05 January 2011

Fixing the Budget Process

Instead of wasting four months after the end of a fiscal year for the president to make a proposal that it will simply ignore, Congress could start the budget process in the fall so that it could get the appropriations process started as soon as it reconvenes in January. The president’s budget message could be reformed to emphasize long-term trends and structural imbalances along the lines of the Financial Report of the United States Government, an obscure Treasury Department report that I discussed last week.
The original idea of the Budget Act of 1974 was to focus attention on the budget aggregates – total spending and revenues. This is still a good idea, but the current budget process doesn’t accomplish that purpose. Instead, there is far too much attention paid to trivialities such as earmarks and insufficient attention to entitlement programs such as Medicare. And the nonsensical Republican belief that tax cuts have no effect on the deficit needs to be refuted before it bankrupts the country.

Shifting ultimate budget power to the Congress was an incredibly bad idea.  Now wasteful spending is made easier since it’s approved of by a group of people, and no one person owns the entire blame.  Of course, presidents still have limited veto power, but they have tended to lack the intestinal fortitude to use it.  Now, I’m not trying to suggest that the budget process would be perfect had the Budget Act of 1974 never come into existence.  I’m just saying it would be better.

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