Finally, the Advisory Group believes that a bigger set of issues are confronting the next administration and new Congress with regard to the relevance of the current regime of budget and appropriations scoring and the concepts that undergird them. A host of changes over the past 25 years-dramatically enhanced financial management capability in the agencies, a massive transformation of the federal budget to one primarily composed of transfers (in the form of direct or tax benefits), a dramatic change in technology, rapid urbanization, global competition, and aging federal real estate assets, to name a few-suggests that the theories underlying our current national resource allocation system may require reconsideration on a grand scale.
The demographic, fiscal, and geopolitical shifts since 1967 have been seismic, not the least of which is the nation's aging physical infrastructure, which in many cases is in desperate need of repair. Much of the federal real estate infrastructure was either new or being planned in 1967. Today, the improvement of our public assets is challenged by a budget process favoring consumption spending at the expense of investment.
In their article "Time for a New Budget Concepts Commission," Barry Anderson and Rudolph Penner argue, "It is time to examine the fundamental budget concepts that underlie the federal budget process. Those concepts have not been comprehensively reviewed since the president's 1967 Commission on Budget Concepts. The 1967 guidelines leave unanswered a number of thorny questions about the budgetary treatment of modern budget legislation."
In particular, they highlight problems with the way that the current budget concepts handle capital investments, saying, "It is obvious that capital investments by the government have a very different impact on the economy than do current expenditures. Assuming that the investments are well allocated, they add to productivity growth and improvements in living standards in the long run. Current expenditures may have immediate benefits but little effect on the long run. Therefore, many advocate that the budget should treat capital outlays differently from current expenditures."5