C. Cox: “the question before us now is whether a capital budget is going to help rein in deficit spending or create more of it.…”

“the question before us now is whether a capital budget is going to help rein in deficit spending or create more of it. In 1986 and 1987 I served on a White House task force on capital budgeting. The purpose was to take a look at this idea and see whether there might not be a way to imitate businesses and States that routinely distinguish between capital investment on the one hand and period expenses on the other hand. What we found was that because the Federal Government is different in some key respects from businesses and States, a capital budget for the Federal Government would do nothing more or less than increase deficit spending. It would in fact provide the intellectual justification for more deficit spending. Some of the differences have already been noted here on the floor. State governments have outside disciplines. Bond issues have to be approved by voters. Not so when the Federal Government issues debt. Bonds issued by States are rated by private agencies, like Standard and Poor and Moody's. Outside bond counsel and certified public accountants are used before this debt is issued. We just passed the Chief Financial Officer's Act here in hopes that some day the Federal Government will be able to produce reliable financial statements, but we know that is years into the future. We cannot get a simple P&L out of any agency. The IRS tells us they cannot even produce a listing of their assets, of their computers. There is no balance sheet available.”