BUDGET-MAKING PROCEDURES by Arthur Smithies by Fiscal Policy and Budgetary Principles ---The budgetary process in the United States is essentially one of program evaluation. As the functions of the government have grown more complicated, it has become essential to devise ways in which the relative merits of competing programs can be assessed, and in which the merits of the government's program as a whole can be compared with its cost. The result has been a budgetary process that is necessarily long and complicated, but has been increasingly successful in improving the efficiency of the government and in bringing essential issues before the President and the Congress for decision.
The most notable step forward was the Budget and Accounting Act of 1921. Before that act estimates were submitted by the individual departments to the Congress with no review by the President and with no regard to the requirements of the budget as a whole. Moreover, the requests of each department were sent to one of the eight separate and independent appropriations committees of the Congress, so that in the legislative branch of the government also there was no unified examination of the budget.
The Act of 1921 requires the President to prepare a complete budget of estimated revenues and expenditures for the government as a whole; and thus the budget goes to the Congress as the recommended program of the President. Soon afterwards the Congress overhauled its own machinery for receiving the budget. The eight independent committees were replaced by one appropriations committee in each House. These two committees are now responsible for the entire budget in Congress.
In 1946 a further important step was taken to improve congressional consideration of the budget as a whole. The Legislative Reorganization Act required that the appropriations and revenue committees of both Houses should meet jointly at the beginning of the session to prepare a "legislative budget" stating the objectives which the appropriations committees should strive to attain for the budget as a whole. If this procedure
proves workable, there will be machinery not only for examining the whole expenditure side of the budget but also for considering expenditure policy in relation to revenue policy. The experience with the legislative budget in its first year has not been reassuring. Before the Joint Committee could agree on general targets the appropriations committees and the revenue committees had completed their work. The legislative budget never came out of conference. It is greatly to be hoped that the legislative budget procedure can be made to work, since, without it, Congress has no direct machinery for considering revenue and expenditure policies together.
The Budget and Accounting Act created the Budget Bureau and made it directly responsible to the President. On behalf of the President the Bureau examines the requests of the agencies and translates into specific terms the President's budget policy. The Bureau is organized to assess not only the intrinsic merits of particular programs but, more importantly, to appraise their relative merits and to achieve a proper balance within the limits of the budget as a whole.
In some quarters the Bureau has acquired an unenviable reputation of always saying "no." Occasionally it does say "yes." During the war, for instance, there could be no question of hindering war production with financial limitations. In general, however, it is the proper function of the Bureau of the Budget to cut departmental requests. The departments are principally concerned with their own programs and have a natural tendency to extend and improve the services they render to the public. The Bureau on behalf of the President has to take into account the political and economic limits on the budget as a whole. It must compare expenditures with the receipts that can be expected. The departments would probably not be doing their duty if they did not request more than the President allowed, and the Bureau would not be doing its duty if it did not in general reduce the requests of the departments.