Fiscal Exposures: Improving the Budgetary Focus on Long-Term Costs and Uncertainties

GAO-03-213 Published: Jan 24, 2003. Publicly Released: Feb 24, 2003.
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GAO and other budget experts have discussed that the current time horizons and content of the federal budget could be enhanced to more comprehensively reflect the government's commitments or signal emerging problems. GAO was asked to (1) provide information on the range and nature of responsibilities, programs, and activities that may explicitly or implicitly expose the government to future spending and (2) present and discuss options for increasing the attention paid to these items in the budget and budget process. GAO recommends that OMB report annually on fiscal exposures. Where possible, OMB should report the estimated costs-"exposure level"-of certain activities in the Program and Financing schedules of the budget. In a few select areas, the ultimate objective might be to include costs directly in the budget when doing so would enhance up-front control of spending. Congress may wish to consider exploring options for improving the budgetary information and the attention given to fiscal exposures. If more explicit congressional consideration is desired, as estimates improve, Congress may wish to develop budget process mechanisms that prompt more deliberation.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Office of Management and Budget OMB should report annually on fiscal exposures, including a concise list and description of such exposures, cost estimates, where possible, and an assessment of methodologies and data used to produce cost estimates for such exposures. In addition, where possible, OMB should report the estimated costs associated with certain exposures as a new budget concept--"exposure level"--as a notational item in the Program and Financing schedule of the President's budget. For select areas where an explicit liability exists and there are accepted cost-estimation methodologies, the ultimate objective might be to include the costs directly in the budget when doing so would enhance obligation-based control. OMB also should ensure that agencies focus on improving cost estimates for fiscal exposures. These steps should complement and support continued and improved reporting of long-range projections and analysis of the budget as a whole to assess fiscal sustainability and flexibility.
Closed – Not Implemented
OMB has yet to take action on this recommendation, although it is possible that renewed interest may arise in the new Administration.

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