Public Management and Administration - Owen E.hughes

President must obtain Congressional approval for spending and has a limited
veto over Congressional spending.
The budget is where the accounts of the government are reconciled, and
where revenue and expenditure items are set out for public scrutiny. The main
steps in budgeting are: formulation – where the budget is drawn up; authorization
– the formal approval by the legislature; execution – where it is carried out;
and appraisal – how it performed. The budget involves legislation; any government
spending or taxation measures must be firmly based in law.
There are significant differences between countries: in the United Kingdom
and other parliamentary countries the government is firmly in control of its
financial resources; it can dominate all four stages, with almost total control of
the first three. This is not so in the United States. The greater degree of separation
of the powers – legislature, executive and judiciary – means that, while
the President can propose a budget, the Congress is not obliged to accept any
part of it. Congress can also pass its own budget measures, something unknown
in Westminster systems, where, by convention, the government initiates spending
measures. The long period of very large United States government budget
deficits during the 1980s and 1990s – something damaging both to its own
economy and to the world economy – was in large part due to the government
not being able to control its budget, and a breakdown in the system of compromises
between Congress and the White House. The entire Federal government
sometimes closes down for several weeks, such as in 1996, when no
agreement was reached on the budget and, as civil servants cannot be paid
without authorization from Congress, they could not work.
Traditional financial management
Financial Management 169
The traditional model of administration had its own form of financial management,
one aptly suited to an administrative view of government. The usual form
of financial management was the traditional budget, also called the line-item or
input budget. This kind is for one year: it includes only inputs into the administrative
process, and the amounts allocated in a given budget would usually represent
incremental changes from the expenditure approved for the year before.
There are several main features of the traditional budget. First, money is
allocated to those particular items or types of expenditure that are the major
inputs to the task of administration. These typically include money for staff,
equipment, postage and all incidental items used in running the department.
Secondly, the budget contains a comparison between income and expenditure
for the previous financial year. Thirdly, there is a marked tendency for the
budget for the forthcoming financial year to be based solely on the record of
the previous one. This is incremental budgeting; that is, the budget represents
a series of incremental increases on the previous year, usually to account for
inflation.