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United States Government Accountability Office: 


Before the Committee on Finance, United States Senate. 

For Release on Delivery:
Expected at 10:00 a.m. EDT:
Wednesday, May 4, 2011: 

Budget Process: 

Enforcing Fiscal Choices: 

Statement of Susan J. Irving:
Director for Federal Budget Analysis, Strategic Issues: 


Chairman Baucus, Senator Hatch, and Members of the Committee, 

It is a pleasure to be here today as you consider the role and design 
of appropriate budget enforcement mechanisms in changing the 
government's fiscal path. My testimony today outlines some elements 
that could facilitate debate and contribute to efforts to place the 
government on a more sustainable long-term fiscal path. 

Budgeting is the process by which we as a nation resolve the large 
number of often conflicting objectives that citizens seek to achieve 
through government action. The budget determines the fiscal policy 
stance of the government--that is, the relationship between spending 
and revenues. And it is through the budget process that Congress and 
the President reach agreement about the areas in which the federal 
government will be involved and in what way. 

Because these decisions are so important, we expect a great deal from 
our budget and budget process. We want the budget to be clear and 
understandable. We want the process to be simple--or at least not too 
complex. But at the same time we want a process that presents Congress 
and the American people with a framework to understand the significant 
choices and the information necessary to make the best-informed 
decisions about federal tax and spending policy. This is not easy. 

We have all heard the statement "The process is not the problem; the 
problem is the problem," which in this case is the federal 
government's unsustainable fiscal path.[Footnote 1] As the Committee 
knows, we have been raising concerns about the long-term trajectory of 
the budget for nearly two decades. Our first long-term simulation of 
the federal budget path was issued in 1992 for members of the Finance 
and Budget Committees. As in 1992, our latest simulations continue to 
show that the federal budget is structurally unbalanced and on an 
unsustainable path. (See figure 1.) 

Figure 1: Debt Held by the Public under Two Fiscal Policy Simulations: 

[Refer to PDF for image: multiple line graph] 

Percent of GDP: 

Historical high: 109 percent in 1946. 

Fiscal year: 2000; 
Baseline extended: 34.7%; 
Alternative: 34.7%. 

Fiscal year: 2001; 
Baseline extended: 32.5%; 
Alternative: 32.5%. 

Fiscal year: 2002; 
Baseline extended: 33.6%; 
Alternative: 33.6%. 

Fiscal year: 2003; 
Baseline extended: 35.6%; 
Alternative: 35.6%. 

Fiscal year: 2004; 
Baseline extended: 36.8%; 
Alternative: 36.8%. 

Fiscal year: 2005; 
Baseline extended: 36.9%; 
Alternative: 36.9%. 

Fiscal year: 2006; 
Baseline extended: 36.5%; 
Alternative: 36.5%. 

Fiscal year: 2007; 
Baseline extended: 36.2%; 
Alternative: 36.2%. 

Fiscal year: 2008; 
Baseline extended: 40.2%; 
Alternative: 40.2%. 

Fiscal year: 2009; 
Baseline extended: 53.52%; 
Alternative: 53.52%. 

Fiscal year: 2010; 
Baseline extended: 62.14%; 
Alternative: 62.14%. 

Fiscal year: 2011; 
Baseline extended: 69.38%; 
Alternative: 69.38%. 

Fiscal year: 2012; 
Baseline extended: 73.90%; 
Alternative: 74.04%. 

Fiscal year: 2013; 
Baseline extended: 75.52%; 
Alternative: 77.77%. 

Fiscal year: 2014; 
Baseline extended: 75.30%; 
Alternative: 80.77%. 

Fiscal year: 2015; 
Baseline extended: 74.88%; 
Alternative: 83.84%. 

Fiscal year: 2016; 
Baseline extended: 75.01%; 
Alternative: 87.61%. 

Fiscal year: 2017; 
Baseline extended: 75.20%; 
Alternative: 91.65%. 

Fiscal year: 2018; 
Baseline extended: 75.31%; 
Alternative: 95.81%. 

