Budget Structure

The nation's economic future depends largely on today's budget and investment decisions. Trends in economic investment, however, have not been encouraging. The pool of national savings available to finance investment has been shrinking since the 1970s, the level of gross private domestic investment as a percent of gross domestic product has fallen during the same period, and many of the nation's trading partners have significantly higher levels of investment. The most important contributions that the federal government can make to a healthy and growing economy are to reduce the federal deficit and make wise decisions on investments that will foster long-term economic growth. GAO believes that the creation of an investment component in the federal budget could help Congress and the President make more informed decisions on federal spending on consumption versus investments for the future. Separate targets for investment spending within the existing discretionary spending caps could be set to ensure that the investment was considered formally in the budget process. Such a component could be established within the context of a unified budget framework that leads to a balanced unified budget over an appropriate period.