Legislating Crisis

Legislating Crisis

Description

For the last several years, the congressional budget process has jumped from self-created crisis to self-created crisis. Debt limit, shutdown, sequester, and potential withholding of congressional pay have come in quick succession and have required Congress to take action to avert a problem. The result has been measurable damage to the economy and federal agencies. This has rightly engendered much commentary about the political system broadly, including the deleterious effects of polarization in American politics. And, it has also raised questions about the specific devices that led to these crises, with calls for many of them to be abolished. There is a common element to each of these devices. Congress sets a catastrophic event to occur at a specified time—and this sets up the possible crisis. It is an event that the parties create but do not really want to see occur. To put it colorfully, Congress and the President set up a mechanism that could shoot them in the foot. This chapter represents an exploration of these devices—and a modest defense of some of them, despite the recent chaos in Washington. At the very least, these devices can and are used in ways that address other legislative failings. Thus, there is a trade-off in simply throwing out such devices entirely, and, while there is a literature focused especially on the costs of individual crisis devices, there has yet to be a more complete accounting. This chapter seeks to build out this literature by describing both the benefits and costs of legislating crisis and how those benefits and costs might be weighed. But why should Congress ever create even the possibility of a crisis? There are a variety of reasons, as this chapter explores, but most of these involve changing the behavior of Congress going forward relative to what it otherwise would be without the threat of an undesirable outcome at that future point in time. One of the key conclusions of this chapter is that, in doing so, Congress may be trying to address some of its other failings. These devices may allow Congress to economize on transaction costs by declining to fully specify the way legislation will work in the future. They also allow Congress to enforce its deals and better coordinate negotiations by setting timelines. The conclusion that these devices can serve some constructive ends reflects an underlying judgment that the legislation facilitated by these devices is of some significant value to the country. In other words, it reflects the judgment that it is valuable for Congress to coordinate opportunities for fiscal deal-making, including regular updates to appropriations and broader deals with regard to the fiscal position. If the deals themselves were not valuable, then risky legislative tools used to facilitate them would not be worth employing. The wisdom of using these devices reflects a cost-benefit trade-off. On the one hand, there is the benefit of deal-making being facilitated. On the other hand, there are the actual risks associated with legislating a crisis. And, while policymakers may not actually want the crisis to transpire, the government and private sector must still plan for the crisis, which involves costs of its own, and, then, there is the risk that the crisis in fact happens. Further, these costs can be magnified by policymakers who strategically use crises in ways that do not align with the interests of their constituents. Importantly, the benefits from legislating the possibility of a crisis derive, to some degree, from the costs of that crisis. It is the potential costs that help to motivate policymaking. For example, if the crisis were not sufficiently salient, then the device would deliver little reward; it would do little to facilitate policymaking. This does not mean that a bigger crisis is always better. If the threat of a small or moderate crisis can prompt similar action from Congress as the threat of a large crisis, then clearly the smaller one—if any—should be the one used. In short, it is a question of using those devices where the benefits outweigh the costs so long as there exist no alternative devices with better benefit-cost trade-offs. It is this trade-off that leads to the tentative conclusion in this chapter that the threat of a debt limit breach is an ill-suited crisis device. This is because this particular threat poses excessive risks to the economy, and alternatives are available that better facilitate the legislative process at significantly less risk. It is also this trade-off that leads to the tentative conclusion that some of the other crisis devices discussed here—such as government shutdowns, a modified sequester, and, especially, with- holding of congressional pay – are probably worthwhile. This chapter is not meant to be a decisive and comprehensive evaluation of these devices, but, rather, an attempt to begin a more nuanced analysis of this family of legislative tools—as to their constructive goals, their costs, and the overall wisdom of using them. It is an analysis that recognizes that there is, in fact, a place for certain self-created crises in our legislative process.

Source Publication

The Timing of Lawmaking

Source Editors/Authors

Saul Levmore, Frank Fagan

Publication Date

2017

Legislating Crisis

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