POLI 2070
9/25/13 & 9/27/13
Housekeeping
• Seminar discussion on Friday
• Look up articles on current budgeting situation to discuss
Budgeting: Allocation & Public Policy
• Whether the merits of any program are significant to justify using public sector
resources rather than relying on private sector & how should the public sector
resources that are available be spent
• How important is the budget?
• Characteristics of the Federal Budget
o Executive budget
▪ Prepared by president & his staff, approved by Congress, executed
by president
▪ Budget & Accounting Act of 1921 (accumulated power in the
Exec. Office of President; Office of Management & Budget)
▪ Congressional Budgeting Office (taken back some of the control
but still generally responsive to executive action)
o Line item
▪ Allocating funds into categories for specific purposes within the
specified agency (which allows Congress to determine if the $ is
being spent under legal authority – Gov’t Accountability Office)
▪ Limits management capabilities within agencies
▪ Congress, wishing to maximize control, will maintain this line item
system to continue oversight
o Annual budget
▪ Solely year expenditure plan
▪ Makes long term ideas difficult & larger patterns may not be
visible before it is too late
• Budgeting Cycle
o Setting the parameters
▪ Spring review – 1st official act of the budget cycle, prep of
estimates of total size of the fed. Budget to be prepared for that
year
▪ Provides summary of the strategy & what the agencies should
work within for their own budgets, although this is not the final
budget
▪ Budget preparation is based on estimates from 16 month before &
at times must be adjusted to current economic conditions or other
current political considerations
▪ Preparation of economic & expenditure estimates result from the
interaction of the Council of Economic Advisers, OMB &
Treasury
• “Troika”
o Agency requests
▪ Central actors in budgeting process
▪ Responsible for initial preparation of estimates to request funding
& interacting w/ OMB & other agencies within its department to
produce coordinated & politically viable budgets
▪ Balancing act for cabinet secretaries, agencies & the larger
departments for each to coordinate the restrictions of avail. funds
w/ interest pressures, presidential programs & other restrictions
within the process
▪ All requests must be made while still considering the restraints of
an annual budget
o Exec. review
▪ Final request passed to OMB who organizes all agency requests &
fits them w/ presidential priorities & general spending needs
▪ Generally this stage involves cutting requested budgets in some
way or rationalizing funding new requests or requests for budget
increases (examiners review the requests & previous budget levels
in the given budget environments)
▪ Hearings are held for agencies to defend requested increases in
their budgets; results are forwarded to the final director’s review; a
final trim is negotiated then 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
o Congressional action
▪ Committees develop 2 resolutions outlining spending limits every
year (w/ help of Congressional Budgeting Office staff)
▪ Appropriations committees in both houses make decisions
concerning how to allocate spending among agencies & programs;
most of the work is done through subcommittees generally one to
ea. exec. dept., a # of agencies or a function
▪ New situations have restricted committee & subcommittee
autonomy (politics of deficit reduction) & appropriations levels
must match the levels set in the joint resolutions on taxing &
spending; if the levels match then the budget accepted by the
subcommittee has been decided
▪ After the presidential recommendations, subcommittees create one
or two appropriations bills (13 to 14 total per year) & hold
hearings, mark up the bill & submit it to the committee & then the
larger Congressional body
▪ Generally the procedure in Congress needs to be ready for Sept. 15
to go into effect on Oct. 1; Congressional Budget Act requires
second concurrent resolution setting budget ceiling, revenue floors
and overall fiscal policy considerations
▪ Reconciliation bill generally is passed by Sept. 25