"Pass A Budget Now Act" Links Congressional Pay to Performance

Agenda-Setting Financial Insight.
Feb. 15 2012 6:30 PM

"Pass A Budget Now Act" Links Congressional Pay to Performance

The Capitol.
The Capitol.

Photograph by iStockphoto/Thinkstock.

If you don’t do the basics of your job, you shouldn’t get paid. It’s a simple concept, but lately it has been a foreign idea to the U.S. Congress. Federal lawmakers haven’t passed an annual budget in over 1,000 days. A new bill could apply a little financial pressure. 

The “Pass a Budget Now Act” was introduced on Wednesday by Representative Bill Johnson. The Ohio Republican proposes to stop paying members of Congress after April 15 each year if no budget has passed, until it has. The lost pay would go toward paying off the rapidly growing U.S. debt. 

California started a similar experiment when residents voted in favor of Proposition 25 in November 2010. John Chiang, the state’s comptroller, last year interpreted the rule as calling for a balanced budget. Lawmakers had passed something, but it didn’t balance and it was vetoed by Jerry Brown, the California governor. Pay was halted, and legislators later sued Chiang. But something worked: after less than two weeks, a balanced budget did pass. 

The situation in Congress is of course different. Though an annual budget process is enshrined in law, some would argue federal lawmakers don’t in practice really need to use it - they can rely on so-called continuing resolutions to allocate funds, the strategy over the past few years. But a budget with both revenue and expense items set out in black and white might encourage fiscal prudence as well as forward planning. After all, establishing a budget is a step any credit counselor would recommend to someone with a debt problem. 

Supporters of the new bill could even go further. Members of Congress collect some pretty generous perks, including travel - sometimes by government jet - and top-of-the-line healthcare. Wall Street knows financial incentives are powerful. Stop the paychecks and the perks, and dogma could suddenly take a back seat to pragmatism. 

Johnson, however, faces an uphill struggle. In California, voters put the pay measure on the ballot and made it happen. In Congress, it will be up to the lawmakers who would be directly affected. Many of them have in recent years taken pride in prevaricating. And most, surely, would be loath to jeopardize their own pay and perks.

Richard Beales joined Breakingviews.com in 2007 from the Financial Times, where he was the US markets editor and a Lex columnist. Prior to the FT, he spent more than 10 years as an investment banker, based largely in Hong Kong.

Daniel Indiviglio is a Reuters Breakingviews columnist, based in Washington, where he covers the intersection of politics and business. He joined from The Atlantic, where he provided analysis on topics such as financial regulation, housing finance policy, the Treasury, and the Fed.

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