COCHRAN CAUTIONS SENATE ON CREATING
NEW MANDATORY SPENDING PROGRAMS

Says Health Reform, Education & Climate Change Plans Weaken Federal Spending Controls

(Video/Audio Sound Bite Available Here)

WASHINGTON, D.C. – U.S. Senator Thad Cochran (R-Miss.), the ranking Republican on the Senate Appropriations Committee, today cautioned the Senate about creating new programs—whether for health care, climate change or education—that are funded through automatic mandatory spending.

In a speech to the Senate, Cochran on Thursday addressed congressional spending practices, and stressed that the Congress could better control future spending by relying on the annual congressional appropriations process rather than putting more funding on “autopilot.”  He delivered the speech on the eve of Senate debate on a health care reform package that will create new mandatory spending programs.

“Given our nation’s fiscal situation, it seems to me that we should strongly favor a procedure that requires Congress to consider programmatic spending every year,” Cochran said.  “This is not a question of which committee has the power over the purse.  It is a question of whether Congress will maintain the power over the purse, and deliberately exercise it.”

Cochran reviewed some of the new mandatory spending programs being proposed in legislation expected to be debated by the Senate in the coming months, including health care reform, climate change legislation, and a measure to restructure the federal student loan program.

Mandatory spending includes programs which are funded by eligibility rules or payment rules.  Such spending makes up about two-thirds of the total federal budget. Mandatory programs are not subjected to funding through the annual congressional appropriations process.

“Once a funding stream is made mandatory, it is extremely difficult to reduce or cut off the spending, or to use the leverage of future funding to motivate more efficient management of federal programs and activities,” Cochran said.
 
“Every year in appropriations bills, programs are terminated, reduced or expanded based on performance and the availability of resources pursuant to the budget resolution.  Interest groups and program beneficiaries are required to give us their view annually.  The competition for available dollars is intense, but so what?” he said.
 
“Whether it is health care, climate change, education or other legislation, Congress should be very cautious about establishing new, long term mandatory funding streams because it fundamentally weakens our ability to control federal spending at a time when we greatly need to exercise that control.  I hope my colleagues will keep this in mind as we proceed with the business before us,” he said.

The following is the text of Cochran’s remarks:

Madam President, in the coming weeks and months the Senate is scheduled to complete action on several appropriations bills that will have a profound impact on federal spending for many years to come.

Congress has sent only five of the 12 annual appropriations bills to the President for his signature.  Four other bills are in conference with the House.  The Senate has not yet acted upon the remaining three bills.

Last year Congress completely abandoned the appropriations process.  The year before last only a few bills were acted upon by the Senate before all the bills but one were bundled into an omnibus bill and sent to the President. 

Thus far this year, we have not been able to complete action on all 12 appropriations bills, but we have made significant progress.  The Senate has debated a stand-alone Agriculture Appropriations Bill and an Interior Appropriations Bill for the first time in four years.  Ideally, these bills should be subjected to the scrutiny of the full Senate every year.

This year, there have been hearings in each subcommittee, and the bills have been subjected to subcommittee and full committee markups.  We have tried to get the bills to the floor individually so that all Senators have an opportunity to offer amendments, and so we can avoid the necessity of grouping the bills into an omnibus bill.  The chairman, the Senator from Hawaii, Mr. Inouye, deserves the credit for these improvements.

Despite the many difficulties associated with enacting the appropriations bills, the process compels us to hear testimony, analyze programs, and consider funding needs and priorities on an annual basis.  It isn’t always a smooth or easy process, but it has the benefit of compelling us to continually reevaluate the level of federal spending.  That is not the case when we create long term or permanent mandatory spending programs.

I don’t mean to criticize the oversight of the authorizing committees.  Many of them do excellent work, holding agencies and funding recipients accountable for their management decisions.  But once a funding stream is made mandatory, it is extremely difficult to reduce or cut off the spending, or to use the leverage of future funding to motivate more efficient management of federal programs and activities.

