Budget? Budget? Who Needs A Stinkin' Budget?

So, if you read any of today’s national headlines, you’ll have noticed that both the Senate and the House have adjourned for a season, and headed home to campaign for re-election. One article I read noted that: “For the first time since the budgeting process was overhauled in 1974, neither chamber has voted on a budget resolution."

Now, for the sake of background (and stop me if you already know this), Budget Resolutions are the skeleton of federal spending, and the Appropriations bills (12 of them) are the meat on the bones. At the beginning of the year (usually around the State of the Union speech), the President will present his proposed budget to Congress so that Congress can then laugh at and ignore it. “The President’s Budget”, as we often hear the term, is a glorified wish list that holds no legal authority.

Article I, section VII grants the authority of budget writing to Congress. Traditionally (and, I would say “legally”, except there has been a long standing dispute between the House and Senate on this), spending (a.k.a. budgeting) bills originate in the House of Representatives. As a matter of practice, both houses of Congress have committees who get cracking on the budget bills concurrently, so as to save time later on in the process.

So, two things take place concurrently: The Budget Committees of both the House and Senate start working on the general guidelines and road map for the federal budget. The Appropriations Committees in the House and Senate pay close attention to what the Budget Committees are doing; but, ultimately, start writing some of the basics of their Approps bills down on napkins. Usually what they do is look at last year’s bill and start plagiarizing some of that boilerplate language (why reinvent the wheel if you don’t have to?).

This is a somewhat symbiotic relationship, the Budget Committee gives the Approps committee borders and caps within which to operate, and the Approps Committee fulfills Congress’s Constitutional responsibility to pass a federal budget.

Once in a while, the Budget Committees fails to get their bills passed out of the House, the Senate, or both. That usually has to do with a obstinate voting block of Members who don’t like what’s in the budget, and somehow garner enough votes (usually in the Senate) to block passage. But all is not lost. The Appropriations Committees can still write their bills (there’s just less formal guidance for them to follow) and fulfill their Constitutional responsibilities. This happened 3 or 4 years ago. A vote took place, but it failed to pass. The Approps Committees continued their work moved their 12 bills to the floors of the House and Senate, and the House and Senate passed their bills.

So, that’s the process. Then there’s the timing. The federal government operates on a fiscal year that begins on October 1, and ends on September 30. So, ideally, Congress should pass their appropriations bills by September 30, and, if all goes well, the Budget Committee passes their budget bills sometime in the Spring prior to September 30, allowing the Appropriations Committees plenty of time to sort out the details with the helpful guidance.

I once called the Library of Congress (who tracks all sorts of inane trivia related to Congress) and asked when was the last time Congress passed all of their appropriations bills on time: 1995. That year, as you recall, was the first year of the Republican Contract with America. However, since then, neither R’s nor D’s have managed to do their job on time.

So, what happens when the approps bills don’t pass on time? The Congress passes something called a “Continuing Resolution” (CR). A CR essentially says, “pretend the budget this year is exactly the same as last year until we actually get around to passing one for this year. Oh, and don’t start any new efforts. Just keep the lights on.” Federal agencies usually have to keep the lights on for 3 or 4 months until they get a real budget to work with. Unfortunately, stopping everything for 3 months and idling is a bit like the USS Dallas having to go to a dead stop when the Red October does a Crazy Ivan. To paraphrase Seaman Jones: “The catch is, an Agency this big doesn’t exactly stop on a dime... and if we’re too close, we’ll drift right into the back of him.” It makes it a nightmare for agencies who are trying to deliver services to tax payers and citizens.

Sadly, CRs are very common, happening every year since 1995,and probably the majority of the years before 1995 (although, I’ve not checked on that). In Fiscal Year 2007 (which I affectionately called “fiasco year ’07) the newly minted D majority CR’d the whole year, not even trying to get it done. Granted, the outgoing R’s left them a stink bomb load of unfinished budget business on their desks for the incoming D’s, but CR the whole year?!?.

Anyhoo...

So, this year, let’s take a look at the tally card: Not only did neither houses of Congress pass a budget, they didn’t even vote on a budget. Leaving it difficult, but not impossible, for the Appropriations Committees to do their work, the Approps Committee in the House has passed two committee reports onto the House for a vote, then over to the Senate for a concurrence vote. Those two bills funded military, veterans, transportation, and HUD. All of the other agencies have their cheese hanging out in the wind (to quote Ed Rooney) with no budgets.

Yesterday, rather than rolling up their sleeves and pounding out the last 10 appropriations bills yet to be passed, they called it good enough, passed a CR, and went home to campaign. Granted, it would take several weeks to finish their work, but weeks late is better than months late.

