Several drafts of legislation are circulating around Capitol Hill with a new budget gimmick: let federal agencies borrow additional funds from the U.S. Treasury. The proposed borrowing process bypasses the Appropriations Committees that ordinarily fund agencies and bypasses the House Ways and Means Committee and the Senate Finance Committee that oversee the operations of the Treasury Department.
This new effort comes at a time when the federal debt is more than $35 trillion, and growing at a rate of $2 trillion per year. The ability of the federal government to respond to real emergencies is diminished by fiscal imprudence.
One proposed bill under consideration by the Senate Commerce Committee would allow within 90 days of enactment the Federal Communications Commission to borrow from the U.S. Treasury more than $10 billion and the Department of Commerce to borrow $5 billion. The proposed bill also earmarks spending of billions of dollars for additional pet projects of the Senate Commerce Committee.
The proposed bill raises several important unanswered questions:
Do the FCC and the Department of Commerce routinely have borrowing authority directly to the Treasury Department? No. Historically, these agencies do not have such borrowing authority, much less for billions of dollars.
Have FCC auction receipts in the past been earmarked for specific programs or to repay loans? No. Aside from the cost of administering auctions, most previous FCC auction receipts have gone to the U.S. Treasury, effectively for deficit reduction.
How would these agencies pay back the U.S. Treasury? Supposedly with receipts from FCC auctions that would be held in the next several years up through 2033. But only one band of spectrum, 12.7 GHz – 13.2 GHz, is specifically identified as being subject to auction, and no serious observers believe that band would yield receipts sufficient to cover the borrowing and spending required under the proposed bill.
What interest rate would the U.S. Treasury charge the federal agencies? It is costly for Treasury to borrow funds and then lend those funds to federal agencies. The FCC and the Department of Commerce should be charged at least the cost that Treasury Department would incur in borrowing the funds that might be repaid until 2033.
What happens if the agencies do not repay the borrowed funds? The federal debt simply grows more.
What happens next year when the $7 billion borrowed for the FCC’s Affordable Connectivity Program runs out? The proposed bill does not have an answer.
Responsible parties in Congress could stop this budgetary nonsense. The Congressional Budget Office can say that, without specific bands of spectrum identified for auction, borrowing for U.S. Treasury will count as direct spending without an offset. Future receipts need to be more concrete than a hope and a promise.
The Appropriations Committees can say that all agency spending must be appropriated, and that the Commerce Committee cannot simply bypass it with borrowing authority.
The House Ways and Means Committee and the Senate Commerce Committee should make clear that any legislation creating new borrowing authority for any federal agencies needs to be reviewed and approved by those committees.
The Parliamentarian in each Congressional Chamber should refer any bill that creates new borrowing authority to the relevant appropriations committees and to the relevant committees with oversight of the U.S. Treasury.
If the Senate Commerce Committee can borrow to pay for its projects, other committees will follow suit with their projects and budget gimmicks. It is time to limit spending and to stop Congressional budget gimmicks.