One of the justifications often cited for creating mandatory spending programs is that the funding recipients need “predictability” to properly manage programs.  While there may be some truth to this, in itself it is not a sufficient reason to make a new program mandatory, or to change an existing program from discretionary to mandatory.  If increased predictability is the goal, Congress should make greater efforts to get the annual appropriations bills done as close to on-time as possible, and in an open and orderly fashion that allows scrutiny of the proposed spending.

Failure to process the appropriations bills in this manner has the effect of driving interest groups to seek the “predictability” of long term, mandatory funding streams.  In effect, we create a situation whereby Congress must take proactive steps to reduce or eliminate spending, as opposed to proactive steps to continue spending.  As a general matter, Madam President, we should be very careful about moving programs in that direction, in my opinion.  And as I look at the major legislation that Congress is slated to consider over the coming months, I am greatly concerned.

Of most immediate concern is the health care bill on which we will soon begin debate.

The bill reported by the Senate Finance Committee creates new programs with direct appropriations that should be funded—or not funded—through the annual appropriations process.  There are mandatory programs for Maternal, Infant, and Early Childhood Home Visitation, and for Personal Responsibility Education for Adulthood Training.  There are grants for school-based health centers, a demonstration program for emergency psychiatric care, and a demonstration program to address health professions workforce needs.  A previously authorized childhood obesity program is directly funded with a mandatory appropriation.

Many of these programs are funded for only a few years—just enough time to get funding recipients invested in the program, after which expectations will be overwhelming that the programs be continued with annual appropriations.

As ranking member on the Labor-Health and Human Services Subcommittee, I might be inclined to support funding some of them.  But beginning new programs with short term mandatory funding is a recipe for trouble.  It results in hiding the long term costs of these programs, and provides no opportunity up front to consider tradeoffs between the new programs and existing programs.

The health care bill reported by the HELP Committee includes a new Prevention and Public Health Fund to support an “expanded and sustained national investment in prevention and public health programs to improve health and help restrain the rate of growth in private and public sector health care costs.”  The bill appropriates $2 billion for this purpose in Fiscal Year 2010 alone, and increases that amount to $10 billion by Fiscal Year 2014 and thereafter.  This has long been a priority of the Senator from Iowa, Sen. Harkin, and to the Committee’s credit the bill provides some latitude for the Appropriations Committee to allocate funds among various prevention and wellness programs in the out years.

At its heart, however, this provision implies that we know today what the appropriate Federal investment for wellness programs will be 10 or 20 years from now.  I just don’t think that’s plausible.  If prevention and wellness programs are that important, let’s call up the Labor, Health and Human Services Appropriations Bill and either increase the size of the bill or reallocate money within the bill to support wellness programs.  And when the FY2011 appropriations process begins, let’s analyze how those programs are working and consider once again the appropriate funding levels for the coming year.

Beyond the health care bill, there is legislation to address global climate change.  Here again we face the prospect of massive new annual federal expenditures being established on a mandatory basis—effectively being put on autopilot right from the beginning.

While nobody knows the value of the carbon allowances that would be auctioned under some climate bills, it is clear that tens of billions of dollars from such auctions would be plowed directly back into an array of programs administered by federal, state and local government agencies.  Some of the programs have a more obvious relationship to climate change than others.  Just to list a few, the Senate-reported bill directly funds clean vehicle technology, building retrofits, advanced energy research, nuclear worker training, coastal preservation, and federal land acquisition.  Many programs that would be funded by this bill are identical or similar to programs already funded in annual appropriations bills.  Others are entirely new.

Are we truly confident that in the year 2016 it will be prudent to spend 4.3 percent of an unknowable amount of auction revenues on international deforestation efforts?  Are we sure that in the year 2030 that we should be spending 0.74 percent of auction proceeds on worker assistance programs?

Congress should protect its ability to reconsider support or opposition to such spending annually—or at least periodically—based on program performance and our national interests. 

