Summary: When viewed over a long enough period of time, there are few uncontrollable programs in the Federal budget. The length of time it takes to make the necessary changes depends upon the willingness of Congress and the executive branch to enact legislative changes. The relatively uncontrollable part of budget outlays grew from the growth of Federal entitlement programs, long-term demographic trends, and programs tied directly or indirectly to inflation. There are also numerous operations and maintenance programs for public works and defense facilities that require special attention and funding. There are three major categories of uncontrollables identified for the current year: (1) entitlements, which include Social Security, Medicare, unemployment trust funds, and revenue sharing; (2) net interest on debt; and (3) the payments for goods and services obligated for in prior years or for fixed-cost items. Congress and the executive branch need to take budget actions with a longer time horizon in mind. Consideration should be given to enhancing multiyear planning and budget actions and the organizational and procedural changes that may be required. With multiyear planning, the budget becomes more controllable in the long term. Entitlement programs are income redistribution programs. Any significant change in these programs must be made with sufficient lead time to allow people to change their spending and savings patterns. All changes in entitlement programs, except management efficiency changes, would require enabling legislation. Inflation accounted for half of the growth in Social Security expenditures and somewhat less than half of the increases in expenditures for Civil Service and military retirement. There is little prospect for achieving a restraint on inflation without some check on the programs which are indexed to the cost of living. Cost-of-living adjustments for Federal retirees should be made annually rather than semi-annually.
