Who is Afraid of the Big Bad Debt? A Modern Money Theory Perspective on Federal Deficits and Debt

The U.S. federal government's deficit is expected to grow to over one trillion dollars in fiscal year (FY) 2020, and the national debt held by the public will likely grow to over $16.7 trillion. Budgeting scholars in the field of public administration have expressed concern over the increasing debt levels. The field of public administration, however, is largely unaware of Modern Money Theory (MMT) and the mechanics of money, which is its focus. MMT argues that understanding the mechanics of money in the U.S. financial system should lead scholars to different conclusions regarding the debt and deficit. This article presents the core arguments of the MMT perspective in this regard, with the goal to trigger further debates about debt and deficit among the community of budgeting scholars.     

To PPB or Not PPB – Budgeting in Victorian Local Government

Budgeting is an important element in a public sector organisation's accounting control system. There are a number of budgetary methods that could be used, each with an explicitly different focus. This article investigates possible reasons for Victorian local government selecting line item budgeting, planning programming budgeting (PPB) or a combination of the two. While program budgeting arguably failed in the USA, research shows it was adopted by local government. Australian researchers report similar findings, yet the introduction of program budgeting into local government has not been explored. Four reasons are postulated: (1) PPB will be adopted because of the complexity of the organisation; (2) PPB will be adopted because it is perceived as an aid to planning; (3) line item budgeting will continue to be used because users are familiar with this type of budgeting; and (4) management's support for the adoption of PPB will be a significant factor in its introduction. A questionnaire was distributed to all the local governments in Victoria and 60 percent were returned. The findings reported in this article confirm the reasons postulated.     

Budgeting for Federal Capital

This article examines the issues involved in federal investment budgeting and planning for the acquisition of federally-owned assets. It describes the unique role of the federal government and examines the different issues and reforms prompted by differing types of capital and investment sponsored at the federal level. It suggests that meaningful changes can be instituted in our budgeting practices that can make a difference for our budgetary choices without adopting a full-scale capital budget. It also presents a framework for improving federal agency capital decision making based on a study of practices used by leading state and local and private sector organizations. The article is based on testimony delivered before the President's Commission to Study Capital Budgeting.     

Incremental Thinking: "Toward a Theory of Budgeting"

Editor's Note: V.O. Key's article bemoaning "The Lack of a Budgetary Theory" was reprinted in the previous issue of Public Budgeting & Finance. The problems identified by Key are normative; they go to the basic values arid purposes of society and, hence, cannot be resolved by budgetary solutions alone. But a dozen years after Key wrote, Verne Lewis sought to anchor a theory of budgeting in marginal analysis, His article, printed here by permission of the American Society for Public Administration, first appeared in the Public Administration Review in 1952, Rather than seeking a full-blown political philosophy. Lewis thought that budgetary choice could be rationalized at the margins, by comparing the marginal costs and benefits of competing claims on public resources, While his hopes for a theory of budgeting have not been fulfilled, Lewis laid the groundwork for forms of marginal analysis introduced by PPB and ZBB in later decades. Indeed, there is a remarkable affinity between the budgetary structure proposed by Lewis and the one used by zero-base budgeting in the 1970s.     

Jesse Burkhead: An Appreciation

This article is an overview of the distinguished career of Jesse Burkhead, Professor Emeritus, Maxwell School, Syracuse University, and for eight years editor of Public Budgeting & Finance. For forty years he has influenced the field of budgeting through his teaching, articles and books. The article reflects on some of Burkhead's budgetary principles and observations which remain relevant to today's decision making.     

Current Practices and Issues in Capital Budgeting and Reporting

Budgeting and accounting professionals, as well as other interested parties, are currently examining ways to improve governmental capital budgeting and reporting. Although progress has been made, major policy issues are still being analyzed and debated. This article provides an overview of current practices and the major policy issues that are being addressed. The discussion incorporates related ideas and observations made by Jesse Burkhead four decades ago. The author concludes that many of Burkhead's insights in the area of capital budgeting and reporting are still relevant and useful today.     

The President's Commission to Study Capital Budgeting: An Interim Review

The President's Commission to Study Capital Budgeting is slated to complete its report by year-end 1998. Even though it would be premature to try to anticipate the Commission's recommendations, it is already clear that the Commission will contribute significantly to the capital budgeting debate by casting the concept of capital budgeting broadly, as a systematic decision process, rather than merely a budget accounting or scoring convention or a government financing alternative to the balanced budget rule. This article summarizes some of the analytical accomplishments of the Commission at the mid-point of its expected life.     