I wonder if this dismal record will come back to haunt them as they go home to glad hand supporters and plead for votes?

Manifesto #3: Immigration

Some time ago I read a book by Hernando de Soto called "The Mystery of Capital: Why Capitalism Triumphs in the West, and Fails Everywhere Else". It's a fascinating read, produced by the President of the Institute for Liberty and Democracy headquartered in Lima, Peru. Reading this book is as close to cross-training reading you can find. The implications of his findings in analyzing the question in the title crosses over to any and every conceivable social question out on the market of ideas today.

A key matter he discusses is the tension between the laws passed by policy makers, and the reality of those laws on the ground. To illustrate what kind of chaos can take place when laws don't address the reality the people on the ground face, he conducted a little experiment:

"When I began studying the possibility of giving the poor access to formal property in Peru in the 1980s, every major law firm I consulted assured me that setting up a formal business to access capital would take only a few days. I knew this was true for me and my lawyers, but I had a hunch it was not true for the majority of Peruvians. So my colleagues and I decided to set up a two-sewing-machine garment factory in a Lima shantytown. To experience the process from the point of view of the poor, we used a stop watch to measure the amount of time a typical entrepreneur in Lima would have to spend to get through the red tape. We discovered that to become legal took more than three hundred days, working six hours a day. The cost: thirty-two times the monthly minimum wage."

He conducted other experiments with similar results: to obtain a legal title to a home in Lima, 728 steps; to formalize informal property (in other words, to go from illegal to legal) in the Philippines, 168 steps and between 13-25 years; procedure to gain access to desert land for construction purposes in Egypt, 77 steps, 31 agencies, and between 6-14 years; process to obtain a sales contract following the five-year lease contract in Haiti, 111 steps, 4,112 days.

The list goes on. Faced with such overwhelming odds and ridiculous amounts of red tape and expense, the poor enter into what de Soto calls the "extra-legal market." He goes on, describing how some of these extra-legal markets work, the rules established amongst the participants, etc. He also estimates the value of of the extra-legal market. "By our calculations, the total value of the real estate held but not legally owned by the poor of the Third World and former communist nations is at least $9.3 trillion. This is a number worth pondering: $9.3 trillion is about twice as much as the total circulating US money supply. It is very nearly as much as the total value of all the companies listed on the main stock exchanges of the world's twenty most developed countries...."

All of this value, however, is "dead capital" because the "owners" of it don't have a piece of paper (or, a title/deed) proving they own it, because the process to get that piece of paper is hopelessly out of reach (as demonstrated by the examples given above).

The United States, too, had this problem...back in the 1800's, and de Soto goes to great lengths to demonstrate how the US pulled together all of the varying "extra-legal" markets scattered across the country and developed a unified system of recognizing property. This system was based largely on the reality on the ground, on how things really worked out in the field where the extra-legal markets adapted their own systems to fit their situations.

So, let's bring this to our discussion on immigration. The parallel, here, is obviously the extra-legal practices of people in the market place and the illegal immigrants. The question is, are the current immigrations laws and processes in such a state as to vary greatly from the "reality on the ground"? And if so, then what?

Before we get to answering that, I'd like to frame the broader discussion on immigration, so that we all start on the same page. First, by my estimation, there are three central components or questions to the immigration debate as we know it. 1) how people come into and go out of this country. This, I call the fence on the border issue; 2) migrant labor. Is the work visa system reasonable and accessible?; and 3) what do we, as a nation, do with those who are already here illegally?

I think the maintaining of a secure border, regulating the in-flow and out-flow of people is an obvious need. Otherwise, why have nation states and borders? If you want to argue that there should be no borders anywhere, that's fine, but it doesn't deal with the reality of today, or the near future. Let's stick with the the world order as it is now constituted. And that world order has countries with definable borders. So, yeah, we should secure our borders.

Is the current migrant work visa system meeting our needs as a country, and, correspondingly, the needs of those who want to enter into it? I cannot think of one serious analyst who has looked at this question who thinks our migrant work visa program (especially seasonal migrant visas) is remotely reasonable. Back when I was working on Capitol Hill, my boss was tinkering with this issue, and had me track down a flow chart that represents the process by which a migrant worker could legally enter into the US and begin work. I found one, and as I looked at it (a college educated political scientist), I could not figure out how your average Jose would get from the first box to the last one marked "legal worker." The chart resembled a Rube Godlberg invention.

