Budgeting for Mandatory Spending: Prologue to Reform

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.