From: degroff@tricorder.IntelliCorp.COM (Les Degroff)
Subject: Re: Balancing the budget
Date: Fri, 10 Apr 1992 22:19:36 GMT
Distribution: usa

In article <1992Apr7.053450.11277@midway.uchicago.edu>, thf2@ellis.uchicago.edu (Ted Frank) writes:
|> In article <TOM.92Apr6110736@amber.ssd.csd.harris.com> tom@ssd.csd.harris.com (Tom Horsley) writes:
|> >Here is my plan for a balanced budget process - I am interested in knowing
|> >what is wrong with it. Please ignore the fact that the Congress would never
|> >adopt it, I already know that, I am just wondering what is technically wrong
|> >with it...
|> >
|> >Step 2 - The first phase of the budgeting process would prioritize spending
|> >         requirements. Each member of Congress would be able to annotate
|> >         each node in the computer chart with the percentage of the budget
|> >         he feels that part of government should get. Any Congressman could
|> >         go as far down the org chart as he felt like going. He could
|> >         allocate money just to top level nodes and leave it up to the
|> >         bureaucrats running that section to divide up the pie below that
|> >         level, or he could micro manage all the way down the tree. It would
|> >         be up to the individual Congressman to decide how much detail he
|> >         wanted to get into.
|> 
|> >         a minimum amount of funding to be worth doing at all, and every
|> >         program should have a cap on funding representing the maximum
|> >         amount of money the program could use. These numbers would also be
|> >         noted in the chart and each Congressman could give his idea of what
|> >         the number should be.
|> |> 
|> >Step 4 - Finally - the step everyone has been waiting for. The total amount
|> >         of money available is estimated. This consists of tax revenues,
|> >         plus any borrowing which another supermajority will authorize.
|> >         At this time, Congress may consider raising taxes (if they think
|> >         they can get away with it).
|> >
|> >         This money is then allocated according to the percentages fixed in
|> >         Step 3. Any program which fails to get its minimum required funding
|> >         is simply canceled, and the increased revenue allocated according
|> >         to the percentages again (you probably program a computer to do
|> >         this iteratively - you want to cancel just one program at a time so
|> >         the increased revenue has a chance to salvage a more important
|> >         program).  Any program which gets more than its max also returns
|> >         money to the pot to be spread out over the other programs.
|> >
|> >         (Should a miracle occur, and Congress actually adopt a plan like
|> >         this, it should probably be phased in over several years with
|> >         initial plans for deficits dropping to zero after 5 or 10 years).
|> 
|> The problem is that in a perfectly functioning economy, the budget
|> deficit shouldn't be precisely zero: it should be fluctuating between
|> surpluses and deficits depending on the strength of the economy.
|> 
   This is easily included in the model by simply including special 
researve  "bin"s.  Any budget with out slacks, reserves and 
slush buckets will run into problems.   There are a number of budget
entities of this type in federal system already to cover "high variance"
items like disaster relief.
|> The problem with your model is that it will shoehorn budgets into
|> an unnatural zero-state, creating feedback effects:
    Once again, a real system, even simply based on current detail
budgets will have slack, if we enforce balanced or payback budgets, some
of these expendatures will need bigger reserves or will get cut.

|> >I like this idea because it seems like it would be simple to sell to the
|> >voters. Anyone should be able to understand the concept of not being able to
|> >spend money you don't have. 
  I like the idea of the Congress under the pressure to "formally do
allocation instead of never having to "compare the apples and oranges", just
pass the bill, figure out how to pay later.  Even more powerful in a long
run sense would be to require a verified April 15th check point copy be
available to all citizens and educational institutions. I have enjoyed
some news articles on the budget laying it out and saying ok, these are
the trade offs... A spread sheet style interface to such a data set would
work wonders for grass roots economics education!!!
 Another fake argument that will arise are issues of "black" secret budgets.
which can be surmounted by allowing "Blank agency funds"...the fact that
we spend 5 billion on some intelligence agency is and should always be 
available to public inspection, that it's spend on exotic technology
can remain hidden and still allow bugetary control.   

|> 
|> Did you get a mortgage to buy your house?  Ever use a credit card?
|> *Everyone* spends money they don't have.  The issue is whether they spend
|> it wisely, and invest it in such a way that the return from the borrowed
|> money exceeds the interest expenses on that borrowing. 
|> 
Right but forcing an actual reconcilation by congress of programs and
spending would have some power.  Special interests would have to argue
about the investment quality, or why we are spending on consumption.
The Revenue calculation can always include, additional bond revenue,
special asset sales ect.  
|> 
|> >It might even be easy to seel to the Congress. They no longer have to agree
|> >on individual spending, they only have to agree on the process.
|> 
|> There might be Constitutional problems with this process.
|> 
I don't think so other than certain aspects must be integrated with the
idea of an "Executive" (executing action) presidential role.  Clearly the
mandate of direction setting and setting taxations belongs to Congress!
Some aspects of asset sales, bonds and estimation and summary of revenues
would be executive branch chores.
|> >I would move most "entitlements" into the budget and eliminate cost of
|> >living increases.
|> >same way - you get an increase when the country can afford it
Although the entitlements are the most visible, there are a lot of places
where "the failure of our system" is not looking at or monitoring long
term allocations. It would be a good (but not absolutly required) extension
to allow multiyear funding  by either preallocating funds (Congress
allocates .0001% of this years revenue to xx project to be disbursed
15% this year, 30% next year, 30% third year, 25 in fourth and final year)
or
  by some continuation of Federal Bonds, used for what bonds are good for,
 long term capital projects, selling authorized bonds as required for
project. 

|> 
|> -- 
|> Ted Frank          + "A word is not a crystal, transparent and unchanged, it
|> 1307 E 60 St, #109 +  is the skin of a living thought and may vary greatly in
|> U o' C Law Skool   +  color and content according to the circumstances and
|> Chi, IL 60637      +  the time in which it is used."  --  Holmes

Unlike Frank, I think such a system is a large part of what we need...it then
could be extended by polls, Federal TAX form "citizen advisory" feedback or
even some Perot imagined citizen feedback network.  It would be a 
massive change our system but such a purse strings direct democracy could
work even if every citizen was given a direct allocation vote!!!!
(the shape of the political and world system would most likly change in
fairly radical ways...much more advertising for programs rather than 
parties, much more attention by beneficiaries of special interests on
convencing the public of the public welfare.  
   Pulling back to reality, such a system to reign in, better control
the budget aspects of Government is only a partial relative to issues
of governemnt effect on economy, regulation and prohibitions are also
tools of the system....Laws that encouraged wholesale suit against
trivial and inconsequential damages or pollution could still cripple
the economic system.  Les DeGroff