Emergency Spending: a Bipartisan Failure | Citizens Against Government Waste

Emergency Spending: a Bipartisan Failure

The WasteWatcher

On January 29, 2013, President Obama signed into law a $50.5 billion relief bill aimed at helping victims of Hurricane Sandy.  Despite complaints from many fiscal conservatives – Citizens Against Government Waste included – that the bill had been unnecessarily fattened up in order to serve parochial interests, the deal got done.  Its passage marked an important victory for politicians like New Jersey Governor Chris Christie and Rep. Peter King (R-N.Y.), both of whom had publicly and loudly excoriated Congress for dragging its feet. 

To many, Washington’s inability to immediately draft up a hurricane relief bill that would sail through Congress was yet another reason to get exasperated over what feels like an increasingly polarized time in American politics.  However, a less-discussed trend has been gathering momentum, one that is indicative of bipartisan agreement on many politicians’ favorite pastime: spending taxpayer money.  Indeed, if the last decade has taught those who follow Washington politics anything, it is that no disaster is too small to require more deficit spending.

It is exceedingly rare for Congress to accurately foresee each expenditure that that will be needed during a given fiscal year.  Accordingly, in the case of an unexpected disaster, Congress has the power to enact supplemental appropriations bills.  According to the Congressional Budget Office (CBO), Congress has been doing so since 1790.  However, according to George Mason University economist Veronique de Rugy, recent supplemental bills “have been effectively used to hide the cost of programs that do not address emergencies or unexpected circumstances … and to expand spending beyond budget limits.”

Supplemental spending started down what the CBO describes as “a largely downward path” in the late 1970s due to a series of changes to Congress’s budgeting process.  The Budget Enforcement Act (BEA) of 1990 created pay-as-you-go (PAYGO) rules and discretionary spending caps in an effort to reduce the deficit.  Under PAYGO, any new spending that would increase the deficit required across-the-board cuts to cancel out the effect.  Any defense, domestic, or international spending was subject to caps enforced by presidential sequestration.  But as de Rugy notes, “the BEA also specified that emergency provisions, including supplemental bills designated as emergency bills, were exempt from PAYGO requirements.” 

However, with the exception of 1991, when the first Gulf War broke out, emergency supplemental spending remained relatively small throughout the 1990s.  Bills were passed in almost every year, and the notion that spending billions of taxpayer dollars without the requirement for offsets should be reserved for “dire emergencies” seems to have been taken seriously.  Supplemental spending in FYs 1990-1999 totaled $139 billion, or less than $14 billion annually.  Those numbers reflect all supplemental spending, not just emergency supplemental bills.  In 2002, the BEA was allowed to expire, and all of that restraint went out the window. 

Under President George W. Bush, all of the funding for the wars in Iraq and Afghanistan came from emergency supplemental requests.  While waging war can be an unpredictable task, funding it via emergency supplemental bills proved to be much less transparent than the normal budget process.  As a result, money for sugar growers, fisheries, Christmas trees (literally), presidential nomination conventions, and a host of other “emergency” items unrelated to the wars snuck their way into those bills between 2000 and 2010.  Supplemental spending reached $117 billion in FY 2004, and the total for the decade was a staggering $989 billion.  In FY 2005, Congress’s response to Hurricane Katrina led to a quick $50 billion for what President Bush’s emergency request termed simply, “disaster relief.”  As the New York Times pointed out at the time, “Even in the United States, $50 billion is a lot of money to allocate with just two words.”  Predictably, much of that money was wasted.

The first decade of this century set an expensive precedent for handling large chunks of each year’s budget outside the traditional appropriations process, and Congress, along with the President, have never looked back.  Fast-forward to early 2013, and the response to Hurricane Sandy has been more of the same.  The final bill signed by President Obama included no offsets and provided “emergency” funding for disasters as far away as Texas and Louisiana, as well as money for improved weather forecasting, state and tribal grants for clean water and pollution control, and upgrades to aircraft at various agencies.  Whether or not these expenditures can be independently justified, it is hard to see how they qualify as “emergencies” that cannot be included in the normal budgeting process. 

Congress should solve its massive emergency supplemental spending problem by creating some sort of rainy day fund that would contain money for unpredictable disasters.  Such a fund already exists in the form of the Federal Emergency Management Agency’s Disaster Relief Fund (DRF), but its budget is so low that the Office of Management and Budget equates DRF funding with assuming “there would not be any natural disasters in our nation that would necessitate federal help,” adding that “this omission is irresponsible.” 

Despite a history of providing emergency relief on the order of tens of billions of dollars for major disasters, the DMF has never received more than $4 billion in annual funding.  Ballparking an emergency budget during the appropriations process would lend transparency, stability, and quality to spending bills that are intended to help people in need.  It would prevent lawmakers from tacking frivolous projects onto emergency relief bills, thus removing the incentive to vote against otherwise well-intentioned legislation and preventing time-sensitive relief from being bogged down in Congress. 

After all, each individual hurricane, tornado, or earthquake may be impossible to foresee, but it is certain that a whole host of unanticipated emergencies will occur.  To act as though large emergency expenditures cannot be estimated is to assume indefinite sunshine and rainbows.  Contrary to their campaign promises, Congress cannot deliver such a rosy future.  It is past time to fix the funding process to prevent more supplemental free-for-alls following disasters.

-- Luke Gelber