Bias in OMB's economic forecasts and budget proposals

The Office of Management and Budget (OMB) annually submits the President's budget for the U.S. government to the Congress. The economic forecasts and revenue and outlay proposals contained in the budget have been criticized as biased, especially during the 1980s. Tests for bias in one year ahead proposals for the 1963–89 period show no bias in economic forecasts and revenue estimates, but substantial bias in outlay proposals. Most outlay proposals are consistently less than actual outcomes, accounting for underprediction of the Federal deficit. OMB outlay proposals appear to be influenced by politics. Republican administrations show more significant proposal biases, with defense proposals higher and domestic outlay proposals lower than outcomes. The Office of Management and Budget consistently understates the deficits by resorting to the most optimistic economic assumptions it can credibly — and now sometimes even incredibly — employ. — Senator James SasserWall Street Journal, 25 January 1990     

Rent-seeking in the deregulatory environment: State telecommunications

Proponents of rent-seeking theories argue that firms pressure and reward politicians and bureaucrats to pursue favorable policies so they can achieve higher than normal, market returns. In an era of deregulation, often with long transition periods toward unregulated competition, how do firms develop specific political strategies to achieve success in rent-seeking? Deregulation of telecommunications at the state level allows comparison of the strategies of the seven firms created in the AT&T divestiture in more than one political jurisdiction. One firm, U S West, has pursued the most aggresive political strategy. This paper argues that U S West executives correctly perceived that the political environment in which they operated differed greatly from that in the rest of the country and that a different deregulatory strategy was appropriate. The firm exploited institutional differences by bypassing state regulators and going directly to state legislators to get favorable policies.     

Government-business interface: the case of the small technology-based firm††

Abstract. This article presents the findings of a recent study made of successful technical entrepreneurs with small be in the secondary manufacturing sector in Canada. A major purpose of the study was to ascertain the entrepreneurs' perception of the environment for entrepreneurship in Canada, with a view to determining the form that Canadian government assistance might take. The article, amongst other things, relates the findings of the study to the current discussion of an industrial strategy for Canada, the recommendations of the Senate Special Committee on Science Policy and the operations of the Canada Development Corporation. Twelve specific policy recommendations are presented in the article. These recommendations deal with the following topics: the provision of venture capital; taxation; the provision of management expertise; and the provision of information. The need to rationalize and market government assistance programs for small businesses is highlighted in the article. Sommaire. Cet article présente les conclusions d'une étude récente d'entrepreneurs techniques prospères, propriétaires de petites affaires appartenant au secteur de fabrication secondaire au Canada. L'une des principales raisons de cette étude était d'évaluer la perception qu'ont les entrepreneurs du milieu de l'entreprise, au Canada, afin de déterminer la forme que l'aide gouvemementale canadienne devrait prendre. Entre autres choses, cet article établit un rapport entre les conclusions de cette étude et les débats actuels sur I'élaboration d'une stratégie industrielle pour le Canada, les recommandations dun comité spécial du sénat sur la politique scientifique et l'exploitation de la Corporation pour le développement du Canada. L'auteur propose dans cet article dowe recommandations de politiques qui portent sur les sujets suivants: fourniture de capital spéculatif, fiscalité, fourniture & expertise en gestion et fourniture d'information. Cet article insiste sur la nécessité de rationaliser et de mettre sur le marché des programmes daide gouvernementale pour les petites affaires.