Budget Issues:

Capping of Outlays Is Ineffective for Controlling Expenditures

AFMD-90-111: Published: Sep 28, 1990. Publicly Released: Sep 28, 1990.

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Pursuant to a congressional request, GAO provided information about federal and state experience with outlay caps.

GAO found that: (1) during fiscal years 1970 through 1990, Congress enacted only three outlay caps on two federal programs; (2) states used methods other than outlay caps to control expenditures; (3) agencies had no problems implementing outlay caps; (4) outlay caps failed to produce long-term savings, since agencies typically delayed outlays exceeding the cap until the following year; (5) agencies did not have to cancel or delay any contracts; (6) outlay caps did not affect the balance of fiscal power; and (7) the Department of Defense's administratively imposed expenditure controls created problems for some contractors. In addition, GAO noted that in the future, outlay caps could: (1) lead to long-term savings if they permanently reduced agency budget authority; (2) result in additional costs; (3) adversely affect business relations; and (4) dramatically shift the balance of power over spending priorities from Congress to the executive branch. GAO believes that outlay caps were costly and ineffective.

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