Emergency spending plays a unique role in the federal budget process. It allows Congress to respond quickly to urgent, unforeseen events—such as natural disasters, military conflicts, serious economic downturns such as the Great Recession, or public health emergencies such as COVID—without being constrained by the usual budgetary limits like PAYGO (pay-as-you-go) rules and funding caps. But over time, the use of emergency designations has expanded, raising questions about how such spending is defined, tracked, and incorporated into long-term fiscal planning.
What Qualifies as Emergency Spending?
The Office of Management and Budget (OMB) has outlined five criteria for designating spending as an “emergency.” These were codified in the Budget Control Act of 2011 and are intended to ensure that emergency funds are used only in appropriate circumstances. According to OMB, emergency spending must be:
- Necessary: Essential to address the situation.
- Sudden: Arising unexpectedly.
- Urgent: Requiring immediate action.
- Unforeseen: Not anticipated in advance.
- Temporary: Limited in duration and scope.
These criteria help distinguish emergency appropriations from routine or discretionary spending, which is subject to annual budget caps, when in place, and long-term planning.
Emergency Spending is Large and Lacks Oversight
An analysis by the Cato Institute finds that since 1991, Congress has approved over $12.5 trillion in emergency-designated spending, with an additional $2.5 trillion in interest costs. Some of this spending—originally intended as one-time relief—has been absorbed into the Congressional Budget Office (CBO) baseline.
Emergency spending has averaged 5.7% of total outlays since 1991. While this is a relatively small percentage, in dollar terms the outlays can be significant. In 2018, prior to the COVID-19 pandemic, total outlays were $4.1 trillion and emergency expenditures were more than $200 billion. In that same year, that was more than the Federal government spent on the Departments of Interior, Justice, Labor, State and Transportation – combined.
When extraordinary events occur, emergency spending logically increases. However, the amount of emergency spending associated with extraordinary events has increased dramatically.
- In FY 2004, during the Iraq War, emergency spending was 5 percent of annual budget authority.
- In FY 2009, in the wake of the Great Recession, emergency spending was 17 percent of expenditures.
- At the height of the pandemic response in FY 2020, emergency-related spending peaked at $3 trillion, accounting for one-third of all annual budget authority.
The growth of emergency spending is troubling because emergency-designated spending often receives less scrutiny than regular appropriations, increasing the risk of waste and fraud. A 2008 Government Accountability Office (GAO) report found that supplemental appropriations—frequently labeled as emergency—were subject to reduced oversight, with funds sometimes diverted to unrelated priorities. This pattern intensified during the COVID-19 pandemic: the Associated Press reported that roughly $403 billion in relief aid was stolen, wasted, or misspent—about one in every ten dollars disbursed. (Although part of the challenge was that Congress had to quickly move money into the economy to prevent serious economic collapse in the early days of COVID; nonetheless, better planning for such events in the future would help ensure emergency funds have appropriate safeguards.).
More recent GAO estimates suggest that fraud in pandemic-era Unemployment Insurance (UI) programs alone totaled between $100 and $135 billion. These findings highlight how rushed emergency funding can undermine effectiveness and fiscal accountability.
How Emergency Spending Affects the Budget Baseline
The Congressional Budget Office (CBO) produces a baseline projection of federal revenues and spending over a ten-year period. This baseline estimates spending by assuming that current laws and funding levels continue, and it serves as a benchmark for evaluating the fiscal impact of proposed legislation. The rules that govern how the baseline is formulated are set in law. Particularly important is the Balanced Budget and Emergency Deficit Control Act of 1985 (sometimes called the Deficit Control Act), amended several times since enacted, which defines the baseline and spells out some of the rules for projecting spending and revenues. In particular, the act directs the agency to:
- Assume full funding for benefits under entitlement programs even if the source of that funding is inadequate;
- Assume that many mandatory programs (and thus their spending) continue to operate throughout the baseline projection period after their scheduled expiration dates;
- Assume that excise taxes dedicated to trust funds are extended for the remainder of a projection period at their expiring rate; and
- Assume that appropriations grow each year with inflation, starting from the most recent discretionary appropriation, even if the appropriation is for an emergency or is widely viewed as a onetime appropriation.
The assumptions around discretionary spending noted in this last bullet creates a particular problem when emergency or supplemental appropriations are included in the baseline. These funds can distort future projections. For example:
- One-time emergency funding may be treated as recurring, inflating future spending estimates.
- New legislation may appear to generate “savings” simply by reducing spending from an artificially high baseline.
- The public and policymakers may have a less accurate picture of the government’s long-term fiscal outlook.
This phenomenon—sometimes referred to as “baseline bloat”—can complicate efforts to assess the sustainability of federal programs and the impact of new policy proposals.
Policy Options to Address Baseline Bloat
The Stop the Baseline Bloat Act of 2025 (H.R.3912) has been introduced to address concerns about emergency spending and its impact on the budget baseline. This bipartisan bill would require the CBO to exclude emergency-designated and supplemental appropriations from its baseline projections. The goal is to ensure that temporary funding does not become embedded in long-term budget estimates.
Supporters argue that this change would:
- Improve transparency in budget projections.
- Reduce opportunities for budgetary gimmicks.
- Reinforce the temporary nature of emergency spending.
Other policy options under discussion include stricter enforcement of the OMB’s emergency criteria, enhanced reporting requirements for emergency designations, and reforms to the budget process that separate crisis response from routine appropriations.
Conclusion
Emergency spending is a vital tool for responding to crises, but its use has implications for long-term fiscal planning. Understanding how emergency funds are defined, tracked, and incorporated into the budget baseline is essential for policymakers, analysts, and the public. As Congress considers reforms like the Stop the Baseline Bloat Act, the broader conversation about fiscal transparency and sustainability continues to evolve.
