	General Criteria for a Budget Process

In the past we have suggested four broad goals or criteria for a budget  process. The process should provide information about the long-term impact of decisions while  recognizing the differences between short-term forecasts, medium-term  projections, and longer-term simulations; provide information and be structured to focus on important macro provide information necessary to make informed trade-offs between  missions and between the different tools of government; and be enforceable, provide for control and accountability, and be  transparent. 853, your staff asked me to focus especially on the  importance of the long-term perspective, on increasing the understanding  and recognition of long-term commitments and insurance commitments in  the budget, and on how this relates to the need for control, accountability,  and transparency. In this spirit, the approach taken in H.R. 853 has much to recommend it. Requiring reports on 75-year budgetary trends for the budget as a whole  can help provide the necessary long-term context. The inclusion in the  budget of OMB’s reports and comparisons between the President’s policy  proposals and current law will focus more attention on the long term and  on how the President would seek to address looming problems. Having a  CBO report as well will permit the Congress and other observers to make  comparisons with the OMB current law report, providing an independent  view. Although for  many programs BEA’s multiyear time frame has represented great progress,  there are programs and activities where a longer time horizon is necessary  to understand the spending implications of the government’s commitment-- and this commitment affects future budgetary flexibility. H.R. Programs with an apparently shorter time horizon than pension and health  commitments could also benefit from a longer-term perspective. Federal insurance provided to individuals and businesses against a wide  variety of risks is a prime example of the type of program that may carry  long-term cost implications. H.R. 853 requires that estimates of the risk assumed by the government in  these programs be disclosed in the budget. It also sets fiscal year 2006 as a  date certain for moving to the comprehensive approach. H.R. 853 also calls for  OMB, CBO, and GAO to report on the advisability and appropriate  implementation of budgeting for the risk-assumed costs. 853, if a joint resolution is enacted into law, it would  specify subtotals of new budget authority and outlays for nondefense and  defense discretionary spending, direct spending, emergencies, and other  subsets of spending if deemed necessary. 853 contains “fall-back” procedures for  expediting a concurrent resolution if the President vetoes the joint  resolution. H.R.
Why GAO Did This Study

Pursuant to a congressional request, GAO discussed the implications of H.R. 853 on the congressional budget process, focusing on: (1) the importance of the long-term perspective; (2) the long-term and insurance commitments in the budget; and (3) how this relates to the need for control, accountability, and transparency.

What GAO Found

GAO noted that: (1) in the past GAO suggested four broad goals for a budget process; (2) the process should: (a) provide information about the long-term impact of decisions while recognizing the differences between short-term forecasts, medium-term projections, and longer-term simulations; (b) provide information and be structured to focus on important macro trade-offs; (c) provide information necessary to make informed trade-offs between missions and between the different tools of government; and (d) be enforceable, provide for control and accountability, and be transparent; (3) the approach taken in H.R. 853 has much to recommend it; (4) requiring reports on 75-year budgetary trends for the budget as a whole can help provide the necessary long-term context; (5) the inclusion in the budget of the Office of Management and Budget's (OMB) reports and comparisons between the President's policy proposals and current law will focus more attention on the long term and on how the President would seek to address looming problems; (6) having a Congressional Budget Office (CBO) report as well will permit Congress and other observers to make comparisons with the OMB law report, providing an independent view; (7) although for many programs the Budget Enforcement Act's multiyear timeframe has represented great progress, there are programs and activities where a longer time horizon is necessary to understand the spending implications of the government's commitment and how this commitment affects future budgetary flexibility; (8) programs with an apparently shorter time horizon than pension and health commitments could also benefit from a longer term perspective; (9) federal insurance provided to individuals and businesses against a wide variety of risks is a prime example of the type of program that may carry long-term cost implications; (10) H.R. 853 requires estimates of the risk assumed by the government in these programs be disclosed in the budget; (11) it sets fiscal year 2006 as a date certain for moving to the comprehensive approach; (12) H.R. 853 also calls for OMB, CBO, and GAO to report on the advisability and appropriate implementation of budgeting for the risk-assumed costs; (13) if a joint resolution is enacted into law, it would specify subtotals of new budget authority and outlays for nondefense and defense discretionary spending, direct spending, emergencies, and other subsets of spending deemed necessary; and (14) H.R. 853 contains fall-back procedures for expediting a concurrent resolution if the President vetoes the joint resolution.