CBO has been an effective check on the information coming from the executive branch, and it has empowered Congress to have its own source of information in a way that it didn’t prior to the creation of the CBO. Thanks to the CBO, every time a bill is considered on the floor of the House or the Senate, it has to carry with it a Congressional Budget Office cost estimate. It's a way of objectively and independently informing Congress about the fiscal effects on the budget. Sometimes, Congress doesn't want to do something that costs a lot of money and therefore it will change the policy to lower the cost. That's something that was less likely to happen before the creation of CBO.
SB: You sound pretty positive about the CBO, to what extent do you think it has become a significant voice and fiscal policy?
PJ: I wrote a book about the CBO, and one of the things that was interesting to me is that I talked to people who worked at the Office of Management and Budget (OMB), the president's budget office, and they said the CBO helped to keep the executive branch more honest. They knew that somebody else was going to be coming in after the fact and doing an analysis of their policies. If the president wanted to, he could say he was going to cut taxes but it wasn't really going to cost any money. But then when the CBO comes along later and says it's actually going to cost a lot of money, it damages the credibility of the president and the executive branch.
Another thing that made the CBO influential is that the media discovered CBO. And you know the media loves a story about fights between the executive and the legislative branches, right? At the point at which the president is proposing something and then CBO comes along and says “no, we don't think it's going to work exactly that way,” it gives the media a story to write about. It used to be that the media would go to OMB for budget numbers, but increasingly it began to go to the CBO.
SB: You mentioned in your paper that the CBO has the most influence when the media focuses on deficits and is less influential when the reverse is true. Why is that the case?
PJ: The CBO was described once in the Washington Post as the “skunk at the Congressional picnic.” What they really do is try to impose a kind of level of reality into the process. But the Congress doesn't always want to listen to that. One of the big questions then becomes, are the moon and the stars aligned so that Congress and the president believe it is in their political interest to focus on deficits?
A really good example of that was when President Obama proposed what became the Affordable Care Act. That was at a point when Congress and the president were pretty focused on deficits. And so what President Obama said is that he would not sign any bill that added one dime to the deficit. What that meant was they had to find ways to offset those costs so that it ended up being neutral with respect to the deficit. Because CBO were the ones who were going to do the analysis of whether the bill added to the deficit, they had a very powerful position. They had to keep iterating until they got to a place where CBO said, yes, this is a bill that is deficit neutral. Now, if President Obama had never said that, CBO would still have been doing estimates, but those estimates wouldn't necessarily have led to there being big changes in the bill because they wouldn't have to have been shooting for this particular goal.
Right now, I would say CBO is not very influential at all with respect to the deficit, because it's hard to find many people in Congress who care about deficits. And so, in that kind of a situation, CBO still has influence with respect to these individual cost estimates of the individual pieces of legislation, but I think its influence on overall fiscal policy is much more limited.
SB: As you mentioned in your article, deficits have continued to grow since the Act. Why has that been the case?
PJ: There was nothing in the act that prevented that from occurring; I mean, the law didn't say the budget had to be balanced. All the law did was create a process where Congress could come up with a proposal for a congressional budget that was an alternative to the President's budget. Prior to the 1974 Budget Act, the President's budget was effectively the only budget in town.
Because the law didn't mandate fiscal responsibility, there were attempts in the 1980s and 1990s to reform the budget process to try to focus on deficits and debt. And some of those were more successful than others. In the 1990s, several laws were passed that reduced deficits. And in fact that, coupled with the increased economic growth in the late 1990s, actually led to four years in which we had budget surpluses — 1998, 1999, 2000, and 2001. But since that point, there has not been much attention on deficits.
SB: Earlier, you touched on the fact that the last presidents to be fiscally responsible were Bill Clinton and the first George Bush. Clearly, that was a long while ago. Do you have any thoughts on why there’s not much political interest in being fiscally responsible now?
