Committee for a Responsible Federal Budget

Zika Debate Provides An Opportunity to Discuss How Emergencies Are Funded

May 24, 2016 | Other Spending

Currently, Congress is debating if and how to provide emergency funding to fight the Zika virus. While the President has requested $1.9 billion in emergency funding this February to fight the mosquito-borne illness, the Senate has offered $1.1 billion in emergency funding and the House would provide $622 million from already-existing funds.

Under current budget rules, the emergency designation exempting Zika from the budget caps is appropriate, though it is often abused – for example, to pay for the Census in 2000. The Zika outbreak has been sudden and unforeseen, and a funding response to mitigate its effects is both necessary and urgent but would not be permanent. 

Yet the fact that Congress continues to debate this is partially the result of a broken budget process that relies on an ad-hoc and somewhat inconsistent funding system for various emergencies. As Congress discusses ideas for improving the budget process, policymakers would be wise to develop a better system to budget for emergencies. 

One example comes from a paper by the Peterson-Pew Commission on Budget Reform, Budgeting for Emergencies, which proposes a fiscally responsible reserve fund that would require Congress to set aside money each year to be withdrawn in case of a emergency like the Zika outbreak. In the long term, a reform like this could prevent unnecessary debate over whether emergency spending should be offset by ensuring that it is offset well in advance of a crisis. 

Identifying the funds to pay for new Zika spending shouldn’t be that difficult – and all things being equal, doing so is almost always preferable, even if not required by budget rules. The House bill would offset its proposed Zika funds by reallocating unobligated funds from the 2014 Ebola outbreak and other unobligated funds from the Department of Health and Human Services. Even fully funding the President’s request would cost less than 0.2 percent of total discretionary spending for FY 2017. If paid for over ten years, costs could easily be covered through very small tax or spending changes, many of which have broad bipartisan support. 

Some examples of possible offsets include:

Potential Offsets for Zika Funding
Policy Savings
Reduce FY 2017 budget caps by 0.17 percent $2.0 billion
Increase the Medicare sequester from 2.0 percent to 2.04 percent $2.0 billion
Eliminate enhanced Medicaid funding for prisoners  $2.0 billion
Reform inland waterway funding $1.3 billion
Increase customs and courier fees $1.2 billion
Reform oil and gas management and leasing as in the President’s Budget $1.2 billion
Rebase Medicaid DSH payments $700 million
Eliminate payments for abandoned mines $520 million
Require universities to report the amount that students must report to claim the American Opportunity Tax Credit $500 million
Properly account for lottery winnings and other lump-sum income when determining Medicaid eligibility $475 million
Increase agriculture user fees $472 million
Increase collection of non-tax debts owed to the federal government $400 million
Require businesses to withhold taxes on payments to certain contractors, similar to taxes withheld on wages $424 million
Use border-crossing data to prevent improper payments to those that have left the country $200 million
Reduce drug abuse in Medicare Part D $200 million
Strengthen state child support enforcement $174 million
Increase information sharing to administer excise taxes $151 million

Sources: CBO, President’s Budget, JCT score of the Tax Reform Act of 2014

Regardless of whether the President and Congress agree to offset Zika funding, they should work to improve the way we budget for emergencies going forward. Doing so would better prepare the country to respond to such needs in a fiscally responsible manner.