The Budget As An Expression of Public Policy

Sean O’KeefeSeptember 25, 2000

What is the Budget Process?• A framework for raising revenue • A means to allocate resources• Federal process easiest to describe• State & local methods incorporate similar

methods with one key distinction:– federal is a “unified budget” process– state & local incorporate several approaches

Genesis

• Budget and Accounting Act of 1921– established “President’s Budget” submission– established Bureau of the Budget– created the General Accounting Office– R.S. 3678 and 3679

Genesis II

• Congressional Budget and Impoundment Control Act of 1974– a mechanism to coordinate Congressional action– created Budget Committees and budget resolution– established the Congressional Budget Office– established “impoundment” procedures

Genesis III

• Balanced Budget and Emergency Deficit Control Act of 1985– (aka Gramm-Rudman-Hollings)– designed to eliminate deficit by 1991:

• it didn’t

– amended in 1987 -- changed target to 1993:• still didn’t make it

Genesis IV

• 1990’s budget resolutions:– Omnibus Budget Reconciliation Act of 1990– Budget Enforcement Act of 1990

• Discretionary caps and entitlement targets• Pay-As-You-Go (PAYGO) provisions introduced

– Balanced Budget Act of 1997

Budget Process Today

• Budget Preparation/Development– Internal agency process– OMB interaction with agencies & departments– President’s Budget submission

Budget Process Today

• Congressional Consideration– budget resolution– reconciliation process– authorization– appropriations

• Budget Execution & Audit/Evaluation

Policy Conflicts as expressed in the Budget Process

• Revenue sensitive to economic performance• Focus on discretionary spending• Federal shutdowns• Debt Ceiling Debate• Line Item Veto• Process, not policy, usually dictates timing• Scorekeeping rules drives choices

Gross Domestic Product($ in Billions)

$ 10,610

$ 7,854

$ 5,685

$ 2,719

$ 0

$ 2,000

$ 4,000

$ 6,000

$ 8,000

$ 10,000

$ 12,000

FY 80 90 97 02

Federal Outlays($ in Billions)

$ 1,902

$ 1,631

$ 1,253

$ 591

$ 0

$ 200

$ 400

$ 600

$ 800

$ 1,000

$ 1,200

$ 1,400

$ 1,600

$ 1,800

$ 2,000

FY 80 90 97 02

GDP & Federal Outlays($ in Billions)

$ 1,902$ 1,631

$ 1,253

$ 591

$ 10,610

$ 7,854

$ 5,685

$ 2,719

$ 0

$ 2,000

$ 4,000

$ 6,000

$ 8,000

$ 10,000

FY 80 90 97 02