Restructuring the Federal Budget for Future Investment

Abstract

Testimony originally presented to the President’s Commission to Study Capital Budgeting proposes dividing the federal unified budget into three parts: (a) a capital investment budget that includes government spending on capital assets that have multiple-year lives and the potential to increase future productivity; (b) a pension budget that includes investments in and for current, future, and retired workers; and (c) an operating budget that reflects government spending for current consumption. Under this restructuring, the budget will lead to sound decision making on federal fiscal policy, which in turn will foster increased productivity and economic growth.