This paper examines the Obama administration budget reform proposals and evaluates how (and if) they would improve the budget process and restore fiscal responsibility. In particular, the paper examines the administration’s proposed changes to the calculation of the budget baseline and its reintroduction of a statutory pay-as-you-go (PAYGO) framework.
The CBO recently projected a ten-year deficit of $7.1 trillion using a "current law" baseline. But these numbers may prove to be optimistic. CRFB argues that four major assumptions in the baseline are unlikely to materialize, leading to a ten-year deficit of $12.6 trillion. This paper discusses US Budget Watch's own "current policy" baseline, which assumes particular policies do not conform to current law.
With the retirement of the baby boom generation drawing closer, concerns about the sustainability of current policies have become critical elements of the budget process. The seriousness of this problem should prompt us to reexamine the concepts and goals underpinning the budget process and find ways to focus budget decision-makers on the long-term implications of our current policy paths. This paper reviews some of these challenges and recommends ways they might be addressed.
Recently, the White House released its comprehensive FY2010 budget request, including detailed proposals for each agency, along with “Analytical Perspectives,” a description of all proposed spending cuts and program eliminations, and an updated set of summary tables. Also released was the Treasury Department’s “Green Book,” which compiles all tax proposals within the budget. This paper analyses those documents.