Carol Cox Wait, President, Committee for a Responsible Federal
(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:
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.
CRFB disagrees with the basic assumptions underlying the arguments favoring
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
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.
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.
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