The National Association of Manufacturers' (NAM) Fiscal and Monetary Policy Committee welcomes this opportunity to present our views on specific budget policy and procedural reform. In response to your letter of September 24, 1982, we created five task forces to examine some of the specific subjects you highlighted. Specifically, small working groups met to evaluate progress in the areas of multi-year budgeting, impoundment procedures, entitlements, federal credit activity, and the reconciliation process. Knowledgeable representatives from Congress and the Office of Management and Budget were invited by several of the task forces to present their views on the current situation and to offer their recommendations for reform. As is evident by the following recommendations, many hours of consideration were devoted by our members to this project. Prior to a discussion of the five specific areas of concern, it is necessary to reiterate an important point emphasized in past testimony. The NAM continues to believe that all federal spending and revenues should be included in the unified budget totals. Past and current projections of budget deficits have fallen short of stating the true amount of federal indebtedness because a portion of federal spending, commonly referred to as off-budget outlays, is never included in budget total estimates. We contend that all off-budget spending should be tranferred on-budget all at once. With this measure of budgetary control as a base, we present the following broader recommendations: A. Federal Credit Activity The National Association of Manufacturers has long recognized the importance and impact of federal credit activity on the national economy. The growth of these programs has contributed to the significant increase in government absorption of available credit. This in turn has made it more difficult for private industry to service its own borrowing requirements, which has resulted in slower rates of capital investment and job creation. The magnitude of federal credit has been largely overlooked due to a lack of uniform accounting procedures among borrowers and lenders. Comprehensive statistics are essential to determine the full extent of federal credit liability. If the growth of these programs is to be effectively managed, we must begin to address the issue now. The National Association of Manufacturers' Fiscal and Monetary Policy Committee therefore recommends the following: 1. Congress, the Office of Management and Budget (OMB), 2. terms. A unified effort would produce the reliable data necessary to assess and establish responsible levels of federal credit activity. Binding limits should be established in the budget and appropriations congressional authorizations federal spending and credit activities, an equivalent has The language necessary to implement these changes been developed and was included in the First Concurrent Resolution on the Budget for FY 1983. Similar language should become a standard part of the FY 1984 and subsequent budget resolutions and a part of the Congressional Budget and Impoundment Control Act of 1974. 3. 4. The federal government's total credit liability should be included in both the President's budget and in the reports accompanying all budget resolutions emanating from Congress to highlight the extent of federal involvement in credit markets. In addition, default rates for individual programs should be included in the President's budget to assist in program management and congressional oversight activities. Funds for credit activities should be subject to the same impoundment and reconciliation procedures that are included in the Budget Act for other types of federal funds. 5. 6. As part of its oversight responsibilities, Congress should review all credit programs. Priority for federal funds should be established based on need, program efficiency and cost-effectiveness. Comprehensive statistics on all federal lending activities should be compiled and a periodic analysis of all federal credit programs should be prepared. Development of a credit budget, studies requested by congressional committees, and computer scorekeeping capabilities developed by the Congressional Budget Office have all been helpful in providing the necessary information, but more is needed to establish an accurate assessment of our government's credit obligations. Many of these recommendations stem from the realization that budgetary treatment of credit practices has been less than that for taxes or direct spending. Credit programs must be subject to the same scrutiny that is afforded by Congress for all federal spending. B. Multi-Year Budgeting The NAM supports the purpose and objectives of the Congressional Budget and Impoundment Control Act of 1974. However, the ability of Congress to adhere to the timetable of the Budget Act has declined markedly since the process was initiated, substantially curtailing the ability of Congress to review other legislative issues. Our Fiscal Policy Committee benefits of multi-year budgeting. endorses the concept and Specifically, the Committee recommends a biennial budget process. The cycle should begin in the first session of each Congress. A budget resolution and all authorization and appropriations bills should be passed in the first year of the cycle, leaving the second year open for oversight and other legislation. In addition, the Fiscal Policy Committee believes that a number of issues related to the budget process need to be addressed and therefore recommends that: 1. A single set of economic assumptions should be agreed upon for all budget proposals by the Congress and the Administration. 2. The first concurrent budget resolution shall be made binding and the mandatory second concurrent budget resolution shall be eliminated. 3. Congress shall have the option to attach reconciliation resolutions. instructions to concurrent budget 4. Any modification of a budget resolution to increase C. Impoundment Procedures . We further believe that the impoundment procedures contained in the Congressional Budget and Impoundment Control Act of 1974 are adequate for providing congressional control over the impoundment of funds by the executive branch. |