Budgeting for Mandatory Spending: Prologue to Reform

Abstract

This paper identifies a feature of the federal budget process that, consistent with the findings of behavioral research, increases the difficulty for policymakers of restraining the growth of mandatory spending to sustainable rates: budgetary accounting. Specifically, use of cash-basis accounting, on-budget payment accounts, and a narrow definition of debt defers recognition of the cost of mandatory spending until benefits are payable and politically unavoidable. Acting to control “future” costs is cognitively more difficult for decision-makers than addressing cost now as obligated. The paper proposes a trial of alternative budgetary accounting for mandatory spending that saliently recognizes cost as it accrues.