


Yesterday, Dan wrote about the Supreme Court’s decision to uphold the Consumer Financial Protection Bureau’s funding structure, where it can take money from the Federal Reserve System outside the normal government-budgeting process. This funding structure is a scandal, or it ought to be. But Dan rightly frames it as only one relatively small part of a much larger problem:
The decay of our constitutional system is rarely clearer than when observing how American government is funded today. Vast proportions of the federal government are effectively self-funding without annual or biennial appropriations — the CFPB is dwarfed, in that respect, by Social Security and Medicare. These self-licking ice-cream cones simply operate on autopilot, unaffected by who wins or loses elections. Perpetual appropriations stand the system’s design on its head: Instead of a majority of a single house of Congress being able to say no and bring things to a halt until its consent is obtained, the appropriation needs to be affirmatively repealed by both houses and the president. That creates a bias toward spending, and channels inter-branch negotiations into blunt instruments such as brinksmanship over the debt ceiling. The result, combined with the ballooning debts created by this system, is that the portion of the budget that actually gets decided annually by the elected Congress is a small and shrinking fraction. So much for democracy. And state legislatures don’t really control state spending anymore, either, because so much money is raised through the federal tax code and then funneled to the states. Good luck voting any of this out.
I call the phenomenon Dan describes “mandatory-spending dominance.” It’s hard to call Congress’s budgeting process “normal” when 73 percent of federal spending occurs outside of it. That’s how much of current spending goes to mandatory programs (mostly Social Security and Medicare) and interest payments. That spending happens continuously, automatically, without any votes being taken.
In one sense this is undemocratic, as Dan describes. But in another sense, it is democratic in that the American people generally want the same or greater spending on entitlements, and that’s what they’re getting. They also don’t want higher taxes, so the government has to borrow to meet its obligations. That spirals into higher interest payments and more borrowing.
Dan’s right: The Supreme Court isn’t going to fix this problem. Congress holds the constitutional power over budgeting, and the people need to demand better of Congress.