Hearings of the
House Committee on Rules
H.R. 853, The Comprehensive Budget Process Reform Act of 1999
Dr. Susan J. Irving
Associate Director for Budget Issues, General Accounting Office
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In your testimony, you state that GAO has suggested four broad goals for a successful budget process. One of these goals is to “provide information about the long-term impact of decisions while recognizing the differences between short-term forecasts, medium-term projections and long-term simulations.”
How can the requirement in H.R. 853 that CBO and OMB provide 75 year estimates be helpful in this regard?
ANSWER:
H.R 853’s requirement for OMB and CBO to provide 75-year estimates would provide information about what could happen under current law if no policy actions are taken. The requirement for OMB to also report on 75-year estimates that would result from adopting the President’s policy proposals and to compare that to the current law estimates would provide information on the possible effect of one set of actions. Other sets of policy actions, such as those in the budget resolution, might also be simulated to provide information on the fiscal effects of those decisions. But the difference between these long-term simulations and short-term forecasts and medium-term projections is that the simulations should be seen as illustrative of direction and magnitude and not be viewed as forecasts of specific fiscal outcomes. They are much more uncertain than forecasts or projections covering shorter time periods.
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You make a very important point in your testimony that “even if the surplus is ‘saved’, we face an unsustainable outlook.”
Would this suggest that the Clinton Administration budget submission, or any previous Administration’s budget submission for that matter, is incomplete in that it does not address the structural and demographic challenges that lie ahead?
ANSWER:
Each Administration submits a budget that presents its proposals to address what it sees are the most pressing problems confronting the nation at that time. To do this each Administration balances short, medium and long-term goals in many areas--the economy, national security, general welfare of the citizenry. In addition, how the nation addresses the demographic challenges that lie ahead may vary depending on what the economy looks like. Bringing the deficit under control has been seen by many as one of the--if not the single--most pressing issue confronting national economic policy. Since most budgets in the last 15+ years have been presented when the forecast still showed high deficits, Presidents may have chosen to focus on deficit reduction--thus building a base from which to tackle long-term structural and demographic challenges.
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You state that “Social Security and Medicare are not the only programs in which the government has made long-term commitments”. In fact, there are a number of direct spending programs that have a serious long-term impact on the budget.
Would you recommend simply including the aggregates for all direct spending in our long-term estimates (that is just one number for all direct spending) or would you favor a more specific approach that details each program by itself?
ANSWER:
Attempting to model the details of each direct spending program would introduce much greater complexity into the models for making long-term projections without providing information that is drastically different from using aggregates for programs other than Social Security and health care. It is clear that these latter are the drivers of the long-term challenge facing the country. However, I want to add that for insurance programs—most of which are direct spending programs—the cognizant agencies ought to be developing models to help them estimate the risk assumed by the government due to those programs. If the insurance budgeting proposal contained in H.R. 853 is enacted (and maintained beyond the 2 years specified in the bill), these risk-assumed estimates would be included in aggregate long-term projections in the future.
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I was very interested in your description of transparency as a complex goal, particularly your point that one thing transparency can mean is “no hidden costs” or “few surprises.”
Is it your contention that providing Congress with greater information on the long-term costs of current law is a useful tool and will actually help Members make more educated decisions?
ANSWER:
Yes, I firmly believe that providing the Congress with greater information on the long-term costs of current law will help Members make better-informed decisions.
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H.R. 853 contains numerous provisions designed to encourage House committees to reauthorize the programs within their jurisdictions every 10 years. If not requiring them to seek to abide by the letter of clause 2 of House Rule 21 relating to appropriating money for unauthorized programs, it does seek to encourage committees to abide by the spirit of this rule.
Particularly, H.R. 853 prohibits the creation of a program for an indefinite period of time, limits authorizations to 10 years, and requires committees to establish timetables for these authorizations within their oversight plans.
Does GAO possess any information or resources that may assist committees and ultimately the House in complying with these new requirements?
ANSWER:
Committees in their oversight roles are currently using much of the work that GAO does. We produce evaluations of specific programs with recommendations for improvements in management, economy, efficiency, and effectiveness. The financial audit reports on individual agencies and the consolidated financial report of the U.S. government are also sources of information that would complement that provided in budget documents. GAO performs the audit of the consolidated statement and some of the agency audits. It also reviews the financial audit reports for all individual agencies and thus has a large knowledge base that could be drawn upon by committees in their oversight roles.
