POLI 2070 Notes 2

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Published on 15 Mar 2019
POLI 2070
Test 2 Notes
9/ 25/13
Budgeting: Allocation and Public Policy
o Whether the merits of any program are significant enough to justify
using public sector resources rather than relying on the private
sector and how should the public sector resources that are available
be spent
Private versus public sector
o How important is the budget?
Is it a major theme? Are the fiscal cliffs important?
Characteristics of the Federal Budget
o An Executive Budget
Prepared by the President, by the President and his staff,
approved by Congress, executed by the President
Budget and Accounting Act of 1921 (accumulated power in
the Executive Office of the President; Office of Management
and Budget)
Congressional Budgeting Office taken back some of the
control, but still generally responsive to executive action
Congress taking back some of the control, but it still is
generally responsive to executive action
Congressional control most exemplified in it’s budgeting
office parallel to the Office of Management and Budget
o The Line Item
Allocating funds into specific categories for specific
purposes within the specific agency (very controlled, which
allows Congress to determine if the money is being spent
under legal authority Government Accountability Office)
Limits management capabilities within the agencies
Allows for great oversight
Congress, wishing to maximize control, will maintain this line
item system to continue oversight
Critics say that the funds aren’t being used to its most
capability, but still Congress tries to maximize its
o An Annual Budget
Solely year expenditure plan
Makes long term ideas difficult and larger patterns may not be
visible before it is too late
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Although control is maintained because it is annually
reviewed, long-term ideas/plans are difficult to
The Budget Cycle
o First Stage: Setting the Parameters done by the President and the
executive branch
Spring Review first, official act of the budget cycle,
preparation of estimates of total size of the federal budget to
be prepared for that year
Provides summary of strategy and what the agencies should
work within for their own budgets, although this is not the
final budget
Outlines what agencies should use for their own budget,
but still not the final
Back and forth motion throughout the entire cycle we
give you parameters, then they tell you what they’re
going to do with the parameters, etc.
Budget preparation are based on estimates from 16 months
before and at times must be adjusted to current economic
conditions or other current political considerations
Starts way ahead of time
Preparation of economic and expenditure estimates result
from the interaction of the Council of Economic Advisers,
OMB (Office of Management and Budget), and Treasury
These three groups are referred to as the “troika
CEA group of economists who advise the president,
but their predictions are tampered by the political
OMB funnels requests and balances what must be
spent with incoming requests (put the budget together
given what is coming in and what has to go out)
Treasury represents the economic community and
generally wants a balanced budget (secure economic
This is where the bargaining process begins
o Second Stage: Agency Requests
Central actors even in the budgeting process, as with every
other stage executive agencies are central actors
Responsible for initial preparation of estimates to request
funding and interacting with OMB and other agencies within
its department to produce coordinated and politically viable
Idea of what’s available and agencies requesting what
they need
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Balancing act for the cabinet secretaries, agencies, and the
larger departments for each to coordinate the restrictions of
available funds with interest pressures, presidential
programs that the president has put forth and his priorities,
and other restrictions within the process (political, ideological,
etc. within the process)
All requests must be made while still considering the
restraints of an annual budget
o Third Stage: Executive Review (goes back to them)
Final request passed to OMB who organizes all agency requests
and fits them with presidential priorities and general spending
Generally this stage involves cutting requested budgets in
some way or rationalizing funding new requests or
requests for budget increases (examiners review the request
and previous budget levels in the given budget environment)
Can’t defund old programs, so leaves little room for new
Hearings are held for agencies to defend requested
increases in their budgets; results are forwarded for the final
director’s review; a final trim is negotiated than sent on to the
final compilation that becomes the budget document
After final reviews, the budget is prepared for delivery to
Congress within 15 days of it convening in January
Important because the budget is perceived as a
statement of the presidential/government priorities
Makes a statement to Congress of what the President
has intended for the upcoming year
o Fourth Stage: Congressional Action
Committees develop two resolutions outlining spending
limits every year (with the help of the Congressional Budget
Office staff)
Subcommittees/committees help to develop
Appropriations committees in both houses make decisions
concerning how to allocate spending among agencies and
programs; most of the work is done through subcommittees
generally one to each executive department, a number of
agencies, or a function
New situations have restricted committee and
subcommittee autonomy (politics of deficit reduction) and
appropriations levels must match the levels set in the joint
resolutions on taxing and spending; if the levels match then
the budget accepted by the subcommittee has been decided
Most actions occur within the committees of Congress
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