Week 3 Post Discussion

Student 1 Post

Has post-1970 "budgetary reform" simply been a struggle for power between the legislative bodies and the executive, or have they been sincere efforts to get spending under control?  If the latter, why does Congress need a law to force them to exercise spending control?

     Reform, by definition, implies the need to improve something. In fiscal policy parlance, budget reform is the process of changing the way budgets are developed, implemented and managed.  Although budget reforms spring from a variety of motives, some reforms are clearly advocated in order to change budget outcomes (Nice, p. 180). When people are unhappy with government’s financial decisions, calls for budget reform often follows (Rubin, p. 80-81).  These reforms are often initiated for the pragmatic and altruistic reason, to control spending. Since the early 1970s budget reform has become increasingly political and in fact the budget process employed by the legislative and executive branches exacerbates this problem. Some history is relevant to provide context to this assertion.

     The United States government’s budget is guided by law.  The Congressional Budget and Impoundment Control Act of 1974 (known as “the Budget Act”) is the most significant piece of budget-process legislation ever enacted in the United States.  The law was primarily focused on re-establishing constitutional balance in budgetary decisions.  Congress at the time was repelled at the President’s forcefulness in a number of areas, but especially with respect to the power of the purse (Capretta, p. 2). The President pushed against longstanding norms by refusing to obligate funds for programs considered low priority, even though Congress explicitly appropriated funds for these purposes. 

   More than any reason, Congress passed the Budget Act to stop the President from precluding the obligation or expenditure of budget authority, otherwise known as “impoundment.”   The rest of the Budget Act, which was given much less thought, has proven to be of far more lasting significance because it dealt with budget development, not execution. This law set into motion the potential conflict between the executive and legislative branches.  The House and Senate Budget Committees and the Congressional Budget Office were created to write the budget plan for Congress that would serve as the counter, or response, to the president’s annual budget submission (Capretta, p. 3).  Clearly the power struggle between the legislative and executive branches was intensified with the passage of the Budget Act of 1974. 

    Congress needs a law to force them to exercise spending control because there are too many demands and not enough resources to pay for those demands.  In other words Congress has a difficult time saying “no” evidenced by recurring deficits.  Critics of the recurring federal budget deficits have repeatedly called for amending the Constitution to require a balanced federal budget.  Part of the case for the balanced amendment is the belief that the structures and incentives of the current budget process encourage program expansion but resistance to revenue increases and therefore produce chronic budget deficits (Break, p. 256-257).

Student 2 Post

The budget cycle (executive preparation, legislative consideration, budget execution, audit) is at least three years long (for one budget year).  How does this extended time period impact the utility of budgets and how we measure the effectiveness of budgeting?

I am a fan of the idea of building budgets that cover longer periods of time.  This approach would allow government organizations at all levels to really focus on priorities and hopefully compel these same organizations and politicians to stop seeking-short term gains at the expense of long-term progress.  

That being said, the extended budgeting cycle we currently have does not have all of those benefits.  Instead it has serious drawbacks.  These drawbacks result in the budget that’s passed being less useful.  Specifically, while traveling from the preparation to the execution stages, it’s possible that the political winds might shift resulting in large portions of the budget becoming at best deprioritized and at worst obsolete.  It’s also possible that the political leadership could change hands in that time and all or some of the budget may not represent the priorities of the new party in power.

Additionally as time goes on, the stakeholders involved in a project might shift.  Customer demands/expectations might shift at the same time as well.  Reading about the budget cycle made me think of a parking garage that was built on Osan AB in South Korea.  Osan was a great, but tiny base that you could walk all over.  However, everyone there had a vehicle and people that were allowed to bring their families had 2 vehicles.  After years of complaints the budget was approved to fund a new parking structure.  However, from the time the budget request was submitted and construction began, the base population had significantly increased.  (I don't know the specific numbers.) Bottom line, by the time the garage was built, it was filled with cars and they had to immediately start looking for a location and additional funds for a new garage.  A shorter budgeting cycle could have resulted in requirements being able to be updated or drafted in a more timely manner that is more reflective of the need the budget (item) is seeking to fill.

On the flip side of that coin, it can also be difficult to add new priority items to a budget quickly.  However, it seems to me that there is a little more flexibility in budgets that allow for this possibility.