PJ: The short answer is that the things that would need to happen to seriously reduce the debt and the deficits are politically very unpopular. At this point, more than two-thirds of the budget on the spending side is what is referred to as entitlement programs, such as Medicare and Social Security. You can't make any kind of a serious run at reducing deficits and debt without doing something about those programs. But those programs are very politically popular and very popular with the public. They are very much geared towards people of a certain age, who vote, and they give money to congressional campaigns.
And so the kinds of things that you see President Trump doing, well, I will not suggest that they don't have any impact. They certainly have a big impact on the functioning of government. And they're going to have somewhat of an impact on federal spending. But they're focused on the portion of the budget that is small and not growing, they're not focused on the entitlement programs. To some degree, they're not even focused on defense spending, which is also about 15% of the budget. At this point, you are trying to cut the budget by focusing on less than 15% of spending because the rest of it is just too politically difficult to take on.
The other side is revenues, but they're trying to cut taxes. A serious deficit reduction package, in my opinion, would do two things: It would raise taxes and it would figure out how to reform entitlement spending, particularly on Medicare and Social Security.
SB: Another important aspect of the Act that we should touch on is reconciliation, which has become an important part of American politics now. Could you explain some more about what reconciliation is, and why it's become so significant?
PJ: Reconciliation is a process that was set up as a part of the budget resolution. It creates a mechanism for Congress to set targets for revenues and entitlement spending — it sets a target, and then tells those committees that they have to make changes to meet those targets.
Why does this matter? Let's take entitlement spending. For example, Medicare as an entitlement, the spending is more or less on automatic pilot — whatever gets spent on Medicare in a given year has to do simply with how many people are eligible for Medicare and how much money that costs. There is no ceiling. Reconciliation allows Congress to set such a ceiling. But then what has to happen is that the committees that have jurisdiction over those programs have to actually figure out a way to change the law to meet that ceiling.
And so all this comes back in what's usually called an Omnibus Budget Reconciliation Act. But the Congressional Budget Act says that a reconciliation bill can only be debated in the Senate for 20 hours, and that's very unusual. Most bills that come through the Senate can be filibustered, meaning you need 60 votes to be able to essentially move on to voting on the bill. But a reconciliation bill is limited to 20 hours of debate, so they can talk about something for 20 hours, but at the end of that 20 hours, they vote. And that means they don't need 60 votes — they only need 51 votes or 50 plus the Vice President. So reconciliation allows the majority party to be able to enact these big changes without having to get any votes from the minority party. That's meant there's a lot of major policies that are done through the reconciliation process, because it allows the majority party in the Senate to do what it wants to do.
I don't want anybody to get the sort of sense that the Congress can do anything it wants through reconciliation, but there are a lot of things that it can do through reconciliation, and one of the big things it can do through reconciliation is cut taxes.
SB: To finish things off, I’m curious about whether the current happenings in government have led to any new reflections for you since you published your paper, or uncovered any new topics you’d like to explore further?
PJ: If I were writing the paper today, I would spend a lot more time on impoundment than I did. Some people who were advising me on the article were suggesting that maybe I didn't need to talk about impoundment at all, or that I could de-emphasize it. And that was perfectly reasonable. It was essentially the dog that didn't bark, right? But now, I'm actually planning to write a Public Budgeting and Finance article just on impoundment.
While it was implied that the reason for the Congressional Budget and Impoundment Control Act had to do with the relative power of the president versus the Congress and the budget process, all the things that are happening now in the Trump Administration are bringing that all to a head. It kind of feels like we're now back in the 1970s, in the sense that we have a president who is trying to exercise a historically extreme level of authority and power.
And the question is going to become, to what extent are the other two branches going to respond to that? The separation of powers only works if the branches all stand up for themselves. It remains to be seen what the courts are going to do, but I think it’s of note that Congress so far has not really demonstrated that it's willing to protect its own role in the process. The Democrats have complained, but the Democrats are in control of neither house in Congress, so in the end, all they can really do is complain.
The question is, are the Republicans at any point going to decide that it's a bad thing for Congress to cede its power to the president, because that's something that could be more or less permanent as opposed to something that would only stop with this president.
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