Mapping a Field's Development: 20 Years of ABFM Conferences

Public budgeting and financial management has grown into a vibrant and productive research field of study with multiple journals and conferences devoted to the topic. One way to map the field's development is to examine the participants and topics covered in its longest-running dedicated gathering of researchers, the 20 annual conferences of the Association for Budgeting and Financial Management (ABFM). This article traces the 20-year history and composition of ABFM in terms of the participants and topics. It documents the evolution of the field and provides clues to the future direction of public budgeting and financial management published research.     

Power in Editorial Positions: A Feminist Critique of Public Administration

Journal editors serve a vital, powerful role in academic fields. They set research priorities, serve as gatekeepers for research, play a critical role in advancing junior scholars as reviewers and eventually into editorial roles, build extensive networks, and gain valuable insight into the behavior and preferences of reviewers and scholars. This article analyzes data collected from leading public administration journals in 2017 to investigate the role of women as gatekeepers of public administration knowledge. The data illustrate a clear underrepresentation of women on editorial boards. Drawing from these data, research on journal editorships, and feminist theory, the authors present a critique of the current state of public administration research and a discussion of a way forward. They conclude with a proposal for how all public administration scholars (junior, senior, men, and women), journal leadership, and academic departments can move toward increasing women's representation in these important positions.     

Budgeting for Accountability: A Comparative Study of Budget Reforms in the United States during the Progressive Era and in Contemporary China

Budgeting is an important mechanism for ensuring public accountability. How do budget reforms in the United States during the Progressive Era compare to those in contemporary China? Are administrative and legislative budget controls essential to an effective, efficient government? Though the two countries differ in many respects, significant parallels between their budget reforms are evident. In the United States, electoral accountability alone does not guarantee overall government accountability if proper budgetary institutions are absent. China's recent budget reform reveals that it is possible to develop accountability, absent open elections, but with limitations and constraints. Lessons on budgeting and accountability for other developing and transitional countries are drawn from this comparative study.     

The Role of Budget and Financial Reform in Making Government Work Better and Cost Less

Budgeting and Financial Management play a crucial role in organizing and disciplining the federal management culture. Consequently, addressing improvements in their practice is essential in the National Performance Review's examination of government-wide management systems. This article briefly describes the recommendations and anticipated implementing actions relating to budgeting and financial management within the context of the National Performance Review's themes of cutting red tape, putting customers first, empowering employees to get results, and cutting back to basics. External factors, such as innovations in private sector management practices, rapid changes in information technology, and statutory reforms such as the Government Performance and Results Act, also influence needed changes in budgetary and financial management practices.     

Accrual Budgeting: Accounting Treatment of Key Public Sector Items and Implications for Fiscal Policy

Budgeting in accrual terms is one of the most controversial issues in public sector accounting. In this paper, we analyze the accounting treatment of problematic elements of the financial statements when introducing accrual budgeting, and discuss the effects of the analyzed accounting alternatives on fiscal policy. We focus on three pioneer countries in the implementation of accrual budgeting and accounting: the United Kingdom, Sweden, and New Zealand. The accounting standards of the International Public Sector Accounting Standards Board, the European System of Accounts, and the Government Finance Statistics Manual of the International Monetary Fund are taken as benchmarks.     

Ideas, Inheritances, and the Dynamics of Budgetary Change

Long the lifeblood of public administration, budgeting in the United States acquired a new importance during the 1980s and 1990s because of the fiscalization of the policy debate. But how much has American national budgeting really changed? This article examines the evolution of federal budgeting over the past half-century, exploring such developments as the massive growth of entitlements, congressional budget reform, and the protracted battle over the budget deficit. It finds that year-to-year changes in budget results have been relatively small even while budgetary rules and procedures have experienced sweeping change. At the same time, the composition of federal spending has undergone a quiet revolution. The traditional concept of budgetary incrementalism offers an incomplete explanation for these dynamics. To make sense of them, the article focuses on two key factors: the impact of policy inheritances, and the role of actors' causal and normative beliefs. These factors shape the ideational and material context within which boundedly rational actors negotiate decisions. The tension between changes in ideas and entrenched budgetary commitments has often served to stimulate institutional reform.     

