Fiscal cliff as constitutional crisis

The news is filled lately with the "fiscal cliff" looming on March 1 and the devastating effects going over the cliff will have on a broad range of public services, such as food inspection, air transportation, and, certainly, financial regulation.  The threat of going over the cliff also has widespread negative implications for the private sector.  I wrote about some of these problems at the end of January.  And we have more recently witnessed financial regulators renewing their pleas to congressional leaders for adequate funding merely to attempt to carry out their missions -- e.g., CFTC Chairman Gary Gensler still trying to inch his meager staff of about 630 toward the 1000 mark.  But a new and deeper issue of the governmental dysfunction represented by the "fiscal cliff" has occurred to me recently and caused me to revisit the matter.

Clearly the spectacle of a legislature that cannot even agree on a budget for the federal government -- which thus has to "close down" (to the extent that can even be done) -- is not new.  There have been brief government closures, and several near misses, in the past.  That threat still exists with the expiration of the current continuing resolution funding the government until March 27.  Failure to fund the government for a new fiscal year is deeply dysfunctional to be sure -- true nonfeasance.  And history is filled with highly beneficial bills that should have become law but did not through such nonfeasance.

But I cannot recall an instance when Congress passed and the President signed a law which all parties knew when it took effect would be positively detrimental to the nation.  This seems to me to be an even deeper level of dysfunction than we have seen before -- malfeasance rather than nonfeasance.  Democratic institutions do not function well in the absence of existential crises.  But when the legislature creates a synthetic crisis in hopes of scaring itself into action, and then fails to avoid the crisis it has created (or moves the date of the disaster ever onward), the level of governmental dysfunction approaches a constitutional crises in which the very structure of the government prevents it from accomplishing its stated purposes ("provide for the common defense and security", etc., etc.).

If you know of other cases when Congress enacted legislation that it knew would be detrimental to the country, have thoughts on my proposition that this is a deeper and more critical level of dysfunction than the usual nonfeasance we previously experienced, or have any other illuminating thoughts on what this means for the viability of our system of government, the administrative/regulatory state, or any similarly lofty matters, please let me know.    

March madness -- the fiscal cliff and continuing resolution

Yesterday, the Washington Post carried a front-page article on the costs of preparing to "shut down" the government (something that actually can't be done; instead it just becomes even less efficient and responsive than usual).  The obvious costs are those associated with diverting slender staff resources from mission responsibilities toward shutdown preparations.  In the derivatives arena, those disappointed with the pace of regulation and the lack of "regulatory certainty" should be prepared for more of the same, as Congress buckles under its basic responsibility to "keep the lights on."

Operating under a continuing resolution -- which permits spending only at levels of the prior year -- for six months has been an effective across the board budget cut for federal agencies.  Even if Congress were to provide funding at levels near those requested by the agencies during the regular budget cycle -- something unlikely to occur at the end of March when the current CR expires -- the agencies could not possibly spend that funding in a rational and efficient way in the last six months of the fiscal year.  And, if funding above the CR level is not enacted in March, are we facing a full year of flat-lined appropriations?

A more subtle cost of CRs is that they are often "resolved" through passage of massive "omnibus" appropriations bills -- behemoth bills so large that nobody can read them critically before they are passed.  They therefore become laden with pork and bad initiatives that individually are not significant enough to justify delaying the omnibus bill but that are still bad law and collectively inflict a thousand wounds on the public. 

The second look over the fiscal cliff arrives earlier than the March 27 expiration of the CR -- on March 1, thus bracketing the month with a set of legislative spasms.  (The debt ceiling fiasco has been rescheduled for May.)  The ill effects of the cliff controversy are largely the same as those of the CR, only translated into areas of tax policy and other segments of the government not directly associated with the appropriations process.

Having seen Congress injure each foot with a fiscal bullet makes one shudder to think where the debt ceiling bullet may lodge.