Fiscal year: 2019; 
Baseline extended: 75.75%; 
Alternative: 100.43%. 

Fiscal year: 2020; 
Baseline extended: 76.22%; 
Alternative: 105.26%. 

Fiscal year: 2021; 
Baseline extended: 76.66%; 
Alternative: 110.24%. 

Fiscal year: 2022; 
Baseline extended: 77.45%; 
Alternative: 115.73%. 

Fiscal year: 2023; 
Baseline extended: 78.1%; 
Alternative: 121.48%. 

Fiscal year: 2024; 
Baseline extended: 79.19%; 
Alternative: 127.72%. 

Fiscal year: 2025; 
Baseline extended: 80.59%; 
Alternative: 134.58%. 

Fiscal year: 2026; 
Baseline extended: 82.15%; 
Alternative: 141.82%. 

Fiscal year: 2027; 
Baseline extended: 83.91%; 
Alternative: 149.33%. 

Fiscal year: 2028; 
Baseline extended: 86.00%; 
Alternative: 157.28%. 

Fiscal year: 2029; 
Baseline extended: 88.39%; 
Alternative: 165.64%. 

Fiscal year: 2030; 
Baseline extended: 90.96%; 
Alternative: 174.36%. 

Fiscal year: 2031; 
Baseline extended: 93.70%; 
Alternative: 183.32%. 

Fiscal year: 2032; 
Baseline extended: 96.74%; 
Alternative: 192.57%. 

Fiscal year: 2033; 
Baseline extended: 99.84%. 

Fiscal year: 2034; 
Baseline extended: 103.11%. 

Fiscal year: 2035; 
Baseline extended: 106.5%. 

Fiscal year: 2036; 
Baseline extended: 110.12%. 

Fiscal year: 2037; 
Baseline extended: 113.95%. 

Fiscal year: 2038; 
Baseline extended: 117.85%. 

Fiscal year: 2039; 
Baseline extended: 121.90%. 

Fiscal year: 2040; 
Baseline extended: 126.05%. 

Fiscal year: 2041; 
Baseline extended: 130.30%. 

Fiscal year: 2042; 
Baseline extended: 134.63%. 

Fiscal year: 2043; 
Baseline extended: 139.05%. 

Fiscal year: 2044; 
Baseline extended: 143.54%. 

Fiscal year: 2045; 
Baseline extended: 148.12%. 

Fiscal year: 2046; 
Baseline extended: 152.91%. 

Fiscal year: 2047; 
Baseline extended: 157.78%. 

Fiscal year: 2048; 
Baseline extended: 162.72%. 

Fiscal year: 2049; 
Baseline extended: 167.73%. 

Fiscal year: 2050; 
Baseline extended: 172.76%. 

Fiscal year: 2051; 
Baseline extended: 178.04%. 

Fiscal year: 2052; 
Baseline extended: 183.39%. 

Fiscal year: 2053; 
Baseline extended: 188.83%. 

Fiscal year: 2054; 
Baseline extended: 194.36%. 

Fiscal year: 2055; 
Baseline extended: 199.97%. 

Source: GAO. 

Note: Data are from GAO's January 2011 simulations based on the Social 
Security Trustees' assumptions for Social Security and the Medicare 
Trustees' and the Centers for Medicare & Medicaid Services Office of 
the Actuary's assumptions for Medicare. 

[End of figure] 

Since our first simulations in 1992, we have continued to report on 
the nature and drivers of the long-term imbalance and on mechanisms to 
help address the challenge. Focusing on the long term does not mean 
ignoring the near term. While concerns about the strength of the 
economy may argue for phasing in policy changes over time, the longer 
action to change the government's long-term fiscal path is delayed, 
the greater the risk that the eventual changes will be more disruptive 
and more destabilizing. Starting on the path to sustainability now 
offers many advantages. Our increased awareness of the dangers 
presented by the long-term fiscal outlook leads to a focus on 
enforcement provisions within the budget process that can facilitate 
the debate and contribute to efforts to put the government on a more 
sustainable long-term fiscal path. 

