How Budget Rules Distort Lawmaking and What We Should Do About It

This law review article, by Timothy Westmoreland, provides both a useful overview of the current federal budget process and a compelling critique of what's wrong with the process, in particular its failure to take into account the future value of investments in human capital as well as non-fiscal values:

.... The Congress has blinded itself with budgets. It has hidden much of its true deficit creation and intergenerational transfers of burden behind opaque special rules. It walked away from some of its most basic promises, thwarted its ability to make long-term investments, or stopped itself from recognizing any value to the future except money.

Because of all these structural problems, the enforcement tools of the current budget process should be supplemented. The problems intrinsic to the existing policy—especially its camouflage of complex decisions as simple ones and its virtual dismissal of non-monetary values—call for change in the budget process and an enlargement of its field of vision. If routine measurements are needed to aid policy, they should include both budgetary and non-budgetary projections. If pre-commitment structures are needed to restrain the creation of fiscal deficits, they are needed to restrain the creation of non-fiscal bad legacies as well. Using new measures in health and disability (and in other fields, to the extent that such measures exist), the Congress should attend to which spending is simple present-day consumption and which is an investment with value for the future. It is not an easy course to steer, but it is the better one.

Westmoreland also puts forward a number of innovative proactive ideas for reforming the budget process. For example, here's one on PAYGO and health (apologies in advance for the acrynoms, you'll just have to read the article to find out what they stand for!):

Replicating another pre-commitment structure could also help redirect legisla- tion toward investments of future value rather than purchases of simple current consumption. For instance, imagine a PAYGO device for health standards (rather than dollar standards) that prohibit consideration of any legislation that adds morbidity, mortality, or YPLL, or that reduces QALYs. Thus, if legislation to ease air pollution standards were estimated to increase morbidity and mortality from cancer and asthma, it would have to be accompanied by legislation to provide offsetting benefits, say through increased childhood immunization. If a bill to reduce funding for lead-poisoning screening were scored as increasing developmental disabilities and thus reducing QALYs, it would have to be coupled with a disability-reducing action, such as better containment of toxic chemicals. Such a health and disability PAYGO would at least assure that new laws do not make the Nation's future health and disability status worse, just as a budget PAYGO is meant to assure that new laws do not make the Nation's future finances worse.

Conservatives have had a proactive budget process agenda for a while now—balanced budget amendment, dynamic scoring, etc—but there really isn't a proactive progressive budget process agenda. Westmoreland's article makes an important contribution in this area.