The Budget Process Is 100 Years Old Today and Its Age Is Showing

Today marks the centennial of the Budget and Accounting Act of 1921, a law requiring, among other things, the president to annually present Congress with a budget proposal for government. While anniversaries are usually a cause for celebration, most would agree that the federal budget process no longer works as it should.

The problem? Intense partisan competition among policymakers creates a constant temptation to use the budget process to score symbolic points rather than to confront the difficult budgetary tradeoffs that grow increasingly problematic with every passing year. This dysfunctional dynamic contributes to the most obvious flaw with the current process: a repeated failure to enact appropriation bills by the start of the fiscal year.

While non-partisan groups like the Brookings Institution’s National Budgeting Roundtable and the Committee for a Responsible Federal Budget regularly present and debate new ideas for budget process reform, no consensus has emerged on which changes would help produce better decisions. To incentivize lawmakers to meet annual deadlines or to reduce the problems that arise when the budget is late, long-rehashed proposals include shifting to a biennial budget schedule, preventing legislators from being paid and/or going home if bills are not enacted on time, and creating an ‘automatic continuing resolution’ procedure that would fund federal agencies when regular appropriation bills are not enacted.

These proposed reforms are unlikely to solve the problem. Even if adopted, they would not change the constitutional division of responsibility for the budget between the executive and legislative branches of government that complicates the enactment of budgets, especially during periods of divided partisan control of the branches. Because neither branch can act alone to authorize spending or raise revenues, they ultimately must act together. Developing a better budget process will require both branches to negotiate in good faith on important budget issues.

A good first step is for both branches to learn more about how well existing policies and programs work and how new initiatives might be implemented. They could do this by examining a growing wealth of evidence on the performance of government programs. Congress has provided a framework for the executive branch, including the Government Performance and Results Act and the Foundations of Evidence-Based Policy Act. Agencies are slowly learning how to make better use of information about performance. Most have now adopted a stable set of planning and review routines, but so far few have built a strong bridge from these routines to their annual budget development. And Congress spends far too little time examining performance data and using it to inform budgetary decisions.

Beyond increased use of better evidence, the federal budget process must be reworked to make it more policy focused, forward-looking and strategic, to ensure the United States is well-positioned for the future. It is clear the nation faces profound known challenges such as climate change and is certain to be confronted by additional crises, like another pandemic, that will disrupt our best-laid plans. This will require decision-makers to be more agile in shifting resources to higher priorities and better uses as the pace of change accelerates.

Because this vision has been a struggle to achieve, more attention needs to be given to strategic planning and performance measurement. Budgeting still is mostly about what various policy options cost. If and when budgeting becomes a process of sorting options based on their estimated benefits relative to their estimated costs, the way budget choices are presented will be very different and different choices will likely follow. When choices are based on the expected returns to society and future economic growth from alternative public investments, and when the process puts more focus on how to deploy resources to achieve policy objectives, then budgeting may yield better outcomes.

Other opportunities to strengthen the budget process may arise from changes in government’s use of technology. Artificial intelligence has the potential to support decision making and transform budgeting, providing new ways to integrate enterprise data and use it to inform resource choices. Accelerating use of AI may soon support new program designs that allow resources to be applied in a more agile, differentiated and flexible way to achieve better outcomes, flowing at the discretion of administrators to what works best in a given circumstance.

The future also may offer new opportunities to open up the cloistered budget process to public participation in the annual exercise of setting spending priorities. For example, technology offers opportunities for greater transparency through public dashboards that display information on costs and performance. It also offers new ways for representative groups of citizens to engage directly in the budget process by offering feedback on budgetary choices. And cities and counties across the country are better educating citizens about budget trade-offs. At the national level, government is becoming more transparent, but a significant challenge remains to translate access to more data on spending or revenues into effective citizen participation and trust.

Clearly, the U.S. budget process is not working as intended, given late budgets, a rapidly growing national debt, and an American public that is understandably mystified about the topic. A well-functioning democracy requires an operative budget process to ensure elected leaders make sensible fiscal decisions and citizens are engaged and informed. To be ready for the next hundred years, policymakers must take steps to establish a more strategic, evidence-based, participatory, and technologically enabled budget process to help our nation prepare for the many challenges ahead.

Doug Criscitello, formerly with the Office of Management and Budget and the Congressional Budget Office, is a Managing Director with Grant Thornton Public Sector; Steve Redburn, formerly with OMB, is a Professorial Lecturer at George Washington University and Director of Fiscal Studies at George Mason University’s Center on the Public Service; Roy Meyers, formerly with CBO, is a Professor at University of Maryland Baltimore County. All are Fellows of the National Academy of Public Administration. The National Academy of Public Administration, the American Association for Budget and Program Analysis, and the Association for Budgeting and Financial Management will host a series of events the week of June 21, 2021, to commemorate the centennial of the 1921 Budget Act. Register here.