Entitlement Budgeting vs. Bureau Budgeting

As entitlements have become a larger part of the federal budget, they have received more attention in discussions of the federal deficit. That entitlements influence budget totals is well known (Bipartisan Commission, 1995, 1994; U.S. Congress 1997a, 1997b, 1995; Schick, 1995). What has been the effect of increased attention to entitlements on the process of federal budgeting? How can entitlements be incorporated into a theoretical understanding of budgeting? In this article I will argue that for good programmatic reasons, budgeting for entitlements differs in basic ways from the traditional process of budgeting for bureaus. As a result, many of the practical and theoretical disputes familiar from the budgeting literature have little relevance to budgeting for entitlements. Moreover, measures to adapt budgeting to fit entitlements risk losing many of the functional merits of the traditional process of budgeting for bureaus. The challenge of entitlement budgeting, then, is not simply how to control the deficit with tools developed for budgeting different kinds of programs. It is also how and even whether to combine budgeting for two different kinds of programs in one process. The Decline of "Traditional" Budgeting Budget theory once said little about entitlements. What has been called "traditional" budgeting includes a set of common institutions and goals that evolved from the late 18th century through the mid-20th. In Aaron Wildavsky's account, budgeting is annual, incremental, conducted on a cash basis in the form of line items. It serves purposes of accountability, control in many senses, pursuit of efficiency or effectiveness, economic management and planning (Wildavsky, 1978, 502). Naomi Caiden emphasizes that the annual unified budget had goals of program information, efficiency and effectiveness; facilitating choice; directing allocations; reviewing policy; comparison; and control of the executive (Caiden, 1982, 517-518). In the American model, traditional budgeting includes an executive budget document, specialized appropriations or budget committees within the legislature, and specific budgeting legislation--all on an annual or, occasionally, biennial cycle. Control of deficits is only one among many functions of traditional budgeting (Caiden, 1982; Wildavsky, 1978; Schick, 1966; Ervin, 1980). In many ways, traditional budgeting was designed to serve administrative as much as policy ends (Schick, 1980b). The resulting institutions never satisfied a series of critics who sought to bring a more structured concern with objectives into budgetary choice, and the history of the attempts to reform budgeting and satisfy those critics is extensive (Axelrod, 1988, 280-303; Key, 1978; Schick, 1966, 1973; Wildavsky, 1978, 1984). In the late 1970s and early 1980s, however, students of budgeting also began worrying that the operating norms of the traditional process, such as annualarity and comprehensiveness, were progressively being ignored and perhaps outmoded. Naomi Caiden, for example, wrote about the "Myth of the Annual Budget" (Caiden, 1982). The traditional focus on agency appropriations was always a limited view of what might be considered "budgeting. " Most evidently, it did not include revenue decisions. Revenue decisions have just as large an effect on budget balances, and many economists have argued that any macroeconomic policy of demand management would be better pursued through raising or lowering taxes than by adjusting spending accounts (see Stein, 1996). Nevertheless, the bulk of the politics of budgeting normally does focus on spending decisions. Even much budgeting discussion of revenues is often phrased in terms of spending, as in critiques of "tax expenditures. " Caiden and others perceived an increasing share of government activity that did not work through, and so was not controlled by, the annual appropriations process. Tax expenditures and various credit programs, as well as entitlements and other "backdoor spending", could be included in the 1980s list of activities that were not in fact budgeted annually (Bennett and DiLorenzo, 1983; Ippolito, 1984; Schick, 1980a; Wildavsky, 1980). …