The never-ending budget battle: writing rules to stop congress from spending is hopeless.

• Author: de Rugy, Veronique
• Position: Column

THIS YEAR, for the first time in modern history, the Senate failed to pass a budget. That sounds dramatic, but last year the House failed at the same task. A few years before that, the House and the Senate each wrote their own budgets, but failed to agree in conference. Each time, the president ended up signing massive omnibus spending bills--at ever-increasing expense to taxpayers.

The budget process is broken, and public interest in reforming it is keen. But changing the budget rules alone is unlikely to fix our fiscal woes. Even properly designed constraints, in order to be effective, would require credible external and internal enforcement backed by public opinion. Good luck with that.

Nations have gigantic appetites but only finite resources to fulfill them. A functional budget process should help lawmakers set priorities and separate actual needs from mere desires. Our budget process, obviously, isn't doing that, for several reasons.

First, the budget process fails to provide a clearinghouse for all spending. The federal budget has two basic parts. First is "discretionary" spending, which is subject to the appropriations process every year and includes things such as homeland security, most military spending, and programs like aid to schools. The second is "mandatory" spending, which includes automatic funding for entitlement programs such as Medicare and Social Security that doesn't have to be reauthorized each year. Mandatory spending is roughly 60 percent of total annual outlays, and is set to explode in size and share of overall spending in the upcoming years. Yet entitlements have proven so difficult to reform that Congress has effectively declared them off the table when it comes to budgetary oversight.

Second, the budget process is designed with a bias toward higher spending. Nearly a dozen different committees in each body of Congress have the power to propose mandatory spending programs. Lack of coordination over how to use taxpayers' dollars creates what economists call the "tragedy of the commons" whereby each committee over-funds its own programs.

More importantly, the budget process relies on an odd accounting rule--current policy baseline budgeting. Congress is required to start from existing policy baselines to adjust a program's annual funding. Therefore, if the current policy baseline for a program mandates a 10 percent increase, even a 9 percent increase is considered a "cut" That's how we end up with headlines like...