Rather, discussion shifts toward how to allocate surpluses among debt reduction, spending increases, and tax cuts. Alternatives for Improving the Budget Process

There is a broad consensus among observers and analysts who focus on the budget both that BEA has constrained spending and that continuation of some restraint is necessary even with the advent of actual and projected surpluses. Where discussion has moved beyond a general call for continued restraint to specific control devices, the ones most frequently discussed are (1) extending the discretionary spending caps, (2) extending the PAYGO mechanism, and (3) creating a trigger device or a set of rules specifically designed to deal with the uncertainty of budget projections. In the budget resolution for fiscal year 2001 [H. Con. Other Ideas Proposed to Smooth the Process

Others have suggested that mechanisms such as a joint budget resolution and/or an automatic continuing resolution could avert the year-end disruption caused by an inability to reach agreement on funding the government. The budget is highly sensitive to the economy. For many years the goal of “zero deficit”—or the norm of budget balance—was accepted as the right goal for the budget process. The current budget challenge is not to achieve a balanced unified budget.
Why GAO Did This Study

This testimony discusses the budget process established by the Budget Enforcement Act, which will expire in fiscal year 2002.

What GAO Found

Because the goal of achieving zero deficits has been achieved, the focus of the budget process has shifted to to the allocation of surpluses among debt reduction, spending increases, and tax cuts. The budget process should be designed to avoid what has been described as the year-end "train wreck." A year-end "train wreck" results from a failure to reach agreement--or at least a compromise acceptable to all parties--earlier in the year. Although it is possible that early agreement on some broad parameters could facilitate a smoother process, it is not clear that such an agreement will always prevent gridlock--it may just come earlier. Two ideas that have been proposed to avert the year-end disruption caused by an inability to reach agreement on funding the government include joint budget resolutions and biennial budgeting. In discussing alternatives for improving the budget process, there is a broad consensus among observers and budget analysts that the spending constraints established by the act are necessary even with the advent of actual and projected surpluses. Such constraints include (1) extending the discretionary spending caps, (2) extending the pay-as-you-go mechanism, and (3) creating a trigger device or set of rules specifically designed to deal with the uncertainty of budget projections.