Balanced Budgets, Fiscal Responsibility, and the Constitution: (Cato Public Policy Research Monograph No. 1) by Richard E. Wagner & Robert D. Tollison

Author:Richard E. Wagner & Robert D. Tollison [Wagner, Richard E. & Tollison, Robert D.]
Language: eng
Format: epub
Tags: Public Policy, Political Science, General
ISBN: 9781935308614
Google: tyFyIL1bymgC
Goodreads: 16704578
Publisher: Cato Institute
Published: 1980-01-01T00:00:00+00:00

How Often Should the Budget Be Balanced?

We noted earlier that a balanced budget amendment would undoubtedly require a balanced budget each fiscal year. There is probably nothing essential about having the period over which balance is defined correspond to the time it takes for the earth to travel around the sun. One could easily propose shorter or longer periods, and one might reasonably wonder whether there is anything of particular importance about requiring a balanced budget on an annual basis. It could be argued that it makes little difference whether the budget is balanced over a one-year or a five-year period.

Nonetheless, we feel that such arguments ignore the basic reasons for the annual budgetary process that we presently have and to which the balanced budget amendment would apply. This process is designed to allow legislators to monitor and to control the activities of governmental agencies and their performance in carrying out the legislative mandates. Moreover, in a basic political sense, longer budgetary periods would insulate government programs from democratic controls. For example, a one-term president or a two-term member of the House of Representatives might find that he could have no impact on the budget if budgeting were done on a five-year cycle.

The reasons for annual budgeting are, therefore, related to the democratic control of the activities of governmental bureaucracies, and these reasons surely override any abstract case for budgeting over longer periods of time. Since the government conducts its business on an annual basis, this is the period of time that is pertinent to the balanced budget amendment. Moreover, the more frequently budgetary review takes place, the closer can be legislative scrutiny of bureaus and agencies. Thus annual budget balance makes both political and economic sense.

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