Appropriations, the Budget, and Public Debt Transparency: The Fiscal Panorama, by Gillian Metzger, Anna Gelpern, Alissa Ardito Ashcroft, Erika Lunder, and Karla Vasquez-Suarez
Appropriations, budget, and public debt law lurk in the recesses of public law. Every now and again, in a blaze of glory and spilled ink, they emerge under the guise of a constitutional issue. Should a constitutional question arise, usually separation of powers, amid a political stalemate, then an extended shutdown or debt ceiling drama steal the spotlight. After a last-minute compromise or, rarely, a judicial ruling, the green eyeshades return. Money, finance, public spending – whether mandatory or discretionary – exert little charm over lawyers, who went to law school to avoid arithmetic. But the federal government pays for it all, whether through taxes or borrowing. The little-known laws that regulate how it borrows, budgets, and spends, have seldom come before the courts to interpret, which leaves these laws in political and interpretive obscurity. For good or ill, that may soon change.
On December 1, the ABA Administrative Law Conference hosted a panel that brought leading practitioners and scholars of fiscal law together. Panelists included, Gillian Metzger, the Harlan Fiske Stone Professor of Constitutional Law at Columbia Law School; Raquel Spencer, the general counsel for appropriations law at the Committee on Appropriations of the U.S. House of Representatives; Erika Lunder, research manager of the Government Finance and Taxation section at the Congressional Research Service (CRS); Karla Vasquez-Suarez, senior counsel in the Financial and Fiscal Law Unit of the Legal Department of the International Monetary Fund, (IMF);and Anna Gelpern, Anne Fleming Research Professor at Georgetown Law. Alissa Ardito Ashcroft (IMF) moderated the panel. The panel first explored the doctrinal ramifications of Taking Appropriations Seriously. Though venerable, discretionary appropriations are not autonomous but tethered to the annual budget resolution – the overarching blueprint that governs both spending and borrowing, and itself is based on a panoply of laws. Appropriated expenditures are financed by a mix of debt and tax revenues. Paystubs and April 15 keep taxes in the U.S. public consciousness; debt rarely shares the spotlight, but when it does, the sates are high. The panel surveyed the legal regime funding expenditures and brought in a comparative perspective, salient given the U.S. debt limit, to better understand how other countries’ domestic legal regimes handle the challenge of public debt accountability.
This post will offer summaries of each of the panelists’ remarks and some of the more prominent themes sounded, as well as the conundrums and internal tensions that surfaced during the course of the discussion. Before doing so, however, it is apposite to make note of the overarching themes. Fiscal law, at its core, encapsulates the inherent tension between democracy and the operational effectiveness of complex institutions, that lies the core of popular government. With less doctrine to cover up, the fragile balance and the costs appear in sharper relief. Ex post accountability, from hearings to debt limits to audits, can allay that tension. But those mechanisms require continuous refashioning to remain useful which brings us to institutional design. Questions of public law invariably revert to the Federalist Papers to elicit guidance on the meaning and intent of laconic constitutional clauses. Thirteen of the first twenty Federalist papers concern comparative government. Moreover, Papers 15-20 are a distinctive sequence in that great collaborative effort, offering readers a journey through various republics ancient and modern. Partaking of that spirit, another goal of the panel was to elicit a conversation across jurisdictions about institutional legal design to control spending and public debt.
Gillian Metzger began by explaining that appropriations lie at the core of the administrative state. Appropriations themselves are but one part of Congress’ power of the purse. In recent years, appropriations and funding measures have assumed increasing practical importance as tools of congressional and presidential power. By contrast, appropriations are marginalized in public law doctrine. This marginalization takes various forms, such as: singling out appropriations for special rules (appropriations exceptionalism); applying legal frameworks from other contexts that don’t fit well with appropriations (appropriations assimilation); not addressing appropriations at all (appropriations silence), and barriers to enforcing appropriations limits in court (jurisdictional exclusion). Taken together, these doctrinal approaches often operate to diminish Congress’s power over appropriations. and create de facto presidential spending authority. That consequence is at odds with the constitutional text, structure, and history of the appropriations power. Taking appropriations seriously requires refashioning public law doctrine in ways that are alive to the separation of powers dynamics that appropriations disputes present.