Now, it wasn't 728 steps of Lima, nor the 4,112 days of Haiti, but it was ridiculous. When I first saw that chart (and I really wish I had a copy for you all to see), I remember thinking, "no wonder so many of them don't even try to do it legally." So, in this second of the three fundamental immigration issues, we are caught in Hernando de Soto's "extra-legal market", where the poor and uneducated give up, and find their own way. Something badly needs to be done here.

Third issue: what do we do with those who are already here? A group of federal government employees (GAO, I think it was) went, literally, out into the fields of labor and asked those working there to raise their hands if they were illegal. 13 million raised their hands and volunteered to a representative of the federal government that they were illegally in our country, working in the fields. Now, if 13 million were bold enough to volunteer that information, how many, do you suppose, didn't raise their hands.

Assuming there was a way to correctly identify all of the 13+ million illegals (huge assumption), do we send them back to their country of origin? Do you think they'll volunteer to go back? Would we have to resort to forced emigration? Does anyone remember the Elian Gonzalez episode? Are we prepared to do that 13+ million more times? And what about the kids with illegal parents who were born here and are, by force of the 14th Amendment to the Constitution, citizens of this country. Like the Amendment or not, it is part of the Constitution (again, we can discuss the virtues of tossing that Amendment, but as it currently stands, the reality is that it is law). They are citizens of this country. Do we kick their parents out, but then take care of their kids? If we think paying for their education and health care is expensive, how about parenting them? So, again, what do we do with the 13+ million who are here illegally?

These are three issues that actually have relatively easy answers. The problem is that each of the three issues have their own cheerleaders who won't let any of the other ones get passed and resolved in Congress unless theirs get passed at the same time. That's why we hear the catch phrase "comprehensive immigration reform" so much. We actually weren't that far off from getting the trifecta back in 2008. I recall all of the hysteria about "amnesty/shamnesty". The bill: 1) acknowledged and proposed to devote additional resources to maintaining borders; 2) provided for an overhaul (and fairly simple resolution) to our ancient and cumbersome migrant worker visa bureaucracy; and 3) identified a means whereby our nation could reasonably deal with the 13+ million who are already here (or, at least, the vast majority of them).

Ask me if you want the mind-numbing details on the bill, as I read most of the bill, and actually understood it. The killer in the bill was something known as a "Z-Visa." To understand why the "Z-Visa" was death for the bill, we have to first examine (briefly) the 3rd component of the debate, and the bill's treatment of it. 13+ million illegally here. You can't realistically expect to round them up and send them all back, and the current law disincentives them from volunteering to go back. The folks moving the bill didn't want to grant amnesty in its purest terms (no penalty for being here illegally), because the bill wouldn't get enough votes. However, it had to somehow punish the illegals, while acknowledging the futility of sending them all back. It developed a tiered system of fines for those who would get into the process toward legal status (so, among other things, we'd know who is here, where they are, and what they are doing), and is reserved for those who had otherwise kept their noses clean (other than crossing the border illegally). The proposed fines were stiff for a migrant worker, but not insurmountable.

So, you would either have to jump out of the shadows, pay a fine, and enter into the legal system (beginning at the end of the line), or you'd have to continue dodging workplace immigration raids, deal with a hardened border when you try to sneak back in after deportation, etc. The incentives all pointed the illegal immigrant toward doing the right thing. Much of it assumed that, like de Soto's quandary of the average Jose in Lima, most folks want to do things the legal way if it is at all reasonable. This bill provided a reasonable approach (there are many, many more components to the bill that made me comfortable with it).

However, the Z-Visa was the problem. The Z-Visa allowed someone to acknowledge their illegality, but defer on deciding whether or not they'd pay the fine and get in line, or go home. The Z-Visa allowed someone (possessing this Visa) to legally stay here in perpetuity without having to face up to their crime (crossing the border illegally). That was, indeed, amnesty. That is what killed the bill, and that is why immigration is still a mess. Not sure who stuck that visa into the bill, or what their motivation was (other than to kill the bill), but that bill was solid, minus that Z-Visa.

If you elect me to be your fictional President of the United States in 2012, I will support Congress if they pass a bill similar to the one that died in 2008. It dealt with the border (there's never a permanent solution to this need, but the bill got us heading in the right direction), it modernized the visa system for migrant workers, and it found a pretty good balance between the demands of the rule of law (a penalty for committing a crime) while acknowledging Hernando de Soto's reality on the ground.

As de Soto pointed out, "Even the celebrated Homestead Act of 1862, which entitled settlers to 160 acres of free land simply for agreeing to live on it and develop it, was less an act of official generosity than the recognition of a fait accompli: Americans had been settling - and improving - the land extralegally [insert "illegally"] for decades."