The Federal Budget and the Budget Process

T-AFMD-87-8: Published: Apr 2, 1987. Publicly Released: Apr 2, 1987.

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GAO discussed its views on improving the federal budget process. GAO noted that two trends coincided to place severe strain in the budget process, in that: (1) after 1980, the federal budget deficit grew from under 2 percent of gross national product (GNP) to about 6 percent of GNP; and (2) the development of split-party control over the executive and legislative branches lessened compromise between the two branches. GAO also noted that the deficit: (1) cannot be completely resolved simply by making federal spending more efficient; (2) is causing a growing international debt burden that threatens the U.S. balance of trade; and (3) limits the federal government's ability to respond to unforeseen social or economic circumstances. GAO believes that: (1) a constitutional amendment to balance the budget could have serious unforeseen consequences; (2) proposals to grant the President line-item veto authority or enhanced rescission powers could disturb the balance of power between the legislative and executive branches; (3) the budget still treats loan and capital improvement outlays as regular outlays, but this treatment accounts for neither the return received from these outlays nor the net cost of federal credit and capital improvement programs; and (4) the federal government should consider methods of improving budget projections and enhancing agency financial management and reporting, in order to decrease the variance between budget projections and actual outlays. GAO also believes that, to streamline its budget process, Congress should consider: (1) biennial budgeting, which could reduce the annual budget work load and improve congressional oversight; (2) automatic continuing resolutions, which would minimize funding gaps and service disruptions; and (3) reducing duplicative congressional committee reviews.

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