Budget Policy: Budgetary Treatment of Investment Programs

GAO discussed the importance of federal investment-oriented programs and how they should be considered when making budgetary decisions. GAO noted that: (1) deficit reduction and long-term growth projects encouraging the highest rates of return yield a higher gross national product and lower interest costs; (2) the federal government lacks an analytical basis and an explicit strategy for determining the level of federal investment spending; (3) a budget structure distinguishing between physical and human capital, research and development programs, and operating expenses would create a comprehensive budget, allowing consideration of resource commitments and subsidies; and (4) creating an investment-oriented budget within the unified budget would provide needed information for policymakers' decisions on the long and short term effects on the budget and allocation of resources.