Principles for a More Transparent and Effective Budget Process: 

Before turning to enforcement in particular, I will discuss some broad 
principles of budget process since it is the framework within which 
enforcement mechanisms exist. No process can force choices Congress 
and the President are unwilling to make. Having an agreed-upon goal 
justifies and frames the choices that must be made. A budget process 
can facilitate or hamper substantive decisions, but it cannot replace 
them. While no process can substitute for making the difficult 
choices, it can help structure the debate. The budget structure can 
make clear information necessary for important decisions or the 
structure can make some information harder to find. The process can 
highlight trade-offs and set rules for action. 

In our past work, we have identified four broad principles or criteria 
for a budget process that can help Congress consider the design and 
structure of future budget enforcement mechanisms. A process should: 

1. provide information about the long-term effect 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 be structured to focus on important trade- 
offs such as the trade-off between investment and consumption spending. 

3. provide information necessary to make informed trade-offs between 
the different policy tools of government (such as tax provisions, 
grants, and credit programs), and: 

4. be enforceable, provide for control and accountability, and be 
transparent, using clear, consistent definitions. 

Since my comments about enforcement will be related in part to these 
four principles, let me touch briefly on each of them. 

First, selecting the appropriate time horizon in which the budgetary 
impact of policy decisions should be measured is not just an abstract 
question for analysts. If the time horizon is too short, Congress may 
have insufficient information about the potential cost of a program. 
In addition, too short a time horizon may create incentives to 
artificially shift costs into the future rather than find a 
sustainable solution. The move from a focus on a single year to 5 and 
then 10-year horizons represented a major step forward. At the same 
time, we need to also understand the longer-term effects of policy 
decisions. As the first agency to do long-term simulations for the 
federal budget as a whole, we are well aware of the fact that the 
further out estimates go, the less certain are the numbers. But 
policymakers should be given information on the direction and order of 
magnitude of looming challenges. This is especially important where 
the short-term snapshot may be misleading. This concern has led us to 
propose improved recognition of the government's long-term "fiscal 
exposures"--which may not be explicit liabilities.[Footnote 2] 

Second, the structure and rules can determine the nature of the trade- 
offs surfaced during the budget process. Consumption may be favored 
over investment because the initial cost of an infrastructure project 
looks high in comparison to support for consumption. Distinguishing 
between support for current consumption and investing in economic 
growth in the budget would help eliminate a perceived bias against 
investments requiring large up-front spending. We have previously 
proposed establishing an investment component within the unified 
budget to permit a focus on federal spending on infrastructure, 
research and development, and human capital--spending intended to 
promote the nation's long-term economic growth. This proposal focuses 
on the allocation of spending within an agreed-upon amount. For 
example, we identified several options such as establishing investment 
targets within a framework similar to that contained in the Budget 
Enforcement Act of 1990. Under such an approach, and the 
Administration would agree on the appropriate level of investment 
spending within an overall target and create targets or "fire walls" 
to limit infringement from other activities. 

The third principle focuses on the method through which the federal 
government provides support for any federal goal or objective. The 
renewed interest in overlap and duplication has highlighted the 
different ways in which such support is provided: direct federal 
provision, grants, loans or loan guarantees and tax preferences or tax 
incentives. These vary in design and in how effective they might be 
for a given mission. In addition, they vary in the timing of cash 
flows. The budget and budget process should provide the information 
necessary to permit looking across federal agencies and policy tools--
which means across committee jurisdictions--to make an informed 
choice. Such comparisons also require that their budgetary costs be 
measured on a comparable basis. The Federal Credit Reform Act of 1990 
addressed this issue for loans and loan guarantees; the budget now 
reflects the estimated size of the government's commitment, regardless 
of the timing of the cash flows. For federal insurance programs, 
however, the budget offers a misleading picture about the nature and 
size of the government's exposure. The cash-based treatment of these 
programs distorts choice on several dimensions. First, at the time the 
insurance program is created or insurance is offered, there is no 
discussion of the subsidy being provided to those obtaining insurance, 
and second, there need not be an estimate of the likely budgetary 
impact over the insurance period. This means decisions about insurance 
programs are not made based on their likely cost to the federal 
government--nor is the amount of the subsidy ever recognized in the 
budget. Given our concerns that long-term costs of programs be 
understood and that programs or policies be considered on a comparable-
cost basis, we recommended that the budget record the "missing 
premium" for insurance programs.[Footnote 3] 

