Unforeseen emergencies are a big problem for budget setters and Congress is no exception. If Congress attempts to factor in the possibility of a foreign invasion, large-scale natural disasters or a severe economic downturn into its spending targets then it is likely to set spending targets that in most years will allow more funding than is needed for the day to day services of government. If instead Congress establishes a spending target that "cuts the fat" but "preserves the muscle" of such services -- as budget setters like to describe their work -- then there will be no funds available to meet unforeseen emergencies. After a decade of controversy over which approach to take, Congress decided in 1990 to allow spending outside of the normal budget setting process if both the president and Congress designated that it was a "dire emergency."
This normally arcane tidbit of information about rules governing the consideration of spending legislation is now at the heart of yet another standoff in Congress that could result in a disruption of disaster assistance and needed government services. The Majority Leader in the House of Representatives, Eric Cantor (R-VA), appeared to have signed on to an agreement in August that would avert another standoff over funding the ongoing operations of the federal government for the coming fiscal year. Now, Rep. Cantor says the number he agreed to must not only fund the ongoing activities of the government but also unforeseen emergencies or at least a portion of the recent natural disasters brought about by Hurricane Irene and Tropical Storm Lee.
Although there is no record of Rep. Cantor injecting this caveat into the negotiations last August that produced an agreement for a peaceful resolution of fiscal year 2012 spending disputes, he argues his objection might well have been anticipated since Congress has frequently offset disaster spending. Three studies raise serious questions about his grasp of the facts on this matter.
According to an analysis by the Congressional Budget Office, emergency spending during the entire decade of the 1990s totaled less than $140 billion for the entire decade -- a third of which was accounted for by the First Gulf War, money that was repaid to the Treasury of the United States by our allies in that war. Emergency spending during that period averaged less than $14 billion a year even if you don't count the repayment.
A subsequent analysis by CBO indicates that shortly after Rep. Cantor became a member of the House and joined the Republican majority, the use of emergency designated spending changed abruptly. During the six fiscal years that Rep. Cantor served in the majority (Fiscal Years 2002 through 2007) emergency spending exploded, reaching $161 billion in 2005 and averaging nearly $103 billion a year during that period. A review of roll call votes for the 17 emergency spending measures enacted during that period indicates that Cantor voted for all of them -- $618 billion in unbudgeted emergency spending.
A review of these bills indicates just how far afield Rep. Cantor was willing to go in allowing an item to be labeled, "dire emergency." HR 3289, which passed the House with Cantor's support, included more than $18 billion in funds for the design and construction of court houses, bridges, hospitals, prisons, power plants and sewer systems in Iraq. A State Department description of the use of HR 3289 funds included:
• A local area network for trading on the Iraq Stock Exchange
• Tailoring courses for 31 women in Baghdad.
• Computer skills training courses for 22 women in Baghdad
• Furniture for 5 primary health facilities
• $70 million in loans to Iraqi companies
• Printing of 1500 political posters
Despite the insistence by the House Republican leadership that all of these items were emergencies that could not be subjected to the normal budget process and the fund must be appropriated immediately and without offsets, nearly half of the $18.4 billion had not even been obligated one year later at the beginning of the following fiscal year.* (Obligation essentially means that no contract or agreement had been signed specifying to the U.S. government the work to be done or the amount to be paid.) Six years later, at the beginning of Fiscal 2010 there were still more than $1 billion of these funds that had not been obligated, and a much larger amount had not been expended.** (expended means that after a contract to provide services to the U.S. government is signed it may take years for all of the money to actually be spent Appropriated funds remain in the Treasury until a specified segment of the work is completed. This process can take years for items such as the construction of a bridge or a power plant. )
A third study published last week by the Congressional Research Service -- prepared as a "Congressional Distribution Memorandum" -- addresses a second issue. Even if Congress went off the deep end in the past decade in the use of the emergency designation in paying for routine and predictable expenditures, did they (as Rep. Cantor contends) hold disaster aid to a different standard? Did Congress require or provide offsets for unforeseen disasters while at the same time cramming hundreds of billions in unbudgeted money into predictable and routine expenditures. The answer is no -- they did not.
As the CRS memorandum demonstrates, Congress has always recaptured small amounts of appropriated money from prior years when it became apparent that the agencies that requested the funds were unable to spend them in a timely manner for the purposes they were requested. This is done in both regular appropriation bills and in supplemental bills. But the amounts rescinded rarely bore any resemblance to the new spending appropriated in such legislation. In 2005, for instance, the House considered a supplement appropriations Act for Defense, the Global War on Terror, and Tsunami Relief. That act contained $83.6 billion in emergency appropriations and $1.5 billion in rescissions.
Of the 57 supplemental funding measures that CRS examined over the past two decades, 25 contained no rescissions and 32 contained rescissions. Of those 32, 16 contain disaster relief and 16 did not. In other words, rescissions we no more likely to be included in an appropriation that contained disaster aid than one that did not. But most importantly in nearly all of the instances that rescissions were included in emergency disaster bills, the size of the rescission bore no comparison to the amount of money included for disaster aid. And based on the CRS analysis there was no explicit linkage between the rescissions and the disaster funding.
There is, however, one important exception. In December of 2005 Congress rescinded $23 billion from the disaster relief fund and then reappropriated those funds to other agencies to assume a share of the work in the Hurricane Katrina cleanup. This, however, is the exception that proves the rule. The $23 billion that was rescinded was originally appropriated by Congress in September as part of a $51 billion emergency supplemental -- a bill that contained no rescissions or offsets of any kind. New emergency spending was being paid for by canceling old emergency spending.
So the only instance where there is evidence of offsetting disaster assistance with rescissions was simply a reallocation previously appropriated emergency funds--a reallocation sparked by widespread concerns that the Federal Emergency Management Administration had lost its capacity to effectively manage resources necessary for the relief effort.
This week the Senate reached a bipartisan agreement to simply kick the can down the road and provide another week to seek a compromise. The agreement provided a temporary fix for the ongoing cleanup efforts by the Federal Emergency Management Agency for the tropical storm devastation affecting numerous states in recent months, the storms and tornadoes that plagued wide areas of the Midwest and South in the spring and early summer, and other disasters for which federal relief efforts are ongoing.
The Obama administration estimated that the money provided in the Senate compromise will be sufficient to allow these operations to go forward for a little less than two months. In the meantime there is still no resolution -- and we can expect to hear the same old arguments about emergency spending and offsets.
The office of Majority Leader Cantor continues to actively misrepresent the facts concerning how Congress in recent years has handled emergency spending and whether or not offsetting natural disasters has been a common practice. Rep. Cantor is doing this because he hopes to shift the blame for the third major legislative impasse in 6 months to those who attempted to negotiate a resolution of spending differences with him less than two months ago. He should drop these ridiculous arguments and abide by the deal that will prevent a government shutdown and more embarrassing antics that nearly everyone else has grown sick of.
*Obligation essentially means that no contract or agreement had been signed specifying by the U.S. government specifying the work to be done or the amount to be paid
**After a contract to provide services to the government is signed it may take years for the money to actually be expended. Appropriated funds remain in the treasury until a specified segment of the work is completed. This process can take years for items such as the construction of a bridge or a power plant.
Scott Lilly is a Senior Fellow at the Center for American Progress.