Public Budgeting

Paper Summary:

This paper takes an historical approach to public budgeting. Pre-20th century budgeting models are discussed and described. Trends which resulted in current budgeting practices are also presented. The major changes that occurred in 1960s and later that accounted for the change in budgeting model are explained. Finally, the paper describes why classical budgeting couldn't possibly survive and thus it was quickly replaced by other budgeting models.

From the Paper:

"The classical budgeting model proved efficient and practical for many decades but it lost its appeal in mid-20th century when a general trend towards excessive spending took over. This trend was observed all over the world and the main reason for the scope of government's responsibilities that had increased significantly after the two World Wars. Budgets began growing to alarming proportions and between 1965 and 1984 it grew 20 points in OECD countries. But revenues were not growing at the same rate. This was the case in the US too where at the beginning of 1980s, federal budget was found "relatively uncontrollable" (Schick 1990). Social welfare measures had also had a serious impact on spending. These programs which began during the Johnson era were greatly expanded in 1970s thus causing serious burden on the budget. While an attempt to control these expenditures was made still by 1980s, Social Security as well as Medicare and Medicaid programs which had been started in 1965 consumed 6 percent of the GDP. Along with these, government was also unwilling to reduce domestic expenditure. During 1970s, Reagan refused to cut defense spending which went to a record high during his presidency. "

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