Staff Summary of Testimony to the PCSCB: Wait, Committee for a Responsible Federal Budget

Carol Cox Wait, President, Committee for a Responsible Federal Budget (June 4, 1998)

President Cox Wait did not appear before the Commission. A summary of her written statement on capital budgeting follows.

Written Testimony: The Committee for a Responsible Federal Budget (CRFB) believes the Commission should answer six questions: 1) would a capital budget promote more Federal investment spending than the current system, and is this a desirable goal; 2) would a capital budget clarify the relative costs and benefits of competing priorities more than the current system; 3) what new problems would a capital budget create; 4) is capital budgeting the most important change Congress and the President should be considering in the budget process; 5) would a focus on capital budgeting divert attention from considering more important changes; and 6) how could the Commission contribute to solving specific capital budgeting problems and improving the budget process in general?

President Cox Wait addressed the issues raised by these six questions. She made the following points:

CRFB disagrees with the basic assumptions underlying the arguments favoring capital budgeting.
The budget allocates resources based on political priorities, so there is no "right" level of investment spending.
The political incentive to spend on physical infrastructures outweighs any disadvantage resulting from the current treatment of investment spending.
The resource allocation among competing investment priorities is a greater problem than the allocation between investment and other spending.
The current budget process does not have a significant bias against investment spending.
Capital budgeting weakens budgetary discipline by making analysis of Federal policy impact more difficult, creating a favored category of spending, and allowing possible manipulation of useful-life estimates.

She believes capital budgeting creates more serious budgeting problems than it solves. She fears the focus on capital budgeting diverts attention from more important issues, such as improving mechanisms for weighing competing priorities and holding elected decision-makers accountable for their priorities.

In closing, she suggested two ways to improve the budget process: 1) the Congressional budget resolution should become a law, requiring legislative and executive branches to agree on one budget and 2) spending caps should be strengthened and extended.

President's Commission to Study Capital Budgeting