Biennial Budgeting: An Example of Bogus Budget Reform

Last week, Congress passed a federal budget for the fiscal year 2019. You can read an analysis from the Committee for a Responsible Federal Budget here, but essentially, the claimed deficit reduction will not be adequate to deal with the upcoming increase in debt. Creating and passing a budget is a messy process, to be sure. It makes me think of possible ways to make federal budgeting more efficient.

I found one such policy reform when reading a piece from libertarian think tank R Street: biennial budgeting. Biennial budgeting is preparing and adopting budgets for two-year periods. This is in contrast to an annual budget, which prepares and adopts a budget for a one-year period. With all the threats of shutdowns, the budgetary process is held hostage by political desires instead of the desire to serve the people it is meant to serve. Proponents argue that a biennial budget process would solve this problem. Additionally, it could potentially make the budgeting process more efficient because Congress would lessen the number of repetitive votes required by an annual budgeting process, thereby allowing for more time on oversight of federal spending and less politicking. And of course, there is the decrease in man-hours and resources spent on the additional budget that is part of annual budgeting. These all sound like wonderful benefits, but does biennial budgeting outshine annual budgeting? I'm not so sure for a few reasons:

1. Inaccurate budget forecasting. Economic forecasting is a tricky endeavor. It is difficult to forecast one year out, never mind two years. The Congressional Budget Office doesn't exactly have a spotless record on budget projections beyond one year (see testimony from Urban Institute scholar here). There has even been congressional testimony by former CBO analyst Philip Joyce attesting to that fact. In a biennial budget, we would see more budgetary uncertainty, not less.
2. Frequently revised budgets. There is a good chance that because of the inaccurate forecasting, there would need to be off-year appropriations to fill in for unforeseen gaps. This does not account for additional political pressures for additional appropriations that were not political fodder in the previous year.
3. High likelihood of increased spending. Supplemental appropriations increase government spending (De Rugy, 2011). Given the probability of supplemental appropriations in a biennial budgeting process, it is unlikely that biennial budgeting would be cheaper. The libertarian Mercatus Center highlights a couple of studies showing how biennial budgeting translates into higher spending (Fichtner et al., 2016). Plus, a biennial process would give Congress less opportunities to reform non-Social Security entitlement programs, which are major drivers of government spending. 
4. Outdated budget decisions. The Left-Leaning Center on Budget and Policy Priorities makes a good point. Not only is biennial budgeting done too far in advance, but policy considerations and priorities can shift a lot in a year. An annual budgeting process is more adaptable than a biennial one.  
5. Questionable increase in oversight. Congress has hundreds of committee and subcommittee hearings every year (see Brookings Institution stats here). The issue here is not oversight, but lack of follow-through on oversight findings. Biennial budgeting is not going to make Congress more likely to act on these findings. Plus, let's consider that Congress would have to audit twice the spending in the same amount of time. I would not consider it plausible under those circumstances that Congress would have more time for oversight. If anything, there would be less. 
6. Little to prevent budget shutdowns. One would think that biennial budgeting would put an end to the political squabbling and the threat of government shutdown. However, let's think of this intuitively. In a biennial budget, there is more at stake because there are two years of government spending at stake, not just one. Raising the stakes could make the politicking of budgeting worse, not better. 

Conclusion: One of the advantages of a federalist system is the states act as "laboratories of democracy" to see which policies work and which do not. In the past fifty years, fifteen states switched from biennial to annual budgeting, whereas only three states switched from annual to biennial budgeting. As state budgeting processes get more complex over time, we see a switch over to annual budgeting, and for good reason: it works better. And if we see larger states switching over to annual budgeting, wouldn't we think that, a fortiori, that annual budgeting would be better for the federal government? I hope that Congress does not convert the federal budgeting process into a biennial one simply as feel-good policy. Otherwise, it is the American people that figuratively and literally pay the price.