April 14, 2008

The Never-Ending Emergency: Trends in Supplemental Spending

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Rarely does a fiscal year pass without some type of emergency requiring a response from the federal government. When a disaster strikes, lawmakers need prompt access to federal funds, which is provided by the supplemental spending process.

This paper looks at the use of supplemental spending over the last 25 years. It reveals a considerable increase in supplemental spending since FY 1998, including a dramatic hike after FY 2002. It shows that at the heart of the problem is the concept of what constitutes an "emergency." Emergency bills are given special exceptions from the budgetary rules designed to restrain spending, such as budget caps and deficit accounting. Congress and the executive branch have used emergency-designated supplemental spending to dramatically increase government spending and avoid the caps set by annual budget resolutions.

The best way to stop the abuse of the supplemental process would be to stop exempting emergency spending from budget rules: supplemental spending-whether an emergency or not-should be offset with funding cuts in low-priority programs and should also be included in deficit accounting. If that option is not available, another option would be to retain the emergency exemption but establish specific criteria for designating spending as emergency. A third option would be to retain the emergency exemption, but require a supermajority vote of Congress to approve emergency spending. The last option would be to create a reserve fund for emergency spending.

These options are not mutually exclusive, of course, and combined they could also curtail emergency spending. For instance, lawmakers could stop exempting emergency spending from the budget rules and create a reserve fund for emergency spending. Or lawmakers could retain the exemption, establish some specific criteria for what constitutes an emergency, and also require a supermajority vote to approve emergency spending.