into annual budget documents and making them prominent; expanding use of information on fiscal exposures in CBO and OMB budget reports; and increasing the use of accrual accounting.
Although OMB, CBO, and GAO all prepare long-term budget projections, these are not highly visible. OMB’s analysis appears in the Analytic Perspectives volume of the President’s budget. CBO’s long-term analysis is prepared on a different cycle than its regular budget baseline reports and update. GAO updates its reports throughout the year, but must wait for updated data from CBO and the annual Social Security and Medicare Trustees reports. All of the reports provide important information on the budget’s long-term trends, but nothing in the current annual budget process requires that this information be used in that process, so these reports are easily ignored.
As a first step, OMB and CBO could readily integrate presentation of their long-term fiscal outlooks with their near-term budgetary baselines by updating and publishing long-term projections in their initial and midyear budget reports. It would also be very valuable if the long-term impact of the President’s budget policies became a regular section of the main budget volume, with long-term projections included in that volume’s Summary Tables. In the same vein, it would be very valuable if CBO’s long-term outlook were updated every time the agency updates its budget baseline. Other countries do a better job of highlighting their long-term outlook in ways that are hard for policy makers and the public to ignore: Australia is one example; see Box 10-2.
Some of the largest federal programs have costs that grow exponentially over the long term. Their longer-term cost projections are not disclosed in either budget authority or outlay columns in the budget. GAO has coined the term “fiscal exposures” to refer to such activities, which include federal insurance and operations and maintenance for newly acquired capital, as well as long-term spending estimates for the pension and health benefits of current employees. Some of these exposures are defined as liabilities in federal financial statements; but others, such as Social Security, Medicare, and Medicaid, are not. Yet all of them will require future expenditures that are not fully reflected in near-term or even 10-year projections that are prepared routinely by CBO and others (see Government Accountability Office, 2003). OMB’s Analytical Perspectives volume includes reporting on assets and liabilities, but it does not include the same range of commit-