Not a capital idea
One of the more original ideas floating around Washington these days involves converting the current unified federal budget into a new, two-part, budget: one section would be an operating budget; the other, a capital budget. The concept is common to business firms. What makes it especially attractive is that by separating out outlays for long-range, investment-oriented programs into a new capital budget, the overall federal budget would quickly shift from a ledger of soaring deficits and red ink to a budget of - yes - surpluses and black ink. Gone would be the political embarrassment of all those projected deficits. So it is not surprising that some administration officials, such as David Stockman, are advocates of the approach.
Adopting a new capital budget, however, would do little to resolve the present US budget dilemma, which is as much political and ideological as financial. Until administrations and lawmakers are able to reach a consensus on the agenda for federal spending, any changes in the budget process would be merely cosmetic. Moreover, a capital budget would lend itself to convenient political manipulation. Would defense spending, for example, be ''investment'' oriented? What about spending for CETA-type jobs programs? Merely shifting figures around in a bookkeeping ledger will not resolve the politically sensitive questions of how to allocate budget resources. And in fact, such a new bookkeeping approach might make the budgeting process more of a muddle than is currently the case.
Although 45 states now have some form of capital budget, it should not be overlooked that state spending tends to have only limited impact on local economies.
Federal spending, by contrast, has an immediate, direct impact on the national economy. So the federal budget has a broader role, involving not just spending for various projects, whether short- or long-term, but also maintaining a balance in the economy as a whole.
In this broader view of the federal budget, the operating side of the budget becomes as important as the capital, or long-term, side. By keeping both approaches together in the present unified budget, the public can more quickly obtain a sense of where outlays are going and to what end.
In this connection, there is also a strong case for bringing many items that are now off-budget (such as the Strategic Oil Reserve and certain credit programs) back into the unified budget.
These amount to an estimated $10 billion.
Proponents of a new capital budget deserve credit for focusing attention on the investment side of the US budgeting process. Surely more taxpayer dollars need to be put to productive, long-term uses, such as research, education, maintenance of infrastructure. But until such time as federal officials can bring order to the current budgeting process it would seem unwise to split up the budget.