And what about funding of federal land acquisition?  I have supported some federal land acquisitions in my state of Mississippi, sometimes to incorporate important resources into our national park system, sometimes to preserve sensitive habitats by including them in our national wildlife refuge system or in our national forests.  I have many times had other Senators specifically request that we NOT approve the federal acquisition of a particular piece of property.  This has been a particularly sensitive issue for our western colleagues, in whose states federal land ownership is already extensive.

Yet in the climate bill we are being asked to allocate funding to the Executive Branch on a long term basis for unspecified federal land acquisition projects, all with no apparent mechanism for congressional oversight.  Are any Senators really comfortable with that arrangement?  This is just one example of why Congress should consider programs on an annual basis through an open process, rather than putting programs on autopilot and then struggling against the tide of entrenched interests to react when things don’t go as expected.

In July, the House passed an education bill, the Student Aid and Fiscal Responsibility Act.  The bill terminates the program that authorizes private lenders to make federally-guaranteed loans to students, and provides that future student loans will be provided only through direct federal loans from the U.S. Department of Education. 

My concern is that the House-passed bill establishes a number of new mandatory education programs and expands several existing programs with mandatory funding streams.  The Congressional Budget Office estimates the House-passed bill would reduce mandatory spending by $87 billion over the next decade.  But the House bill directly spends all but $8 billion of that amount on new and expanded programs. 

It directly funds a new College Access and Completion Innovation Fund.  It establishes mandatory funding streams for school modernization, renovation and repair, including a program of supplemental grants for states along the Gulf Coast.  It establishes mandatory programs for early childhood education, and for reforming community colleges, and improving training for workforce development.  In many cases these are new programs; in some cases the mandatory amounts are meant to supplement funding currently provided through annual appropriations.

Regardless of the merits of these programs, Madam President, the fact remains that we are faced with a debt problem of huge proportions.  We have now closed the books on Fiscal Year 2009, finishing the year with a federal deficit of $1.4 trillion.  We began Fiscal Year 2010 with a deficit of $176 billion for October.  Our national debt has hit $12 trillion, and soon Congress will have to act to raise the federal debt ceiling again.  President Obama’s own budget—optimistic in many respects—forecasts our national debt rising to 66 percent of Gross Domestic Product by 2013.  The Congressional Budget Office forecasts debt reaching 87 percent of GDP in 2020, and increasing thereafter to even more alarming levels.

Given this set of facts, Madam President, is it responsible to enact a bill that is expected to produce–not guaranteed to produce, but expected to produce—a savings of $87 billion in mandatory spending, but then in the same legislation spends all but $8 billion of that anticipated savings on new programs or expansions of existing programs that could just as well be achieved through the annual appropriations process? 

Is it responsible to advance a climate bill that spends tens of billions of dollars on new mandatory programs, and to allocate funding among those programs for decades into the future when we have no ability to judge whether those programs are really needed or effective, or what different programs might be necessary depending on how climate legislation would affect our economy, our workforce, and our environment?

Can we afford to enact a health care bill that is long on new, costly mandatory programs but short on cost savings that we all know must be found within our health care system?

Mister President, certainly there are situations where mandatory funding is an appropriate mechanism to deliver government services.  In cases where our goal is to provide a service to a certain group of eligible people regardless of how many people may be eligible in a given year, a mandatory appropriation may be the most efficient means of achieving that goal. 

Given our nation’s fiscal situation, it seems to me that we should strongly favor a procedure that requires Congress to consider programmatic spending every year.  This is the very principle stated in paragraph 13 of Rule XXVI of the Standing Rules of the Senate.

This is not a question of which committee has the power over the purse.  It is a question of whether Congress will maintain the power over the purse, and deliberately exercise it.

Every year in appropriations bills programs are terminated, reduced or expanded based on performance and the availability of resources pursuant to the budget resolution.  Interest groups and program beneficiaries are required to give us their views annually.  The competition for available dollars is intense for available dollars is intense, but so what?

Whether it is health care, climate change, education or other legislation, Congress should be very cautious about establishing new, long term mandatory funding streams because it fundamentally weakens our ability to control federal spending at a time when we greatly need to exercise that control.  I hope my colleagues will keep this in mind as we proceed with the business before us.