Romina Boccia and Dominik Lett
The Senate is ready to raid the figurative emergency rainy day fund again. As we highlighted in a recent Debt Digest, Senate Appropriations Chair Patty Murray (D‑WA) and Vice Chair Susan Collins (R‑ME) have reportedly struck a deal to increase fiscal year (FY) 2025 discretionary spending by $34.5 billion by designating some ordinary spending as emergency funding. This is a common trick legislators employ to get around spending limits when sticking to a budget seems too politically difficult.
Over at the American Enterprise Institute, Jim Capretta has pointed out how Congress has already fully reversed all of the $1.3 trillion in 10-year savings from the June 2023 Fiscal Responsibility Act (as scored by the Penn Wharton Budget Model) when it included emergency designations in FY 2024 funding bills and passed the unpaid-for Ukraine-plus foreign aid bill. As the CBO explained in its June update:
“To account for legislation enacted since CBO completed its February 2024 baseline projections, the agency increased its projections of discretionary outlays over the 2025–2034 period by $1.3 trillion. Funding that is not constrained by the limits put in place by the Fiscal Responsibility Act of 2023 (FRA, P.L. 118–5)—often referred to as nonbase funding [aka emergency spending]—accounts for more than 70 percent of the upward revision.”
To legislators’ credit, Congress hasn’t spent the full $1.3 trillion yet. Instead, CBO assumes that higher emergency spending in FY24 will be extended into the future, thus assuming a higher baseline level of spending because Congress will likely come up with new “emergencies” it wants to spend money on. That’s not an unreasonable assumption given congressional profligacy and, as Capretta points out, “proliferating global security threats.” However, it also reflects a budget baseline policy where budget-busting deficit spending is nearly a foregone conclusion—not an ideal state of affairs given the nation’s deteriorating fiscal health.
Against this backdrop, the House Budget Committee recently released three legislative discussion drafts and issued a request for information, asking independent experts and issue stakeholders to provide feedback and additional ideas to reform the budget process. Bringing more transparency and limiting congressional abuse of emergency designations has been a big priority for us over the past year, and we jumped at the chance to submit a statement for the record. Below are highlights from our submission:
Emergency spending is a major contributor to US publicly held debt. Since 1992, Congress has designated more than $12 trillion as emergency spending. Sometimes emergency spending is necessary to respond to unanticipated, temporary, and urgent events, such as the COVID-19 pandemic. Even then, Congress has overleveraged the emergency spending category following the adage to “never let a good crisis go to waste.”
Moreover, Congress is increasingly abusing emergency designations to evade spending limits by designating regular, expected spending as “emergencies” simply to get around inconvenient spending limits. Given the unsustainable growth in national debt accompanied by high and rising interest costs, the time to rein in emergency abuses is now before the next costly disaster strikes.
Draft Proposal: Requiring Sponsors of Legislation to Justify any Emergency Spending
The House Budget Committee’s emergency discussion draft aims to foster greater fiscal responsibility in emergency spending by requiring legislators to justify new emergency expenditures, covering both mandatory and discretionary spending. This requirement would introduce a minimal hurdle in the legislative process, encouraging good-faith discussions on emergency designations. Additionally, the draft legislation would require tracking and reporting on the cumulative total of all emergency-designated amounts for each fiscal year. This increased transparency and accountability would provide regular insight into the costs of emergency designations, promoting more responsible use of taxpayer dollars.
In short, the committee draft wants lawmakers to explain why they’re dousing emergencies in money as if they were watering a Vegas golf course and keep track of it all so we don’t drown in waste-ridden debt.
These were two major recommendations we made in our Cato policy analysis from January, titled Curbing Federal Emergency Spending, and we’re thrilled that the House Budget Committee is advancing these ideas further! The House is taking an important first step to getting a hold of the emergency spending problem. At the very least, we can expect some comedic relief as legislators try to explain why something as mundane as paying FBI agents their yearly salaries and planned expenses is suddenly an emergency.
Beyond tracking and justifying new emergency spending, here are several other reforms the committee might consider:
Offset emergency spending: Implement a budget enforcement mechanism to offset new emergency expenditures with spending reductions elsewhere to prevent budget-breaking initiatives—when Congress plays fast-and-loose with emergency spending like there is no tomorrow—and encourage forward-thinking budget planning. Unlike many states, there is not a federal “rainy day” fund that provides for general emergencies. Instead, Congress chooses to designate just about anything as emergency spending, and there are no limits for how much legislators can spend on emergency designations either. Rep. Emmer (R‑MN) and Sen. Braun’s (R‑IN) Responsible Budget Targets Act would implement emergency offsets over a six-year period as part of a comprehensive set of budget targets.
End executive emergency declarations after 30 days: Create a “shot clock” for emergency declarations to automatically expire unless extended by Congress, limiting costly executive overreach and preventing prolonged states of national emergency. The ARTICLE ONE Act, introduced by Rep. Roy (R‑TX) and Sen. Lee (R‑UT), would restrict presidential emergencies to 30 days, reigning in excessive emergency powers.
Enhance transparency over executive emergency spending: Require more detailed and publicly available expenditure reports from the executive to provide transparency and accountability, allowing Congress and the public to monitor emergency fund usage. Rep. Gosar (R‑AZ) and Sen. Marshall’s (R‑KS) National Emergency Expenditure Reporting Transparency Act would take a big step in the right direction by requiring National Emergency Act expenditure reports to be publicly available.
Correct the budget baseline distortion: Exempt emergency spending from the CBO baseline to avoid the ratchet effect of increased spending expectations and accurately reflect that emergency designations should be temporary. The Stop the Baseline Bloat Act, introduced by Reps. Grothman (R‑WI) and Case (D‑HI), would make this exact change. While this reform would make new emergency authorizations appear to have a smaller effect on the 10-year budget baseline, emergency spending writ large would no longer be assumed to continue increasing in perpetuity, removing a baseline distortion that serves as an implicit justification for spending-prone legislators.
Congress has a habit of playing fast and loose with emergency spending, like a kid in a candy store with grandpa’s credit card. This reckless behavior has ballooned deficits and debt to cartoonish proportions, with the emergency spending total, including interest costs, over the past 30 years being equivalent to about half of the total publicly held debt.
The House Budget Committee is taking a crucial step toward ensuring everyone can see where the money is going and why, with their current draft requiring sponsors of legislation to justify any new emergency spending. Legislators have the chance to further step up and put sensible guardrails in place before the next crisis blows the US debt even further out of proportion.