Presentation on a Proposal for a Two-Year Budget Cycle

The proposal for a two-year budget cycle is a structural reform aimed at changing one of the most fundamental processes in American governance: how Congress appropriates federal funds. Currently, Congress is required to pass annual appropriations bills funding the federal government. In practice, this process has become increasingly dysfunctional, with continuing resolutions, omnibus packages, and government shutdowns becoming routine. A biennial budget would require Congress to pass a comprehensive spending plan covering two fiscal years at once, theoretically freeing up legislative time and reducing the political brinkmanship that accompanies annual budget fights.

The constitutional basis for this reform rests firmly within Congress's Article I powers. The Constitution grants Congress the power of the purse, and nothing in the text mandates annual appropriations. Congress has broad authority to structure its own budget process, as it demonstrated when it passed the Congressional Budget Act of 1974, which established the current framework of budget resolutions, reconciliation, and authorization versus appropriation distinctions. A biennial cycle would require changes to existing statutes rather than a constitutional amendment.

Fiscal impact is a key consideration. On one hand, a two-year budget could reduce uncertainty for federal agencies, contractors, and state governments that depend on federal funding, allowing them to plan workforce decisions and infrastructure projects with greater confidence. On the other hand, locking in spending levels for two years reduces Congress's ability to respond to recessions, natural disasters, or other emergencies without passing supplemental appropriations, which are already common. Some budget analysts note that the savings in congressional time may be offset by the additional complexity of forecasting two years of revenue and expenditure.

Historically, several states already operate on biennial budget cycles, including Texas, Ohio, and Virginia, providing real-world data on how the model functions below the federal level. At the federal level, biennial budgeting has been proposed and debated repeatedly since at least the 1980s, with the General Accounting Office (now the Government Accountability Office) studying the concept multiple times. Each time, implementation has stalled over concerns about oversight and the sheer scale of the federal government compared to any state.

Stakeholders affected by this change span virtually every sector. Federal agencies would gain planning predictability. Defense contractors, infrastructure firms, and social service providers dependent on federal grants would face fewer mid-year funding uncertainties. Members of Congress in appropriations roles would see their annual leverage reduced. Budget watchdog organizations are divided, with some favoring the stability and others fearing reduced accountability. State and local governments that receive federal block grants or formula funding would be significantly impacted by how the two-year numbers are set.

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The proposal under discussion would restructure the federal government's budget process by replacing the current system of annual appropriations with a two-year, or biennial, budget cycle. Under this approach, Congress would pass a comprehensive spending plan covering two consecutive fiscal years at a single time, rather than returning to the appropriations process every twelve months. The existing one-year system, established largely through the Congressional Budget Act of 1974, has in recent decades produced a pattern of continuing resolutions and last-minute deals that reformers argue is inefficient and destabilizing for federal operations.

Supporters of the two-year budget include budget reform advocates, many federal agency administrators, and some members of Congress from both parties who believe the annual cycle consumes too much legislative bandwidth. They point to states like Texas and Ohio, which have operated on biennial budgets for decades, as evidence that two-year cycles can function effectively. Proponents also argue that longer budget windows would allow agencies to make workforce and procurement decisions with greater confidence, reducing waste caused by uncertainty about whether funding will continue.

Opponents include members of Congress who value the annual leverage that appropriations provide over executive branch agencies, as well as fiscal watchdog groups concerned about reduced oversight. Critics argue that a two-year budget makes it harder for Congress to respond to recessions, public health emergencies, or other rapidly evolving situations without resorting to supplemental appropriations bills, which are already used frequently. Some economists also note that revenue forecasting becomes significantly less reliable beyond a twelve-month horizon, meaning the second year of any biennial budget would routinely be based on outdated economic assumptions.

For ordinary Americans, the practical consequences would depend heavily on how the transition is managed. A more stable funding environment could mean fewer service disruptions at federal agencies, more predictable grant funding for local governments, and reduced uncertainty for businesses that contract with the federal government. However, if the two-year process leads to larger, more complex spending packages that receive less public scrutiny, it could also make it harder for citizens to track how their tax dollars are being allocated between election cycles.