Lastly, and perhaps of most interest given the focus of this hearing, 
the budget process should be enforceable, provide for control and 
accountability, and be transparent. These three elements are closely 
related and achieving one has implications for the others. Further, 
the way these are interpreted has implications for the design of any 
enforcement mechanism. By enforcement I mean not a mechanism to force 
a decision but rather a mechanism to enforce decisions once they are 
made. Accountability has at least two dimensions: accountability for 
the full costs of commitments that are to be made, and targeting 
enforcement to actions taken. It can also encompass the broader issue 
of taking responsibility for responding to unexpected events. For 
example, Congress and the President may want to consider periodically 
looking back and assessing the progress toward reducing the deficit. 
Such a process would be valuable because economic and technical 
factors driving direct spending program costs above anticipated levels 
have remained outside policymakers' control. Finally, the process 
should be transparent, that is, understandable to those outside the 

I will turn now to the issue of enforcement. In considering any new 
enforcement mechanisms going forward, it is helpful to draw on the 
lessons learned from the past. Therefore, I will start with a brief 
history of budget enforcement mechanisms and a summary of the key 
lessons learned before turning to the design and implementation of 
budget enforcement mechanisms for today's challenges. 

History of Budget Enforcement Mechanisms: 

The process created in the Congressional Budget and Impoundment Act of 
1974 Act was not created to produce a specific result in terms of the 
deficit. Rather, it sought to assert the Congress's role in setting 
overall federal fiscal policy and establishing spending priorities and 
to impose a structure and a timetable on the budget debate. Underlying 
the1974 Act was the belief that Congress could become an equal player 
only if it--like the executive branch--could offer a single "budget 
statement" with an overall fiscal policy and an allocation across 
priorities. This was an important step. 

It was not until the Balanced Budget and Emergency Deficit Control Act 
of 1985--commonly known as Gramm-Rudman-Hollings or GRH--that the 
focus of the process changed from increasing congressional control 
over the budget to reducing the deficit. Both the original GRH and the 
1987 amendments to it sought to achieve a balanced budget by 
establishing annual deficit targets to be enforced by automatic across-
the-board "sequesters" if legislation failed to achieve the targets. 
GRH sought to hold Congress responsible for the deficit regardless of 
what drove the deficit. If the deficit grew because of the economy or 
demographics--factors not directly controllable by Congress--the 
sequester response dictated by GRH was the same as if the deficit grew 
because of congressional action or inaction. If a sequester was 
necessary, GRH did not differentiate between those programs where 
Congress had made cuts and those where there had been no cuts or even 
some increases. Finally, the timing of the annual "snapshot" 
determining the deficit and the size of the sequester and the fact 
that progress was measured 1 year at a time created a great incentive 
for achieving annual targets through short-term actions such as 
shifting the timing of outlays. 

GRH demonstrated that no process change can force agreement where one 
does not exist. However, the experiences gained led to the Budget 
Enforcement Act (BEA) of 1990.[Footnote 4] This act was designed to 
enforce substantive agreement on the discretionary caps and pay-as-you-
go (PAYGO) neutrality reached by the President and Congress. BEA 
sought to influence the result by limiting congressional action. 
Unlike GRH, BEA held Congress accountable for what it could directly 
control through its actions, and not for the impact of the economy or 
demographics, which are beyond its direct control. BEA did this by 
dividing spending into two parts: PAYGO and discretionary. It imposed 
caps on the discretionary part that succeeded in holding down 
discretionary spending and through PAYGO it constrained congressional 
actions to create new entitlements (whether through direct spending or 
tax preferences) or tax cuts. 

What then do I believe we have learned from GRH and BEA? 

* Enforcing an agreement is more successful than forcing an agreement. 

