ChIMPS in the Budget

Weekly WastebasketChIMPS in the Budget

Budget & Tax  | Quick Takes
Sep 16, 2016  | 5 min read

Appropriators love ChIMPS. We’re not talking about primates here, we’re talking about budget gimmicks. You may not have heard of this type of monkey business, but it is a way to fit a gorilla of a budget into a marmoset suit. In many cases, Changes in Mandatory Program Spending (ChIMPS) can be used like Spanx to get spending under a cap, although there are some times real world consequences.

There are largely three types of government spending: discretionary, mandatory, and emergency. In 1991, the Office of Management and Budget defined emergency spending as necessary, sudden, urgent, unforeseen, and temporary. In truth, Congress decides what’s “emergency” spending and it’s not subject to budget caps. Discretionary spending, roughly one-third of the federal budget, is what everyone fights over every year in the appropriations process. The Pentagon, NASA, Education–you name it–they all get funded through discretionary spending. Then, there is mandatory spending, which comprises two-thirds of the federal budget and contains the big entitlement programs like Social Security and Medicare. It also includes other smaller pieces not subject to annual appropriations like agricultural conservation spending and food stamps. Permanent or multi-year legislation establishes spending for mandatory programs, which don’t get annual oversight by Congress.

Here’s how discretionary spending works in theory: The Budget Committees in the House and Senate draft up budgets for the fiscal year, which eventually become a bicameral budget resolution. The proposal sets the top-line number for discretionary spending for the upcoming fiscal year. The Appropriations Committee then takes that number and divvies it up among the twelve subcommittees that write the bills to fund government – everything from the Pentagon to congressional operations. Sometimes—actually, often–appropriators want a little more than they are given. Enter ChIMPS.

When they are writing their spending bills, lawmakers can dip into mandatory accounts to offset discretionary spending. The Congressional Budget Office scores the mandatory spending in legislation when it is adopted. The Farm Bill, for instance, received a nearly trillion dollar score when it was enacted in 2014. That score assumed various amounts of spending (underestimated as we often point out) in different agriculture programs. The appropriators can limit the spending in any of these areas and harvest the savings for other spending. The Farm Bill envisioned a certain amount of land to be retired for conservation purposes under the Conservation Reserve Program. If the appropriators reduce the amount of land to be retired, they can take the cash and spend it elsewhere. Appropriators even use ChIMPS to claim savings from programs that weren’t going to spend all that was authorized and use those paper savings for more real spending.

Because they are written into the spending bills, ChIMPS only last for one year. And that can cause problems.  An example: Congress is likely to enact a short-term continuing resolution, probably three months, to keep funding government at Fiscal Year 2016 levels when the new fiscal year starts October 1. But because all the spending will remain while the ChIMPS expire, a “clean” CR will likely bust the budget caps. Without ChiMPS, there will have to be across-the-board cuts.  So, as you can see, the paper savings from ChiMPS have real costs for the Treasury. And the programs that are actually reduced are shortchanged and thwart the intent of the lawmakers writing the authorizing bills.

House and Senate Budget Committees have rolled out various initiatives to curb ChIMPS over the years, but it remains a nearly $20 billion problem each year. We hope that as Congress considers process reforms for the badly broken budget process stopping ChIMPS is high on the list.