Raquel Spencer, who served as the general counsel of the House Committee on the Budget before moving to the Appropriations Committee, then placed appropriations in the broader context of the federal budget. Appropriations acts are an exercise of one of Congress’s most essential responsibilities in the Constitution, which instills the power of the purse to the Congress and not the President. While appropriations acts are critically important and represent discrete, programmatic decisions to fund the U.S. Government’s programs, projects, and activities, these Acts alone do not represent the full spectrum of Congress’s primacy over the federal purse. In reality, the annual appropriations Acts and any other piece of legislation providing for new government spending are initially contemplated by projections and fiscal ambitions laid out in a much larger budgetary framework and process, which is specified in the Congressional Budget and Impoundment Control Act of 1974 which also involves the President’s annual submission to the Congress under chapter 11 of title 31 of the U.S. Code. The budget process, and by extension its budget enforcement regime, which has been elaborated in the years since enactment of the CBA, establishes a framework for total government revenues and spending and the public debt, which should reflect the Congress’s assessments of the needs for investments over specified time periods. Decisions about the public debt ultimately flow from decisions already made about government spending and revenues—for which targets were also established as part of the budget framework and process.
The United States borrowed $13 trillion over the past decade to make up the difference between spending and revenues. In May, CBO projected debt would reach a record 110 percent of Gross Domestic Product (GDP) by 2032.
The fact that we know anything at all about the precise nature amount of public debt was not vouchsafed to us by chance. Erika Lunder opened her remarks on U.S. Public Debt in Federal Law with Article I, §9, cl.7., the essential link between appropriations and public debt transparency. The U.S. statutory regime for public debt is nearly as old as the country itself, as the 1789 Act to establish the Treasury Department required the Secretary to provide the Senate and House with fair and accurate copies of all accounts and a “true and perfect account of the state of the Treasury” on the third day of every session of Congress. Like the budget process, the modern public debt statutory regime originates with the Budget and Accounting Act of 1921, which created what today’s OMB and GAO. As the form of debt changed given the advent of debt securities, this required Congress to approve each authorization, until Congress passed the present version of the debt limit in 1941. This shift to the nominal debt ceiling further separated budget accountability from debt accountability. The rest of the requirements relating to financial reporting and disclosure are of more recent vintage – including the CBA of 1974, the Federal Managers’ Financial Integrity Act of 1982, the Chief Financial Officers Act of 1990, and the Federal Financial Management Improvement Act of 1996.
Especially significant is 31 U.S.C. § 3513 which mandates that the Treasury Secretary submit an annual report to Congress including receipts and expenditures on the first day of each session and includes required detail – including the amounts of contingent and unfunded liabilities, and collateral pledged. And in an example of the interplay with other agencies, spanning the executive and legislative branches, that characterizes the U.S. fiscal framework, Treasury prepares the audited financial statement with OMB, which GAO then audits. Other reports and statements familiar to the press and public, including the Financial Report of the U.S. Government are required by statute (31 U.S.D. § 3513(a)). Finally, the doctrine of standing appears in the public debt context as it does in appropriations, with federal courts holding (Flast v. Cohen; Halperin v. CIA) that neither taxpayer status nor FOIA convey the standing to challenge the CIA’s limited reporting regime as violating Clause 7. In public debt too, standing delimits transparency and the purview of the court.
The overview of the U.S. regime so far highlights both the shared functions of fiscal laws and institutions, and the historically contingent character of particular institutional designs. Karla Vasquez then offered another perspective on the U.S. public debt statutory regime, as a prime example of the concept of public debt transparency. Domestically, public information on debt promotes sustainable borrowing, enables effective fiscal management, and more enables the public to properly monitor the use of public resources. At the international level, debt transparency also allows institutions like the IMF to monitor the debt vulnerabilities and risks that are building to prevent debt crisis. The ever more complex landscape of creditors in low-income countries and emerging economies, the migration to off-budget liabilities with large fiscal risks, as well as the increasing use of new forms of lending, such as collateralized debt call for more comprehensive legal frameworks and statutory schemes.
While there is no universally accepted legal definition of debt transparency, key elements should include timely, comprehensive, accurate and consistent disclosure of debt data, and key information on public debt management and debt-related risks. One prime example is the U.S. statutory basis found in 31 U.S.C. § 3513, which requires Treasury to report to Congress and provides the legal basis for the Combined Statements of Receipts, Outlays and Balances and the yearly Financial Report of the US Government. But disclosure requirements are not sufficient. Their implementation relies on supporting laws that provide a clear authority to borrow, the appropriate institutional arrangements for public debt recording, monitoring, and reporting, effective internal and external audit, well-defined accountability to legislative bodies and the public and legal rights to demand information or to challenge validity of unauthorized debt in courts and question its enforceability.
Finally, new legislation could also prevent debt opacity caused by two recent trends, namely, the increase in the use of collateralized debt and collateral like transactions and the sharp increase in the use of non-disclosure agreements at the contractual level.
Anna Gelpern rounded out the panel by delving into the relationship between public debt and accountability. Sovereign debt is, in a sense, a contradiction in terms: the sovereign answers to no law but its own, yet commits to repay – and repays through all manner of adversity. The Leviathan still empties pockets when the bills come due. Channeling Hamilton, public debt is both an asset and a liability.
