Budget Reform for the Federal Government (2024)

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Highlights

GAO discussed budget reform issues and outlined four changes to improve the legislative process, including: (1) streamlining the budget process; (2) restructuring the budget; (3) improving budget cost reporting; and (4) upgrading the quality of budget numbers. GAO found that: (1) the nation's biggest fiscal problem was the federal budget deficit; (2) the deficit reached an all-time high in 1986 of $221 billion; (3) Congress' quick-fix methods to reduce the deficit could lead to unrealistic approaches to budgeting; (4) budget-related activities took up too much committee time and lacked procedural discipline; (5) missed deadlines for enacting appropriations bills compounded the problems, while omnibus continuing resolutions placed restrictions on the President's veto options; (6) the current cash-based unified budget made no distinction between investment and noninvestment expenditures, led to unsound deficit reduction strategies, biased the budget against capital investments, distorted credit program costs, and masked trust- and nontrust-fund fiscal relationships; and (7) budget reporting cost information did not include some major future liabilities in the budget totals. GAO believes that: (1) biennial budgeting could reduce the congressional budget work load and allow more time for oversight activities; (2) a four-part budget could establish deficit targets for operating activities, financing targets for capital activities, and total financing targets for fiscal policies; (3) budgetary information that distinguished between trust and nontrust amounts would prevent masking of important fiscal relationships and trends; (4) the federal government should identify and annually appropriate subsidy credit program costs for new direct and guaranteed loans; (5) each agency should record the budget authority to fund annual accrued employee benefit liability and pension funds' unfunded liabilities; (6) the budget should include the use of noncash assets to finance programs; (7) budget timeliness, consistency, and accuracy need improvement; and (8) upgrading agency financial management systems would improve budget information.