Macro
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The federal budget process sounds good on paper, but it does not work that well in practice. There are several problems. (McEachern, 2010)
Congress often ignores the timetable for developing and approving a budget. Because deadlines are frequently missed, budgets typically run from year to year based on continuing resolutions, which are agreements to allow agencies, in the absence of an approved budget, to spend at the rate of the previous year’s budget. Poorly conceived programs continue through sheer criteria; successful programs cannot expand. (McEachern, 2010)
The average recession lasts only 10 months but budget preparations begin more than a year and a half before the budget takes effect, therefore, planning discretionary fiscal measures to reduce economic fluctuations is difficult. That’s one reason why attempts to stimulate an ailing economy often seem so halfhearted’ by the time Congress and the president agree on a fiscal remedy, the economy has often recovered on its own. (McEachern, 2010)
Congress only limited control over much of the budget. About three-fourths of the budget outlays are determined by existing laws. For example, once Congress establishes eligibility criteria , entitlement programs, such as Social security, Medicare, Medicaid, take on lives of their own, with each annual appropriation simply reflecting the amount required to support the expected number of beneficiaries. Congress has no say in such appropriatations unless it chooses to change benefits or eligibility criteria. Most entitlement programs have such political powerful constituencies that Congress is reluctant to mess with the structure. (McEachern, 2010)
McEachern E., William, Macro 2 Econ, Student Edition, Cengage Learning, 2010, (page 184-185)
Congress often ignores the timetable for developing and approving a budget. Because deadlines are frequently missed, budgets typically run from year to year based on continuing resolutions, which are agreements to allow agencies, in the absence of an approved budget, to spend at the rate of the previous year’s budget. Poorly conceived programs continue through sheer criteria; successful programs cannot expand. (McEachern, 2010)
The average recession lasts only 10 months but budget preparations begin more than a year and a half before the budget takes effect, therefore, planning discretionary fiscal measures to reduce economic fluctuations is difficult. That’s one reason why attempts to stimulate an ailing economy often seem so halfhearted’ by the time Congress and the president agree on a fiscal remedy, the economy has often recovered on its own. (McEachern, 2010)
Congress only limited control over much of the budget. About three-fourths of the budget outlays are determined by existing laws. For example, once Congress establishes eligibility criteria , entitlement programs, such as Social security, Medicare, Medicaid, take on lives of their own, with each annual appropriation simply reflecting the amount required to support the expected number of beneficiaries. Congress has no say in such appropriatations unless it chooses to change benefits or eligibility criteria. Most entitlement programs have such political powerful constituencies that Congress is reluctant to mess with the structure. (McEachern, 2010)
McEachern E., William, Macro 2 Econ, Student Edition, Cengage Learning, 2010, (page 184-185)