Imagine you are an executive at a major corporation. One of the core responsibilities of your job is to collaborate with the other executives to adopt budget and organizational policies for your corporation each year. Instead of meeting your responsibilities, most years the corporation is forced to operate without a budget as outdated policies continue and the firm bleeds red ink. Such a dysfunctional corporation likely wouldn’t last very long. You and the other executives would also likely face pay cuts, before eventually getting fired.
Now, imagine this same scenario, but you’re a member of Congress and the budget you’re supposed to pass is for one of the largest organizations on the globe: the U.S. federal government.
Congress misses deadlines regularly and often fails to complete its work. Congress rarely passes an annual budget nor do members manage to write all 12 annual spending bills before they’re due. The consequences are a less effective, more expensive government that wastes taxpayer dollars and burdens current and future generations with massive debt.
Incentive pay is one key mechanism for aligning individual workers’ motivations with the goals of their employers in private firms. Perhaps it’s time we pay members of Congress for performance.
In the private sector, incentives are well-aligned with executives and managers being rewarded for generating profits. And workers, for the most part, receive pay commensurate with performance. The system isn’t perfect but it’s responsive to changes and learning what works and what doesn’t.
For Congress, incentives to perform include being re-elected and rising among the ranks of congressional leadership to assume key committee roles. Incentives also include future job prospects in the private sector as a reward for delivering benefits for special interest groups.
However, the current system does not seem to reward members for doing the difficult but important work of budgeting. Elections are necessary but not sufficient to ensure that Congress acts in the best interests of the American people. An added layer of incentives may help.
In 2013 just such an incentive was put to the test. After the Senate failed to pass budget resolutions for three consecutive fiscal years (FY2011, FY2012, FY2013), Congress adopted a law that threatened to withhold members’ pay if they failed to adopt a budget resolution by the statutory deadline. The threat, while constitutionally questionable, worked. And the Senate adopted its first budget resolution in four years, more than three weeks before the deadline.
This measure was constitutionally questionable because the 27th Amendment to the Constitution limits Congress from changing member compensation during a current session of Congress. Withholding, instead of cutting, member pay until the end of a session of Congress may be one way to get around this limitation. Alternatively, adopting a “No Budget, No Pay” policy that takes effect during a future Congress, as Sen. Braun (R‑IN) proposed, should avoid legal challenges.
The 118th Congress set out to adopt a budget resolution in the House that would balance the budget within 10 years. This will be a formidable task as balancing the budget by 2032 would require nearly $15 trillion in deficit reduction. In the context of the $72 trillion in projected government spending between FY2023 and FY2032, balancing the budget by 2032 would take a haircut of 20 percent. Put another way, Congress would need to save 20 cents on every dollar it is currently planning to spend over the next 10 years.
Compare that to the Budget Control Act of 2011 (BCA)—the most significant deficit reduction deal since the Great Recession—which required about $2.3 trillion in savings over 10 years. The Budget Control Act of 2011 would have cut roughly 5 percent from total projected spending during the decade in which it was to take effect (2012–2021). That is if Congress hadn’t failed to abide by the BCA. Saving 5 cents on every dollar should have been possible and yet even that amount proved to be more than Congress was willing to follow through on.
There’s another catch: Even if Congress succeeded in adopting a budget resolution that balanced federal spending and revenues by the end of the decade, that doesn’t mean that the federal budget will balance by 2032. The policies in the budget resolution would need to first be passed into law. This would require separate legislative bills.
Why wouldn’t the federal budget balance if Congress adopted a balanced budget resolution? There is an important distinction between a budget resolution, which does not carry the force of law, and legislative bills, such as the Budget Control Act of 2011, which enact changes to policies. The congressional budget resolution establishes the overall framework within which Congress shall consider legislative bills that affect spending and revenues. Without separate enacting legislation, the spending and revenue targets set out in a budget resolution will not become law. The budget resolution is like a planning document. Without following through on this plan, current policy will not change.
In addition to a budget resolution that balances over 10 years, the new House Republican majority also committed to pairing an increase in the debt limit (the statutory borrowing limit restricting Treasury from issuing bonds to pay for deficit spending) with fiscal reforms. Congress is thus chasing two separate targets at the same time:
- They’re drafting a budget resolution that should balance, albeit only in theory.
- They’re negotiating fiscal reforms to accompany the eventual increase in the debt limit.
Only the latter effort has a realistic chance to become law and decrease deficits.
We can safely assume that it’s highly unlikely that members of the new Republican House majority will be willing to introduce legislation to cut $15 trillion or 20 percent from projected spending over the next decade. If they instead pursued a deficit reduction deal at least as large as the BCA, they would still need to identify $3.6 trillion or 5 percent in spending cuts.
This is not to say that going through the theoretical exercise of balancing the federal budget over the next decade isn’t worthwhile. Doing so will be quite educational, especially for members of Congress and constituents who mistakenly believe that cuts to unpopular programs like foreign aid and so-called woke spending will suffice to eliminate deficits. Instead, any serious effort at balancing the budget will inevitably involve reforms to the largest and fastest-growing programs, including Medicare, Medicaid, and Social Security. Another reason this is a useful exercise is so members of Congress consider a longer time horizon that is beyond the next election.
To make it more likely that the House will pass a budget before the deadline of April 15, Rep. Robert Wittman (R‑VA) introduced H.R. 225, also known as the “No Budget, No Pay Act.” This proposal would hold members’ pay in escrow until the end of the session or until members pass a budget resolution for FY2024. Members of Congress would still receive their pay, only they would do so with a delay.
Without specifying that the congressional budget resolution shall meet a particular target, such as 10-year balance, it’s possible that Congress could adopt a budget resolution that increased deficits—thereby establishing a guiding framework to make the overall fiscal situation worse. Whether a budget resolution would balance, increase, or decrease deficits, constituents should take interest in where their representatives stand on budgetary matters.
As gimmicky as withholding congressional pay may seem, we know that this threat has worked before—motivating the Senate to pass a budget resolution for the first time in four years in 2013. Congress could use the extra incentive to adopt a budget resolution each year. This would encourage members to grapple with the size and scope of federal spending and to put their policy priorities into the context of fiscal realities. At the very least, they’d face well-deserved embarrassment should they fail at adopting a budget and have their pay withheld. And with President Biden having already announced that the administration’s budget submission to Congress will be late this year, perhaps the executive could use a pay-for-performance incentive to meet its deadlines as well.
