Our governing institutions must be reformed in order to meet the enormous tasks we face as a nation. At the core of any well-functioning government is a budget process that policymakers can use to make big decisions about resources in a rational, informed way:

• How much government?

• Paid for how, by whom, and when?

• What are the highest priorities for limited resources?

A properly functioning budget process would help stabilize and reduce the federal government’s debt and do so intelligently by eliminating low-priority and ineffective public spending and tax expenditures (tax code provisions that work like spending programs), by investing in public assets to support stronger economic growth, and by reforming our tax system to collect revenue more efficiently and reduce its drag on private investment. If we cut spending without a strategic approach or raise tax rates without tax reform, we risk a period of slow growth and austerity that could economically cripple the country and threaten our position in the world. If instead we manage fiscal challenges strategically, we will be able to more effectively reallocate public and private resources to growth-sustaining investments vital for long-term fiscal stability.

In the face of its greatest fiscal challenge, the federal government’s budget process as we have known it since 1974 has collapsed. It seemingly cannot function in the face of wide partisan and ideological divisions that exacerbate the conflict already inherent in a system of shared and dispersed authority. The annual appropriations process used to make detailed choices about hundreds of important programs has practically seized up. Bigger choices about how to slow health care spending growth, deal with unemployment and slowing workforce growth, or modernize the tax system are being deferred. Increasingly, fiscal choices are made outside the normal budget procedures. But closed-door leadership negotiations and ad hoc temporary structures, such as the Joint Select Committee (also known as the Super Committee) established by the 2011 Budget Control Act, cannot substitute for a regular, comprehensive, orderly review of all elements of the budget.

A breakdown of familiar budget processes may create an opening for reform. The Peterson-Pew Commission on Budget Reform and others have proposed changes to make the process more organized, disciplined, far-sighted, transparent, and smart. These reforms include setting fiscal targets in statutes, adopting fiscal rules and procedures to enact and sustain a multi-year plan to meet the targets, providing mechanisms to force policymakers to agree and enforce their decisions once made, and improving information on both costs and benefits of alternative policies and resource uses to inform decisions.

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