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Understanding affordable housing finance

Scoring: A Supermarket Parable for Stakeholders

by David A. Smith

Summary

Ever since the Balanced Budget Act of 1988 (BBA 1998), more commonly known as Gramm-Rudman-Hollings, legislation can generally be enacted only if it contributes to lowering the deficit. Deficits are measured by a score against a baseline. For members of Congress seeking to make changes, scoring and legislative cost management are essential skills. For everyone else, the arcane language of budget-omics makes the process frustrating for stakeholders to decrypt and thus reduces their ability to comment effectively to opinion-makers and elected officials.

Technical descriptions of scoring provide suitable explanations of key concepts such as budget authority, outlays, and the baseline. But to play the scoring game, or even to follow it on television and in the media, you have to understand why the players act as they do--and for that, we offer a legislative parable: family supermarket sweepstakes.

Legislative supermarket sweepstakes: a parable of Washington
To help you understand how it works, consider an extended analogy: reality on the right, parable on the left. Each column, read downward, is a complete narrative, with corresponding elements side by side to make the analogy clearer.

Every year,	Appropriations happen in annual cycles.
Mom and Dad	House and Senate.
stock up at the Legislative Supermarket.	Enact individual spending bills (and often, a tax reform/cut bill).
Before they set foot in the store, they agree between themselves on how much they will spend in total.	Each body passes a budget resolution, which they then reconcile, resulting in the budget 'caps'.
Once they've figured out what they're committed to spend,	CBO establishes the 'baseline,' which reflects continuation of current law.
they make a shopping list, and what they think those things may cost.	Initial estimates of mandatory and discretionary spending requirements.
Each of them divides the total allowance into thirteen categories, but not necessarily the same ones.	House and Senate may have different budget cap allocations among the thirteen committees.
The store's shelves are filled with products:	Potential legislative provisions.
some staples we buy every year,	Mandatory spending and renewals of entitlements.
some delicacies that we buy when we can,	Discretionary spending.
and frequent introductions of new products.	New initiatives.
Each item is brightly advertised in a big box that lists what it will do for you (Builds visibility! Attracts voters! Gets good press!)	Legislation is advanced based on its policy or political appeal first, cost is secondary.
and how much is inside.	Some legislation has specific nominal-dollar targets (budget authority); these are not its score.
Instead of prices, there's only a small bar code and the statement, See clerk.	Scoring of outlays occurs separately.
Mom and Dad walk up and down the aisles	Legislation is introduced, referred to committee, and so on.
with bouncing children sitting in the high chair seat.	Members of Congress advance their favored provisions.
As they go, Mom and Dad throw things into the cart, always checking against their shopping lists.	Bills are introduced via a chairman's mark.
To keep the kids from squalling too much, occasionally Mom or Dad throw treats into the cart,¹ always admonishing, "Only if you're good, and only if we can afford it."	Amendments are added in markup.
By the time they've navigated the aisles, their cart is overflowing with goods.	As it moves through Congress, legislation typically grows more extensive (and often loses its focus).
They arrive at the checkout counter.	Final scoring.
Here they confront a scowling clerk in an orange smock and a nametag that says, Hi, My name is CBO - OMB - Joint Tax - have a cheap day.	OMB scores Administration proposals. CBO scores Congressional appropriations bills. Joint Tax scores tax bills.
As each item is unloaded, the clerk runs a scanner over the bar code, usually tut-tutting about the choices ("That's a bad idea," "Who said you could buy that?").	Scoring agencies (especially OMB) often editorialize about proposed legislation.
A price pops up.	The score is issued.
There's no arguing with the price (although very occasionally Mom and Dad get a price check).	CBO and Joint Tax scores bind Congress.
The store does honor mispriced items.	If previous legislation was mis-scored, Congress revises the baseline without penalty.
Mom and Dad count on that.	Part of the navigational art involves low spendout rates and similar hopeful assumptions.
If the total bill is less than Mom and Dad brought into the store, everyone is ecstatic. The kids run wild, adding things until the total precisely balances.	If legislation is under cap, the committee can add to it ... or other committees can capture the excess (if Budget approves).
More often, the total bill is more than Mom and Dad brought into the store.	Most legislation is over the cap.
At this point, they cannot leave until they reduce the bill to their previously-agreed allowance.²	Under BBA 1988, above-cap legislation may not be enacted.
So Mom and Dad then have a huddled conference,	Conference committees reconcile competing bills
usually out of the children's earshot,	Meetings are closed and involve only a subset of members, called conferees.
to decide whether to give themselves permission to spend more,	Congress sometimes votes to raise the caps.
and if not, what to throw out of the cart.	Eliminating or reducing provisions.
Each item by now has many childrens' grubby fingerprints all over it ("But you promised I could have the earmarks!") and if set aside, there is howling and crying ("I won't get re-elected! I promised the voters I'd get it! You let me have it last year!").	The political process of bringing bills down to cap is painful.
Sometimes they don't solve the problem in time and have to stay up all night.	Appropriations are supposed to be completed by the fiscal year-end (9/30); if not, Congress typically passes continuing resolutions (CR's) to keep going.
Eventually they stumble out of the store and go home.	Final appropriations are enacted and signed.³
Shopping has taken eleven of their twelve months.	For instance, FY 03 was not done until February.
And in roughly a month, they do it all over again.	The FY 04 budget was submitted in March.

Further Reading

Budget Process resources from the Senate Budget Committee, Democratic Caucus. Includes a glossary, Congressional Research Service Reports, and a budget timetable.
Budget Process resources from the Senate Budget Committee, Republican Caucus. Useful, but with far fewer resources than the Democrats' page.
"The Congressional Budget Process," by Charles W. Johnson, House Parliamentarian, from How Our Laws Are Made, Chapter XII, published by the United States House of Representatives.
"The Congressional Budget Process," by Robert B. Dove, Senate Parliamentarian, from Senate: Enactment of a Law, published by the United States Senate.
Glossary of Budgetary and Economic Terms from the Congressional Budget Office.

¹ Mom and Dad actually have separate carts--House and Senate run on parallel tracks. When they reach the counter, they compare items. It's simpler to think of this as one cart.
² In its infinite wisdom, Congress has given itself permission to fund some items outside the caps--typically in times of national emergency (the definitions of which are plastic depending on circumstances).
³ We have omitted vetoes for simplicity, but the President can send Mom and Dad back into the store to try again.