Week 4: Deficits, Budget Balancing, Reforms

1
Week 4 Deficits, Budget Balancing, Reforms

• Federal deficit politics questions raised by
  Kettl book
• Is budgeting rational? Should it be? Can it be?
• Definitions and critiques of rationality in
  economics, political science, policy analysis,
  budgeting
• Incrementalism in budgeting
• The role of analysis in budgeting
• Class exercise on budget analysis
• Preview of Week 5

2
Federal Deficit Politics

• New predictions of deficits
• Recent Congressional actions to increase spending
• Bush tax cut
• Public opinion
• Questions raised by Kettl and Wildavsky
• How important is it to reduce the deficit?
• Why cant we reduce the deficit if most people
  agree it should be done?
• Is the deficit a sign of faulty budget process?
• Is the breakdown of agreement on budgets a
  problem?
• Is it possible to make budget process more
  rational?

3
Is/Should/Can the Budget Process be Rational?

• What is rationality?
• Rationality in economics
• Rationality in political science
• Rationality in policy analysis
• Rationality in budgeting

4
What is Rationality?

• Based on reason
• Analysis
• Objective
• Comprehensive
• Systematic
• Problem solving
• Apolitical

5
What is rational, in budgeting

• In budget process
• In budget outcomes
• (to be filled in by class discussion)

6
Rationality in Economics and Political Science

• Economics
• individuals
• fixed preferences
• maximize expected utility
• market mechanism
• Politics
• explains political outcomes as result of
  self-interested behavior of individuals
• citizens/voters as individual consumers
• politics is a marketplace
• no collective goals or interests
• no learning from others or situations
• public interest is sum of individual interests

7
Critique of Stones Policy Paradox
8
Rationality in Policy Analysis

• Assumptions
• Analytical techniques can measure costs and
  benefits
• All affected parties can have impact accounted
  for
• Outcomes can be projected with some certainty
• Used by clients to solve problems

• Process
• Identify objectives
• Identify alternative courses of action
• Predict consequences of each alternative
• Select the alternative that maximizes objective
• Recommend to decision maker

9
Critique of Rational ModelLindblom The
Science of Muddling Through

• Rational-Comprehensive Method
• 1. Clarify objective apart from policy choices
• 2. Ends-means analysis
• 3. Good policy is the best means to the ends
• 4. Analysis is comprehensive
• 5. Information is conclusive and authoritative

• Successive Limited Comparisons
• 1. Objectives and choices are linked
• 2. Ends and means not distinct
• 3. Good policy is one on which agreement can be
  reached
• 4. Analysis is always limited
• 5. Information is ambiguous and subject to
  interpretation

10
Critique of Search for Rational Budgeting

• Comprehensive analysis is impossible
• Incrementalism -- see next slide
• Budgeting is about choosing among values
• process reflects political system
• reforms to replace politics with analysis are
  doomed to failure aimed at wrong target
• for different outcomes, need to change system
• Political process does a better job of solving
  value problems
• Attempts at reform have failed (although left
  some useful techniques and approaches)
• Analysis must be in the service of politics

11
Incrementalism

• Descriptive v normative
• is it accurate?
• is it the best we can do?
• Does it work better under certain conditions?
• growth
• declining revenues
• when there is agreement on base
• Does political budgeting require incremental
  process and outcomes?

12
Role of Budget Analysis

• The irony of Wildavskys legacy?
• Graduate School of Public Policy and LAO
• How much analysis? What kind?
• Would unlimited analysis achieve rationality?
• LAO type of analysis v PPBS, MBO, PB, etc.
• Are politics and analysis antithetical?
• How can analysis serve, rather than replace
  politics?
• What should analysis try to accomplish?
• If analysis is rejected by decision makers, is it
  useless?
• What should budget analysts try to accomplish?

13
Preview of Week 5

• Kettl Chapter 5 will repeat some of Wildavskys
  Reform chapter, but is clearer
• Wildavsky fit with week 4 because of rationality
  focus
• For next week, think about todays discussion of
  politics and process as you describe your
  agencys budget process.
• Read Kettl first then can skim Rubin p.
  190-201on federal deficit and focus on state
  process and other issues
• Tuesday email
• first memo on your department/unit may need
  interviews
• review sample memos for writing style