Political characteristics, institutional procedures and fiscal performance: Panel data analyses of Norwegian local governments, 1991–1998

Abstract.  Budgeting can be understood as a common resource pool problem where spending agencies have incentives to encourage excessive levels of current spending and reduce budget surplus or create budget deficits. The political leadership is assumed to have an important role in keeping fiscal control and resisting the high-demanders' pressure for increased spending. Three factors of relevance for their success are investigated: political characteristics (political colour and political strength, the strength of relevant interest groups) and two institutional characteristics – committee structure and budgeting procedures. The analyses are based on panel data from up to 434 Norwegian municipalities in the period from 1991 to 1998. The results support the hypothesis that strong political leadership improves fiscal performance. The effect of interest groups is to a high degree community-specific. However, an increased share of elderly reduces fiscal surplus. Differences in budgetary procedures do not seem to affect fiscal performance. A strong committee structure seems, on the other hand, to result in better fiscal performance than a weaker one.     

Book Reviews

Books reviewed:
Robert D. Lee. Jr. and Ronald W. Johnson, Public Budgeting Systems
John L. Mikesell, Fiscal Administration: Analysis and Application for the Public Sector
S. Rosen, Public Finance     

Management by Results: Its Origin and Development in the Case of the Swedish State

ABSTRACT

The paper discusses the origin and development of management by results in Swedish state administration. The historical presence and stability of this political institution is analyzed. It is argued that it can be traced to program budgeting, which was introduced in the early 1960s, and that the institution has been marked by a high degree of stability. An attempt is made to explain the constancy of the steering model. The question is brought to the fore by the fact that the learning process has failed in several respects. The course of events is explained from a historical-institutional perspective and different theories of bureaucratic power. It is asserted that different initial decisions made in connection to the introduction of program budgeting created different positive feedbacks, which were to have stabilizing effects on the institution.     

The Ups and Downs of State Budget Process Reform: Experience of Three Decades

From zero-base budgeting to the Government Performance and Results Act, state budgeting systems have been synonymous with budgeting reform for over 30 years. This article examines the trends, both long-term and short-term, which have been identified through analysis of state budgeting office practices. Particular emphasis has been placed on understanding the changes in performance measurement over the period of 1970 to 2000. The findings reveal trends such as changes in the makeup of budget office personnel, a lack of budget offices in moving toward cost accounting, and trends in budget preparation and budget documents. Some budget reforms seem to have plateaued, beginning in the mid-1990s, while other reforms have exhibited "backsliding." It is clear that the states are not all marching in unison in reforming their budget systems. As with earlier phases of this study, the 2000 data raise many questions that will be explored in future research.     

The Capital Budget: History and Future Directions

While there is a substantial body of literature concerning capital programming and budgeting in the private sector, there is only a modest literature on this subject in the public sector. Government researchers and public administration scholars have, for about seventy-five years, recognized the value of budgeting for operating expenses and have tried to develop theoretical frameworks for the public budgeting process. However, very little of this attention has been devoted to capital budgeting. As Alan Steiss has stated," The theory of capital budgeting has not been set forth; rather the emphasis... has been on devising and improving the techniques of capital budgeting." Michael White has called capital budgeting an "elusive subject" that "lacks clear definitions, organized traditions of inquiry, conceptual boundaries, standard questions, and reliable data sets."     

From Performance Budgeting to Performance Budget Management: Theory and Practice

This article examines the decades‐long practices of performance budgeting in different countries and their associated challenges from a multilayered institutional framework. Based on theory and lessons learned, the article recommends an array of strategies to address institutional and organizational barriers. It also proposes to reconceptualize performance budgeting as a performance budget management system and suggests how multiyear budget planning, financial risk assessment, policy planning, the departmental budget cycle, the program budget cycle, stakeholder engagement, regular spending reviews, and performance audits should be integrated more closely to address the long‐term fiscal challenges faced by many governments and to respond to the public pressure on agencies to do more with less.     

The Policy Constraints of Deficit Reduction: President Clinton's 1995 Budget

The federal budgeting process is now limited by deficit reduction policy constraints. This article examines the FY 1995 budget requests within the context of long term budget trends, changes in the federal budget process, and the recently established political and fiscal budget constraints. It further examines enactment of the Omnibus Budget Enforcement Act of 1993, the policy changes it contained, and its further tinkering with the process of budgeting. Finally the article evaluates the first budgeting process of the Clinton administration and their initiatives in deficit reduction following these policy constraints.