Budgeting moved to center stage in American politics in the last quarter of the twentieth century. The budget process, with the taxing and spending power, has become the focal point of the administrative state. It is the place where political institutions have sought to accommodate the various interests seeking a share of the national wealth. The growth of the public sector, which has accompanied the increase in size of both federal and state budgets, has obscured the distinction between the public and private spheres. At one time, governments controlled expenditures, and budgets provided the means of limiting claims on available resources. Budget conflict was contained because of fundamental agreement concerning the ends of government. With the growth of the bureaucratic state, the consensus in support of limited government has weakened, as has support for limited—or balanced—budgets. The problem of budget control is exacerbated by a failure of the parties and institutions of government to achieve a new consensus, or political realignment, concerning the purposes of public spending. The Constitution, which separates the powers of government, has provided the conditions for budget strife.
The budget, as a formal plan of government in a fiscal year, is a centralizing device, one that presupposes a conception of the state as an active mechanism pursuing positive purposes in the interest of the people it is created to serve. The modern budget system is the concomitant of the administrative state, which, in principle, is an unlimited government. In America the administrative state traces its origins to the Progressive movement. The national executive budget system was among the political reforms demanded by the Progressives. In their view, the presidential budget, along with party reform, would give activist Presidents the ability to pursue the interests of a national majority. The United States was the last modern industrial nation to adopt an executive budget system. Congress was reluctant to give Presidents the power to formulate budgets, because its members thought such authority would undermine the separation of powers.
The growth of federal expenditures during world war i convinced national leaders—including those in Congress—that the legislative body was incapable of effective management of public resources. Thus, in 1921 an executive budget system was established through the budget and accounting act. The President was given the power to formulate a budget and oversee its implementation. At its inception the executive budget was not considered a means of aggrandizing presidential power but a neutral mechanism to ensure economy and efficiency.
In 1939 President franklin d. roosevelt reorganized the executive branch and placed the Bureau of the Budget at the center of the newly created Executive Office of the President. Roosevelt had become aware of the planning and management capabilities of the budget office. Furthermore, increased government expenditures during the Great Depression and the economic theories of John Maynard Keynes provided the conditions for using the budget to implement federal fiscal policy. The federal budget became an important tool in the presidential attempt to manage the economy. As long as Presidents and Congress agreed on national priorities, there were few unmanageable conflicts concerning economic policy or budget control.
The centralization of administration in Washington during the 1960s and early 1970s began to erode the consensus forged during the new deal. The new regulatory bureaucracy created during the Great Society tended to polarize society as well as the political institutions. The divergence between the parties led to heightened conflict between the political branches of government. The Democratic Party, which dominated the legislative branch, was committed to the maintenance of an administrative state. The Republican party, increasingly able to capture the executive branch, sought to limit the size of government. The 1972 reelection of richard m. nixon produced a crisis in the budget process that led to fundamental reform. In Nixon's view, Congress had become so wedded to the interests of the bureaucratic state that it could no longer control its appetite for increased public expenditures. Nixon sought to limit public spending by impounding expenditures that broke the executive budget. Without control of the budget, the Democratic majority in Congress was unable to challenge the President's authority in formulating economic policy or in establishing national priorities. The 1974 congressional budget and impoundment control act gave Congress the technical capability and institutional means of controlling the amounts of money spent. Congress was at once a dominant force in the formulation of fiscal policy and a major force in setting the priorities of the nation.
Congress succeeded in challenging presidential control of the budget, but the price of success was an institutional inability to reach agreement on expenditures, except at ever higher levels. The reforms in Congress during the 1970s, which accommodated the growth of the administrative state, had weakened congressional leadership and empowered individual members. Power moved from committee chairs to subcommittee chairs. The links between Congress and the permanent bureaucracy undermined presidential attempts to manage the executive branch. The budget process was dominated by those interests in Congress and the bureaucracy that supported the priorities of the administrative state. The growth of the federal government could not be seriously challenged without control of the levers of public spending.
The election of ronald reagan proved to be a serious threat to those committed to the growth of the administrative state. Reagan used the budget process to establish his own priorities, which included a reduction in the size of government. He took advantage of the reconciliation procedure of the Budget Act to force reductions in expenditures, but at the same time reduced tax rates. However, the 1982 recession, coupled with the rapid collapse of inflation, prevented a reduction of expenditures. Instead, the growth of the defense budget and the maintenance of social spending led to an explosion of deficit financing and increased the national debt. Further, the budget process could no longer limit expenditures without fundamental changes in the laws. Nearly half of all federal expenditures now take the form of direct transfer payments to individuals, called entitlements. The political difficulty of raising new revenues, coupled with a mistrust of presidential power, led Congress to attempt to reduce the deficit by procedural devices such as the gramm-rudman-hollings act. Congress lacked the will to act, but refused to trust Republican Presidents with the power to cut the few remaining controllable portions of the budget. The result has been stalemate and budget gimmickry.
Until recently, the Constitution of the United States was considered "the instrument and symbol" of politics in America. The Constitution authorized and legitimized the limited charecter of government and symbolized the notion of a higher law. The law was seen to be dictated by the nature and reason—not merely legislative majorities—and was the source of legitimate authority. It provided the means by which the various institutions of government and the rights and powers of majorities could be reconciled. It is presupported a structure of government in which the characteristic activity of government—lawmaking by legilative majorites—could culminate in reasonable public law in interest of all. The primary virtue of the legilative branch is the capapcity for such deliberation, or public reasoning. It is by means of such deliberation and reconciliation that the various private intersts could be made compatible with the common good.
But Congress no longer functions primarily as a deliberative body, and the constitutional order has readjusted itself accordingly. The courts are now routinely involved in general policymaking, and Congress is excessively concerned with the details of executive administration. Moreover, Congress is less effective today in reconciling particular interests in light of the general interest. Congress has delegated much of its lawmaking authority to administrative bodies, and its primary role has become one of administrative oversight. Since the late 1960s, Congress has maintained an administrative apparatus whose task it is to solve—in a technically rational way, using the methods of science and social science—the social and political problems of industrial or postindustrial society.
The federal budget is in the process of replacing the Constitution as the "instrument and symbol" of American politics. Whereas the powers of government were once thought to be limited, now only resources are limited. The budget is the instrument by which the bureaucratic state is fueled; it is the symbol of the centralization of administration that is the dominant political reality of the American regime. The most important political questions are no longer questions of principle or public right but of money and finance. The Constitution was the embodiment of the principles of republican government. The budget has become the symbol of American pluralism at best and redistributionist politics at worst. The Constitution was concerned with institutions, law, and the common good. The budget is the embodiment of the administrative state. It reflects a concern with administrative detail rather than principle, rulemaking rather than lawmaking, and the attempt to placate every private interest, rather than pursuance of a common good.
Schick, Allen 1980 Congress and Money. Washington, D.C.: Urban Institute.
Shuman, Howard E. 1984 Politics and the Budget. Englewood Cliffs, N.J.: Prentice-Hall.
Wildavsky, Aaron 1988 The New Politics of the Budgetary Process. Glenview, Ill.: Scott, Foresman.