17 Nov 2003
Budgeting in the United States Jón R. Blöndal, Dirk-Jan Kraan, Michael Ruffner
The budgetary process in the United States federal government is different from that in other OECD member countries. This is a consequence of the strict separation of powers that characterises the American constitutional system and of a long historical development in which new layers of institutional innovation were successively added to existing ones. The presidential budgetary process started to develop in the beginning of the previous century. Its first codification took place in the Budget and Accounting Act of 1921, which required that the President submit a budget for the government to Congress and created the Bureau of the Budget, now the Office of Management and Budget (OMB). In the 1970s, Congress changed its own budgetary process through the Congressional Budget and Impoundment Control Act of 1974, which created the Congressional Budget Resolution and established the Congressional Budget Office. Another layer of innovation was added during the 1980s with the aim of controlling the deficit. This began with the Balanced Budget and Emergency Deficit Control Act of 1985, commonly known as the Gramm-Rudman-Hollings Act, which in 1990 was fundamentally amended by the Budget Enforcement Act...
17 Nov 2003
The Learning Government Graham Scott
The question is "how do governments identify important changes in their environment affecting the result of their policies and actions and develop capacity to make appropriate and timely adjustments in public policy and services?". The short answer is "with great difficulty, although competent governments do so on some of the issues some of the time". Successful dynamic adaptive behaviour in government involves virtually every significant feature of the system of government in some way. It is about how the rationality of policy analysis and public management comes together with the rationality of politics. It is about creating an environment which has good governance and good management. It involves resolution of disputes among competing views of the public interest or simply among competing private interests. It involves the effectiveness of the relationships between the government’s constituents and the institutions and policies of government. At the deepest level it is about effective democracy and how in any country a sequence of governments over time choose to exercise their constitutional authorities and whether they do this effectively in some wider sense of serving the best interests of their citizens in a system of democratic accountability...
17 Nov 2003
The Performing State Allen Schick
The contemporary nation-state exists to perform – to provide financial assistance, public services and other benefits to its people. How well the government performs influences the economic and social well-being of citizens, the mindset that voters take into the election booth, the programmes and behaviour of politicians and bureaucrats, and the relationship between government and the governed. Delivering services and writing cheques are not the sole functions of the modern state, for it still has traditional watchman responsibilities such as defending the country against external threat and maintaining domestic health, safety and order. Although the old tasks are essential, in most nation-states they have been surpassed in the sentiments of citizens and in the fiscal accounts of government by a vastly broader array of public services than were provided generations ago. Government not only does more than it once did, it carries out many tasks differently. One of the themes of this paper is that a performing state is inherently a state in transition, adapting to changing conditions and opportunities. Performance is not a static measure, but one that requires ongoing feedback from situations and results to policies and action. Among the many transformations that the performing state has experienced is in its role as unifier of the people through symbols and actions that forge a common national identity. As the provision of services has gained prominence, diversity has gained ground over uniformity because citizens differ in the services they want or need. The performing state must serve the people, even if doing so requires that it serve them differently...
17 Nov 2003
Fiscal Consolidation and Medium-term Fiscal Planning in Japan Hideaki Tanaka
The macroeconomic policy in Japan in the 1990s swung from fiscal expansion to fiscal consolidation and conversely. The efforts to restore soundness of public finance culminated in the Fiscal Structural Reform Act of 1997, which articulated several fiscal targets in the medium-term perspective. The act was however suspended after only a year due to economic slowdown, which threatened politicians with the possibility that fiscal consolidation might deteriorate the Japanese economy further. During the past decade, a number of economic packages to stimulate the return of the economy to a self-sustaining growth path totalled over 130 trillion yen in terms of project cost base.2 However, the Japanese economy has not recovered. As a result, these discretionary fiscal policies made the fiscal balance dramatically worse and accumulated government debt to over 140% of GDP in 2002. The new government under Prime Minister J. Koizumi was formed in April 2001. The government put structural reforms at the top of the agenda and included the fiscal consolidation plan to achieve a primary balance surplus in the early 2010s. While Japan is moving into an ageing society more rapidly than other countries, there is increasing pressure to restore public finances over the medium term. However, downside risk in the Japanese economy has been increasing since the middle of 2002 mainly due to serious deflationary pressure. Halting deflation is urgent in the short term for restoring economic growth. Japan is thus faced with considerable difficulties in achieving both the short-term objective of economic recovery and the medium-term objective of fiscal consolidation. In addition, Japan is in the extraordinary situation where there has been little incentive to enforce fiscal consolidation because huge domestic savings can finance huge government deficit, keeping the coupon rate of a ten-year Japanese Government bond to less than 1%...
17 Nov 2003
Countering Uncertainty in Budget Forecasts Dan Crippen
Federal budget procedures in the United States require forecasts and projections over several distinct periods of time: short term (18-24 months ahead), medium term (both 5- and 10-year horizons), and long term (as much as 75 years in the future). In the United States, the intermediate estimates have taken on increased significance with many press accounts referring to 10-year estimates. In addition to various time periods, the forecasts include the outlook for both the economy and the budget. Economic forecasts not only drive the budgetary outlook, they also provide the basis for developing economic policy. And despite the linkage between economic and budgetary performance, the relationships are neither perfect nor constant. The status of these two requirements has evolved, particularly since the enactment of the Budget Act in 1974 creating the Congressional Budget Office (CBO). The Executive branch forecasts (done mainly by the Office of Management and Budget, OMB) tend to parallel the time periods. Often many of the economic results are similar, especially over a 10-year forecast; the budget estimates vary more widely...
