Summary: The federal government needs to make explicit and well thought-out decisions on (1) national investments that will foster economic growth and (2) spending for federal capital that will yield long-term benefits to government operations. The creation of an investment component within the federal government could help Congress and the President make more informed decisions about the appropriate mix of spending while retaining the strengths and discipline fostered by a unified budget and the current congressional budget process. Although federal capital spending is important to efficient long-term government operations, a goal of the budget process should be to help Congress allocate resources efficiently by ensuring that spending options can be compared impartially--not necessarily to boost capital spending. The requirement of up-front funding is an essential tool in helping Congress make trade-offs among spending alternatives. In an environment of budgetary constraints, agencies need--and some have developed--strategies and tools to help facilitate these trade-offs and enable them to accommodate up-front funding. Agencies have shown that more modest tools than a full-scale capital budget can be developed to accommodate up-front funding within the current unified budget. Agencies must improve their capital-decision practices to ensure that their purchases of new assets and infrastructure will produce the highest and most efficient returns to the government and that existing assets will be adequately repaired and maintained. Federal agencies could learn from the strategies and practices used by leading federal, state, and private sector groups and more widely apply them to the federal decision-making process.