If the US budget/debt regime is indeed a model of transparency yet woefully marginalized, one could conclude that the public just does not care. Alternatively, one could conclude that the U.S. model of transparency is ineffective or misguided. At this point, it is worth considering that if Congress continues to trigger debt ceiling dramas with global spillovers, do we want to add more legislative tripwires to this already fragile contraption? In addition to accountability to citizens, it is worth considering what accountability we owe to the rest of the world.
Q & A
In the discussion which followed, the question of whether there is a statutory definition of debt in the U.S. was raised. The answer, there is none other than the debt limit itself, that retrospective list of liabilities and obligations. In countries that have definitions of debt in statutes, usually debt management legislation, what to include or exclude becomes critical, as the temptation is to classify sovereign liabilities as something else, to present a more wholesome fiscal image. The use of a broad definition to capture all economic meanings and avoid shadow gimmicks is advisable.
How is borrowing authority delegated is another relevant issue. Based on the IMF’s survey of over sixty jurisdictions, certain delegations may be recommended that balance the dual obligations of public control and effective dispatch of borrowing activities. If there is no ideal model given the multifarious institutional arrangements and division of powers between the executive and legislature across jurisdictions, there are some good practices that work. Some of these include a clear legal definition of the agency responsible for approving the borrowing, especially important for entities outside the central government, explicit conditions and criteria, and strict disclosure requirements.
Domestically, it remains to be seen whether the scope of what Congress can delegate is colored by the fiscal nature of the activity. Does the Non-delegation doctrine apply to appropriations? Consumer Financial Protection Bureau v. Community Financial Services Association of America, already covered on this site will take up that question in relation to the CFPB’s funding structure.
The U.S. budget connects to the debt regime through section 301(a)(5) of the CBA. The definition of debt for the purposes of the debt limit is retrospective, while the framework of a unified budget in the form of the joint resolution takes projections into account, and projects debt within the budget window. The unified budget is a comprehensive framework, linking debt both retrospectively and prospectively.  The committee structure is also important as authorizing committees such as Ways and Means (House) and Finance (Senate) make key decisions about budget authority that ultimately determine the boundaries of the budget.
The absence of a statutory definition of an appropriations was remarked upon, which called to mind Sec.301 of CBA –authority to incur obligations – commonly known as budget authority. The basic concept that an appropriation may convey but budget authority can be provided elsewhere, again an intimation of the fact that the power of the purse is more than the appropriations power.
Finally, does the U.S. debt limit, which began as a way to streamline borrowing authority, promote fiscal discipline? The debt limit may seem a parody of a fiscal rule, serving to rally the public around the issue of fiscal responsibility, in the least sober and responsible fashion imaginable. In fact, the U.S. has pieces of a fiscal responsibility framework, but not all of them. To take one example, the debt ceiling is not calculated as a percentage of GDP, revenues, or via some other formula that captures the sustainability of debt. The number conveys nothing about the fiscal health of the nation. It may come as some surprise that many countries have moved towards a more complex and flexible set of rules anchored on a debt objective. These rules permit adjustments in special circumstances to remain credible over time. When developing new fiscal legislation/seeking an alternative to the debt limit, Congress may look abroad for inspiration once more.
Gillian Metzger is Harlan Fiske Stone Professor of Constitutional Law at Columbia Law School.
Anna Gelpern is Anne Fleming Research Professor at Georgetown Law.
Alissa Ardito Ashcroft is a senior counsel in the Legal Department of the International Monetary Fund.
Erika Lunder is research manager of the Government Finance and Taxation Section at the Congressional Research Service.
Karla Vasquez-Suarez is a senior counsel in the Legal Department of the International Monetary Fund.
 Debt to the Penny | U.S. Treasury Fiscal Data. See also, https://www.cbo.gov/publication/58147 Ch.1, 2021 Actuals “Debt Held by the Public.”
 “No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public money shall be published from time to time.”
 An Act to Establish the Treasury Department, (1 Stat. 65, 66, 1789).
 https://www.congress.gov/committee-print/117th-congress/senate-committee-print/45298. See 2 U.S.C. 632(a)(5) for requirement to include public debt in the for the fiscal year and following four fiscal years. The resolutions “may include a heading entitled ‘Debt Increase as Measure of Deficit’ in which the concurrent resolution shall set forth the amounts by which the debt subject to limit (in section 3101 of title 31) has increased or would increase in each of the relevant fiscal years; 2 U.S.C. 632(b)(5).
 Fiscal rules are defined as a longer-lasting constraints on fiscal policy through numerical limits on budgetary aggregates. https://www.imf.org/external/datamapper/fiscalrules/other/char.htm. Usually, such rules have a legal basis in fiscal responsibility laws.