joyce performance-informed budgeting in the united states—tastes great or less filling
TRANSCRIPT
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Philip G. Joyce
November 3, 2010
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` Sustained economic recovery 2008-present
` Ballooning budget deficits
2009-?` Bringing more ofa performance orientation to the
budget process 1960-present (in fitsand starts, but not when something
else is more important)` How can these three coexist peacefully or
happily?
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Year Deficit
/Surplus
% GDP Debt
Held by
Public
%
GDP
1940 -2.9 -3.0 42.8 441950 -3.1 -1.1 219 80
1960 0.3 0.1 238.8 46
1970 -2.8 -0.3 283.2 28
1980 -73.8 -2.7 711.9 26
1990 -221 -3.9 2411.6 42
2000 236.2 2.4 3409.8 35
2010 Est -1342.0 -9.1 9221.0 61
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` Actual deficits: 2007: $161 billion (1.2% of GDP) 2008: $455 billion (3.2% of GDP) 2009: $1,413 billion (9.9% of GDP)
` Under current law, deficitsare very large in short run and declinein later years (but remember: only with no significant change inlaws/policy) FY10--$1,342 billion (9.1% of GDP) FY11--$1,066 billion (7.0% of GDP) FY12--$665 billion (4.2% of GDP)
FY13--$525 billion (3.1% of GDP)` These projectionsassume the scheduled expiration ofthe tax cuts
enacted in 2001 and 2003 (most cuts expire after 2010)
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` Extending all expiring tax provisions--$6.1 trillion
` Extend only Bush tax cuts$3.3 trillion
` Extend Bush tax cuts for only taxpayers < $250k$2.6 trillion
` Index the alternative minimum tax for inflation--$720 billion
` Increase discretionary spending at rate of GDP growth--$2.1trillion
` Freeze discretionary expendituresat 2010 level--$1.65 trillion(savings)
` Reduce troops in Iraqand Afghanistan to 30,000 by 2013--$1.5 trillion (savings)
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With
Tax CutsExtended
and AMT
Indexed
Budget Deficit or Surplus
Percentage of GDP
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Debt Burden Across Countries in 2007
Percentage of GDP
Source: OECD.
Luxem bourg
Australia
Norway
Ireland
New Zealand
M exico
Iceland
SwitzerlandCanada
Czech Republic
Denm ark
Slovak Republic
Korea
Spain
Finland
UNITED STATES
Sweden
Netherlands
Germ anyTurkey
Poland
United Kingdom
France
Austria
Hungary
Portugal
Belgium
Italy
Greece
Japan
0 20 40 60 80 100 120 140 160 180
2020 CBO
Baseline
W ith Tax Cuts
Extended and
AM T Indexed
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` Will the U.S. restore fiscal responsibility?
` Will there be targets, and what will they be?
` What will be the impact ofthe Obama deficit commission?
` What effect will the 2010 midterm election have?
` How substantial will the effort be to reduce the deficit in thePresidents fiscal year 2012 budget (February 2011)?
` Ifso, will this include an effortto reduce programs based onperformance considerations?
` Whataboutthe big four spending programs (Social Security,Medicare, Medicaid, and Defense), which represented 60
percent of federal spending in 2009?
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` Federal Performance-Informed Budgeting
` The Bush Agendaand Legacy
` The ObamaAgenda
` Observationsaboutthe ObamaAgenda inHistorical Context
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` Efforts date back 50 years` GPRA brought more attention` Focus hastypically been on OMB/Congress`
Performance-informed budgeting ismultidimensional` In particular, lots ofactivity in budget execution` Enduring challenges
Identifying and measuring outcomes Getting performance information used Establishing a culture of performance
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` Traffic light scorecard Apparentsubstantial progressfrom 1 green to 72; from 110
red to 14
` PART--1000 programs in 6 years Effective or moderately effective30% to 51%
` Conclusions by studies of PART Agenciessaid PART lacked credibility Decentralized approach does not work for crosscutting
functions Too much work/too little payoff for OMB/agencies
Congress wasapathetic or hostile One size fitsall approach Measures improved, butstill need work Hard to reconcile PART with GPRA
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` Uneven progress made in measuring outcomes
` Attempts made to reduce programs based onperformance (PART) notsupported by Congress
`
Much more success in budget execution(management)than government-wide resourceallocation
` Uneven commitment from top leadership indepartments/agencies
` Some confusion asto the appropriate locus ofperformance (department oragency v. program)
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` Evaluating effects of economic stimulus
` Determining programsto reduce or eliminate aspart of deficit reduction
` Establishing high priority performance goals` Significant investment in a limited number of more
in-depth program evaluations
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` Current estimate--$814 billion in total costs
` Major goal is job creation/saving Administration estimatesthat 6.8 million jobs will be
created/saved
` Recovery.gov tracksspending and jobs Very difficultto track jobs reliably
Current definitionanyone who works in an ARRA-funded job
` Broader definition involvestracking multiplier effect of
jobs
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` Obama 2010 Budget identified 121 programs forreduction or elimination ($17 billion) OMBsays 60% of cuts enacted by Congress
` Obama 2011 budget included 126 terminations,reductionsand savingstotaling $23 billion (FY11) Those savings would representa .7% reduction in spending
forFY11 It isuncertain how much will be approved by Congresssincethey lefttown without passing any appropriation bills
` In both FY10 and FY11 these reductions were argued
on the basis of lack of program effectiveness
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` These are agency directed
` Emphasis on goals where progress can be shownwithin 12 to 24 months
` The ultimate test ofan effective performance
managementsystem is whether it isused, notthenumber of goalsand measures produced.
` Majority of goalsare specific and measurable,although some are ambiguous Social Securityachieving an average speed ofanswer of
264 seconds by the national 800-number Educationasystem with rigorous processes for determiningteacher effectiveness
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` Performance measures can answer only so manyquestions. More sophisticated evaluations necessary todraw conclusions
` It is necessary to isolate the effect of governmentaction
from other possible influencing factors` Obamaadministration established competitive processto secure funds for evaluation 17 agencies funded to do evaluations of 36 programs In some cases funds provided to improve agency evaluation capacity
` A centralized approach to SELECTION of evaluationtopics, buta decentralized approach to the CONDUCTof evaluations
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` Agencies instructed to identify 5% of budgetsaslowest priority Unclear how performance plays out
` Also ongoing effortto reform procurement ($40 billionsavings estimate)
` Continued suggestion thatagenciesthat doevaluations will be favored
` Will deficit commission findings be embraced? Timing is problematic
` Transparentand open government Creation of performance dashboards
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` Notas high a priority as other issues (health reform, theeconomy)
` Short-term could force out long-term` More targeted, in-depth evaluation
` Transparency is majorstated focus` Quantitative measures may force outqualitative ones` Performance agenda must fit with pressuresto reducespending and the deficit
` Stated goal isuse, but notatall clear how that will be
achieved` Continued uneven results