* Covering the full range of federal programs and activities--rather 
than exempting large portions of the budget--can strengthen the 
effectiveness of the controls and enforcement. 

* Targeting sequestration to those areas that exceed their agreed-upon 
level creates better incentives than punishing all areas of the budget 
if only one fails to achieve its deficit reduction goal. 

* Focusing on a longer time horizon can help Congress find a 
sustainable fiscal path rather than artificially shifting costs into 
the future. 

* Incorporating a provision under which Congress would periodically 
look back at progress toward reducing the deficit can prompt action to 
bring the deficit path closer to the original goal. 

Budget process helped once to achieve a goal that had consensus; it 
could work again. 

Enforcement Mechanisms Moving Forward: 

While BEA's focus on actions offered advantages for enforcement, it 
did not go far enough to meet today's needs. BEA specified that 
Congress must appropriate only so much money each year for 
discretionary programs and that any legislated changes in entitlements 
and/or taxes during a session of Congress were to be deficit-neutral. 
The effect of this control on discretionary programs and on 
entitlements was quite different. 

Spending for discretionary programs is controlled by the 
appropriations process. Congress provides budget authority and 
specifies a period of availability. Controlling legislative action is 
the same as controlling spending. The amount appropriated can be 
specified and measured against a cap. 

For mandatory programs and revenues, controlling legislative actions 
is not the same as controlling spending or revenues. For an 
entitlement program, spending in any given year is the result of the 
interaction between the formula that governs that program and 
demographics or services provided. Similarly, for a tax provision, the 
revenue impact is not directly determined by Congress. Under BEA 
legislated changes in entitlements and taxes were to be deficit-
neutral over multiyear periods. However, BEA did not seek to control 
changes in direct spending or in revenues (including tax expenditures) 
that resulted from other sources--whether from changes in the economy, 
changes in population, or changes in costs. Moving forward this is a 
major gap: it is the underlying structure of the budget that is 
driving the long-term fiscal imbalance. 

BEA succeeded as far as its reach. It controlled discretionary 
spending and prevented legislative expansion of entitlement programs 
and new tax cuts unless they were offset. However, it did nothing to 
deal with expansions built into the design of mandatory programs and 
the allocation of resources within the discretionary budget. Congress 
enacted a return to a statutory PAYGO process in 2010.[Footnote 5] As 
with the previous iteration, this can help prevent further 
deterioration of the fiscal position, but it does not deal with the 
existing imbalance. The problem confronting us today requires going 
beyond the "do no harm" or "stop digging" framework of BEA. Going 
forward, the budget process will need to encourage savings in all 
areas of the budget and contain mechanisms for automatic actions 
(whether spending cuts, reductions in tax expenditures, or surcharges) 
if agreed-upon targets are not met. 

Discretionary Spending: 

Caps on discretionary spending--and Congress's compliance with the 
caps--are relatively easy to measure because discretionary spending 
totals flow directly from legislative actions (i.e., appropriations 
laws). However, there are other issues in the design of any new caps. 
For example, what categories should be established within or in lieu 
of an overall cap?[Footnote 6] Categories define the range of what is 
permissible. By design they limit trade-offs and so constrain both 
Congress and the President. As I previously discussed, a category 
could be established for investment spending. Such a category could 
help Congress focus on spending that promotes economic growth within a 
framework that still constrains overall spending. Should these caps be 
ceilings, or should they--as was the case for highways and violent 
crime reduction--provide for "guaranteed" levels of funding? 

