Explore the vast range of titles available.

In this paper, the authors use the Bush administration's management grades from the Program Assessment Rating Tool (PART) to evaluate performance budgeting in the federal government-in particular, the role of merit and political considerations in formulating recommendations for 234 programs in the president's fiscal year 2004 budget. PART scores and political support were found to influence budget choices in expected ways, and the impact of management scores on budget decisions diminished as the political component was taken into account. The Bush administration's management scores were positively correlated with proposed budgets for programs housed in traditionally Democratic departments but not in other departments. The federal government's most ambitious effort to use performance budgeting to date shows both the promise and the problems of this endeavor.

Some observers have argued that the projections for high and rising debt pose a grave threat to the country's economic future and give the government has less fiscal space to respond to recessions or other unexpected developments, so they urge significant changes in tax or spending policies to reduce federal borrowing. In stark contrast, others have noted that interest rates on long-term federal debt are extremely low and have argued that such persistently low interest rates justify additional federal borrowing and investment, at least for the short and medium term. We analyze this controversy focusing on two main issues: the aging of the US population and interest rates on US government debt. It is generally understood that these factors play an important role in the projected path of the US debt-to-GDP ratio. What is less recognized is that these changes also have implications for the appropriate level of US debt. We argue that many—though not all— of the factors that may be contributing to the historically low level of interest rates imply that both federal debt and federal investment should be substantially larger than they would be otherwise. In conclusion, although significant policy changes to reduce federal budget deficits ultimately will be needed, they do not have to be implemented right away. Instead, the focus of federal budget policy over the coming decade should be to increase federal investment while enacting changes in federal spending and taxes that will reduce deficits gradually over time.

The American Recovery and Reinvestment Act (ARRA) of 2009 included $88 billion of aid to state governments administered through the Medicaid reimbursement process. We examine the effect of these transfers on states' employment. Because state fiscal relief outlays are endogenous to a state's economic environment, OLS results are biased downward. We address this problem by using a state's prerecession Medicaid spending level to instrument for ARRA state fiscal relief. In our preferred specification, a state's receipt of a marginal $100,000 in Medicaid outlays results in an additional 3.8 job-years, 3.2 of which are outside the government, health, and education sectors.

The Department of Defense (DOD) is part of the United States Federal Government which oversees the U.S. Military. This Department is one of the largest and most complex organizations in the world. The DOD mission is to protect and defend the United States (US) and provide national security. To achieve this, the DOD requires a major portion of the federal budget. Each year, the DOD portion is based on a variety of political and economic factors. The results of this study are noteworthy. A regression model was derived that explained 82.14% of the variation in the target ratio of the federal budget with a significance level of 0.05. Four variables were identified and listed in order of greatest impact, as determined, by their standardized coefficients. These variables may have a significant relationship with DOD's budget. The four variables are: (a) House Majority Political Party, (b) Doomsday Clock Value, (c) US President's Political Party Affiliation, and (d) US Gross Domestic Product Growth Rate. If corporations and other agencies that deal with the DOD were to be able to accurately predict year-by-year DOD budget levels, this would give them a unique, competitive advantage. The strong presence of political factors in the results may be a key indicator for DOD businesses to consider in ensuring the balance of an appropriate level of politically motivated drivers within their corporate strategy models. Further recommendations focused primarily on the factors and, ultimately, the variables that should be selected for future studies. Variables need to be selected to allow for a greater number of observations to increase the likelihood of producing accurate study results.

The budget process is seriously flawed, as Irene Rubin suggests, but there is little prospect for its effective reform. Current economic and political conditions could open the window for reform, but the excessive partisanship that helped create these conditions also has reduced the pool of institutionalists who could lead reforms. More important is confusion about which reforms might be most effective. Most proposed reforms would create more rules, but they will not work unless politicians commit to meeting the goals such rules are intended to support. Those commitments could be produced by deliberation over critical issues that have been neglected in recent discussions of budget process reform: how the process could support macroeconomic policy making, how improved budget concepts could accurately measure finances and aid in dealing with upcoming policy challenges, how reorganization could enable intelligent priority setting, and how the process could be better aligned with the constitutional sharing of powers and the electoral system.

Theories of political budget cycles have been contested because scholars find that incumbents can manipulate deficits in the pre-election period only if fiscal transparency is low. I argue that these findings do not generally rule out the possibility of fiscal electioneering. Governments may increase spending on highly visible policies. The composition of the budget serves as a second-best strategy. It increases political support without straining the budget balance. An empirical analysis of the West German states reveals alternative electoral budget strategies and ultimately point to the importance of analyzing how governments choose between alternative fiscal instruments.

Simple accounting suggests that shocks to the government budget move the current account in the same direction, and this 'twin deficits' intuition leads many observers to call for fiscal consolidation in the US as a necessary measure to reduce the large external imbalance of this country. The response of other macroeconomic variables to budget developments, however, has important implications for 'twin deficits' and for this policy prescription. Focusing on the international transmission of fiscal policy shocks via terms of trade changes, we show that the likelihood and magnitude of twin deficits increases with the degree of openness of an economy, and decreases with the persistence of fiscal shocks. We take this insight to the data and investigate the transmission of fiscal shocks in a vector autoregression (VAR) model estimated for Australia, Canada, the UK and the US. We find that in less open countries the external impact of shocks to either government spending or budget deficits is limited, while private investment responds in line with our theoretical prediction. These results suggest that a fiscal retrenchment in the US may have a limited impact on its current external deficit.

This paper provides new evidence on the determinants of the U.S. federal budget allocation to the states. Departing from the existing literature that gives prominence to Congress, we carry on an empirical investigation on the impact of presidents during the period 1982–2000. Our findings suggest that federal budget allocation is affected by presidential politics. States that heavily supported the incumbent president in past presidential elections tend to receive more funds, while marginal and swing states are not rewarded. Party affiliation also matters since states whose governor belong to the same party of the president receive more federal funds, while states opposing the president's party in Congressional elections are penalized. These results show that presidents are engaged in tactical distribution of federal funds and also provide good evidence in support of partisan theories of budget allocation.

This article reviews the history of executive budgeting in the United States a century after President William Howard Taft's Economy and Efficiency Commission proposed an executive budget. This history, the authors argue, does not suggest that giving more budget power to the president will improve budget outcomes. Instead, what is needed is more cooperation between the branches of government and a better-educated public—goals that were shared by budget reformers when the Taft report was published.

The administration of President Barack Obama, like those of his immediate predecessors, is focused on trying to improve the quality of, and use of, performance data. The federal government has been pursuing performance-informed budget reforms for more than 50 years. Most recently, the Bush administration reforms included the President's Management Agenda and the Program Assessment Rating Tool (PART). The Obama administration reforms include: measuring the effects of the American Recovery and Reinvestment Act; reducing or eliminating poorly-performing programs; setting a limited number of short-term, high-priority performance goals; and funding detailed program evaluations. The administration is taking a more agency-driven approach than the Bush administration, but continues to find it challenging to move beyond production of performance data to its use. There should be opportunities to show how performance information can be used for decision making, given the change in the political climate and the needs to reduce spending and the deficit. Historically, there has been little appetite in the Congress for evidence-based decision making. The administration, however, can continue to demonstrate how federal agencies can use performance information to more effectively manage programs.