	Principles for a Budget Process

In the past, we have suggested four broad principles or criteria for a budget  process. A process should provide information about the long-term impact of decisions, both  macro—linking fiscal policy to the long-term economic outlook—and  micro—providing recognition of the long-term spending implications of  government commitments; provide information and be structured to focus on important macro  trade-offs—e.g., between investment and consumption; provide information necessary to make informed trade-offs between  missions (or national needs) and between the different policy tools of  government (such as tax provisions, grants, and credit programs); and be enforceable, provide for control and accountability, and be  transparent, using clear, consistent definitions. Discussions on the future of the budget  process have primarily focused on revamping the current budget process  rather than establishing a new one from scratch. This is critical for making the caps realistic. You must balance the need to respond not only to those demands  that existed last year—demands kept in abeyance during many years of  fighting deficits—but also demands imposed on us by the events of  September 11.
What GAO Found

The events of September 11 imposed new demands on the federal budget, while pent-up demands from years of fighting deficits remain. In the past, GAO has suggested four broad principles for a budget process. That process should (1) provide information on the long-term impact of decisions, both macro--linking fiscal policy to the long-term economic outlook--and micro--providing recognition of the long-term spending implications of government commitments; (2) provide information and focus on important macro trade-offs--e.g., between investment and consumption; (3) provide information to make informed trade-offs between missions and between the different policy tools of government; and (4) be enforceable, provide for control and accountability, and be transparent, using clear, consistent definitions. New rules and goals will be necessary to ensure fiscal discipline and to focus on long term implications of decisions. The federal government still needs a decision-making framework to evaluate choices between today's and future needs. Amending the current Budget Enforcement Act without setting realistic caps and addressing mandatory programs is unlikely to be successful because the original act used limited actions to achieve a balanced budget. A budget process appropriate for the early 21st century needs a broader framework for thinking about near- and long-term fiscal goals.