Because caps are defined in specific dollar amounts, it is important 
to address the question of when and for what reasons the caps should 
be adjusted. Without some provision for emergencies, no cap regime can 
be successful. The design of any provision for emergencies can be 
important. How easy will it be to label something an "emergency?" If 
the emergency is something like a natural disaster, at what point 
should the related spending be incorporated into the regular budget 
process rather than remain an emergency exception? The regular budget 
and appropriations process provides for greater legislative 
deliberation, procedural hurdles, and funding trade-offs which may be 
bypassed through the use of emergency supplementals. If appropriations 
committee oversight and procedural controls over the enactment of 
supplementals--whether all spending is designated emergency or not--
are less than that applied to the regular process, there may be an 
incentive to expand the use of supplementals. In the past we have 
recommended a number of steps to improve budgeting for emergencies-- 
both in terms of how much is provided in the budget for yet unknown 
emergencies and in terms of procedures and mechanisms to ensure that 
emergency supplementals do not become the vehicle for other items. 
[Footnote 7] 

It is worth noting that discretionary spending caps leave the decision 
about how to comply with the caps to the committees of jurisdiction. 
Budget control legislation has set the level of the caps, but it has 
not specified how much should be spent on each department or activity 
under the cap. 

Entitlements, Revenues, and Tax Expenditures: PAYGO Plus: 

Unlike discretionary spending, mandatory spending programs and tax 
expenditures are not amenable to simple "caps." Further, even if a cap 
on mandatory programs were to be designed and imposed, it would not 
deal with the underlying structure of these programs and hence would 
not address the longer-term growth trends.[Footnote 8] 

An alternative that would be more consistent with the design of these 
programs would be to set savings targets or specify a downward trend. 
[Footnote 9] Under the current budget process, if Congress wishes 
reductions in mandatory programs or increases in revenues, it may use 
reconciliation instructions to assign targets to the committees of 
jurisdiction; it does not generally direct those committees as to the 
specific nature of the change to meet such targets. 

While changing our long-term fiscal path requires looking down the 
road, we should start now. If Congress were to agree on a fiscal goal 
and set targets along a multiyear path, then enforcement would be tied 
to those targets and that path. The lessons of GRH and BEA could be 
applied: tie enforcement to actions. A look-back provision would 
create a mechanism to reconcile results with intent. 

The growth of some mandatory programs might be slowed by creating 
program-specific triggers which, when tripped, prompt a response. A 
trigger could result in a "hard" or automatic response, unless 
Congress and the President acted to override or alter it. By 
identifying significant increases in the spending path of a mandatory 
program relatively early and acting to constrain it, Congress and the 
President could avert larger financial challenges in the future. A 
similar approach might be applied to tax expenditures, which operate 
like mandatory programs but do not compete in the annual 
appropriations process.[Footnote 10] 

Since the growing deficit and debt is a function of the structural and 
growing imbalance between spending and revenues, we have said that 
both sides of the equation should be covered by whatever enforcement 
mechanism is selected. At the same time, the design of the mechanism 
must recognize the differences in design and hence in control of 
discretionary spending, mandatory spending, spending through the tax 
code in the form of tax expenditures, and revenues. 

As a general rule, incentives or penalties--which are what enforcement 
mechanisms often serve as--are most successful if they are plausible 
and tied to a failure to act rather than imposed too broadly. As I 
noted, we have said that enforcement is an important part of any 
budget process; in designing enforcement mechanisms it is important to 
pay attention not only to their interaction with the design of 
different parts of the budget but also to any perverse incentives or 
unintended consequences that are likely to result. 

Debt Limit: 

Finally, I would like to comment about one measure that does not serve 
as an enforcement mechanism but is often misunderstood as one: the 
debt limit. The debt does not control or limit the ability of the 
federal government to run deficits or incur obligations. Debt reflects 
previously enacted tax and spending and tax decisions. The debt limit, 
therefore, is a limit on the ability to pay obligations already 
legally incurred. If the level of debt--or debt as a share of GDP--is 
to serve as a fiscal policy goal or limit, then it must constrain the 
decisions that lead to debt increases when those decisions are made. 

Our recent work highlights some options for better linking spending 
and revenue decisions to the decisions about the debt limit at the 
time that those decisions are made.[Footnote 11] For example, many 
have suggested that since the Congress's annual budget resolution 
reflects aggregate fiscal policy decisions including levels of federal 
debt, this would be the appropriate point in the budget process to 
make the necessary adjustments to the debt limit. If that were done, 
then Congress might also adopt a process whereby any legislation that 
would increase federal debt beyond that envisioned in the resolution 
would also contain a separate title raising the debt limit by the 
appropriate amount. Congress took this approach with three pieces of 
legislation enacted in 2008 and 2009: the Housing and Economic 
Recovery Act of 2008, the Emergency Economic Stabilization Act of 
2008, and the American Recovery and Reinvestment Act of 2009 each 
included a separate provision increasing the debt limit. 


The budget process is the source of a great deal of frustration. The 
public finds it hard to understand. Members of Congress complain that 
it is time-consuming and duplicative, requiring frequent votes on the 
same thing. And, too often, the results are not what was expected or 
desired. It is inevitable that, given the nature of today's budget 
challenge, there will be frustration. It is important, however, to try 
to separate frustration with process from frustration over policy. To 
change the fiscal path requires hard decisions about what government 
will and will not do and how it will be funded. A process may 
facilitate the debate, but it cannot make the decision. Enforcement 
mechanisms are not terribly successful in forcing actions when there 
is little agreement on those actions. Carefully designed mechanisms, 
however, can enforce agreements that have already been made and ensure 

Chairman Baucus, Senator Hatch, Members of the Committee, this 
concludes my statement. I am happy to answer any questions and provide 
any assistance as you move forward in this important endeavor. 

We conducted our work from April to May 2011 in accordance with all 
sections of GAO's Quality Assurance Framework that are relevant to our 
objectives. The framework requires that we plan and perform the 
engagement to obtain sufficient and appropriate evidence to meet our 
stated objectives and to discuss any limitations in our work. We 
believe that the information and data obtained, and the analysis 
conducted, provide a reasonable basis for any findings and conclusions 
in this statement. 

Contacts and Acknowledgments: 

For further information regarding this testimony, please contact Susan 
J. Irving, Director for Federal Budget Issues, Strategic Issues, on 
(202) 512-6806 or Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this statement. Individuals making key contributions to this 
testimony include Carol Henn, James McTigue, and Thomas McCabe. 

[End of section] 


[1] See GAO, The Federal Government's Long-Term Fiscal Outlook: 
January 2011 Update, [hyperlink,] (Washington, D.C.: Mar. 18, 
2011) and [hyperlink,]. 

[2] GAO, Fiscal Exposures: Improving the Budgetary Focus on Long-Term 
Costs and Uncertainties, [hyperlink,] (Washington, D.C.: Jan. 24, 

[3] GAO, Budget Issues: Budgeting for Federal Insurance Programs, 
(Washington, D.C.: Apr. 23, 1998). 

[4] The major provisions of BEA expired in 2002. 

[5] Statutory Pay-As-You-Go Act of 2010, Pub. L. No. 111-139 (Feb. 12, 

[6] While the original BEA envisioned three categories (Defense, 
International Affairs, and Domestic), over time categories were 
combined and new categories were created. At one time or another caps 
for Nondefense, Violent Crime Reduction, Highways, Mass Transit and 
Conservation spending existed--many with different expiration dates. 

[7] GAO, Supplemental Appropriations: Opportunities Exist to Increase 
Transparency and Provide Additional Controls, [hyperlink,] (Washington, D.C.: Jan. 31, 

[8] GAO, Budget Policy: Issues in Capping Mandatory Spending, 
[hyperlink,] (Washington, 
D.C.: July 18, 1994). 

[9] GAO, Tax Policy: Tax Expenditures Deserve More Scrutiny, 
[hyperlink,] (Washington, 
D.C.: June 3, 1994). 

[10] GAO, Mandatory Spending: Using Budget Triggers to Constrain 
Growth, [hyperlink,] 
(Washington, D.C.: Jan. 31, 2006) and Tax Policy: Tax Expenditures 
Deserve More Scrutiny, [hyperlink,] (Washington, D.C.: June 
3, 1994). 

[11] See GAO, Debt Limit: Delays Create Debt Management Challenges and 
Increase Uncertainty in the Treasury Market, [hyperlink,] (Washington, D.C.: Feb. 22, 
2011) and [hyperlink,]. 

[End of section] 

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