The Office of Management and Budget:

1
The Office of Management and Budget

• The development of the presidential budget as a
  policymaking tool

2
Traditionally Congress was responsible for the
annual budget

• Annual estimates of needed resources were
  prepared by executive departments.
• Estimates were merely transmitted by the
  Secretary of Treasury.
• The president was to have no direct budgetary
  responsibilities.
• Executive departments dealt directly with
  Congressional committees.

3
The U.S. was basically deficit free until 1904

• Then economic difficulties and deficiency
  appropriations began to cause deficitsnot every
  year, but with some frequency

4
1910 Commission on Economy and Efficiency
recommended

• A comprehensive annual executive budget
  (including costs of proposed legislation)
• A systematic budget process to provide Congress
  with expert advice

5
Fearing for its prerogatives Congress resisted.

• However, deficits accrued during World War I that
  supplemented the call for economy and efficiency.

6
Budget and Accounting Act of 1921 reflected
agreement that

• More direct presidential involvement was needed
  to promote efficiency and economy
• A truly national budget was needed
• Congressional splintering over monetary matters
  needed to be countered.

7
Since 1921, several developments have
strengthened the presidents budget leadership
capabilities and broadened the scope of budget
decision making.
8
And power shifted from Congress to the President

• Formation of Bureau of the Budget
• Increased recognition that the federal budget
  played a significant role in economic
  stabilization.
• Full Employment Act of 1946.

9
Formation of the budget now is the presidents
most important policy making tool

• And the Office of Management and Budget (OMB),
  formerly the Bureau of the Budget (BOB) has
  become the center of agenda setting, policy
  formulation, implementation (through regulatory
  review process and budget development), and
  policy evaluation (through PART).

10
In 1970, the Bureau of the Budget was re-named
the Office of Management and Budget (OMB). But
it still operated primarily as a neutral center
of budget expertise.
11
More changes were instituted by budget director,
David Stockman, in the 1980s. These changes
re-organized OMB as a tool of presidential policy
making.
12
HOW DOES OMB OPERATE TODAY?
13
Four Major Responsibilities

• Budget Cycle
• PART (Program Assessment Rating Tool)
• Regulatory Review
• Legislative Coordination and Clearance

14
I. The Budget Cycle

• OMB works on three separate budgets at the same
  time
• Summer OMB issues guidance statements, including
  budget targets through Circular A-11
• Mid-September Agencies submit their budgets with
  justifications

15
Budget Cycle

• Late September Analysis and preparation of
  recommendations
• November Meeting with OMB Director
• Late November OMB decisions are passed back
• Early December Appeals
• December-January Final budget preparation

16
The new budget goes to Congress the first Monday
in February
17
But wait! Theres more!

• Summer Track the appropriations bills, Run
  clearance process, Provide testimony on
  regulations, Perform on-site reviews

18
In terms of the actual budget process there have
been three major changes in the past 20 years
19
They are

• First, greater involvement in efforts to pass the
  presidents budget, track legislation, train
  junior staff, and present the presidents position

20
Legislative role consumes a significant amount of
staff time that could be used for budget analysis
or program review
21
Second, Top-Down budgeting issues

• Setting targets
• Making program review analyses takes a back seat
• More difficult to do multi-year plan

22
Third, Scoring

• Estimating the cost of legislation and monitoring
  appropriation bills
• Implementing the Budget Enforcement Act of 1990
• Preparing statements of administration policy
• Paying detailed attention to congressional budget
  process and daily meetings with CBO
  (Congressional Budget Office)

23
II. PART (Program Assessment Rating Tool)

• Assigns a number to programs
• OMB personnel may lose an inter-agency dispute
  for political reasons and then have to present
  the administrations position to Congress
• OMB has been much more intimately tied to
  resource allocation
• Means more discipline in the process, but theres
  a lot more pressure on individual examiners in
  their role as analysts.

24
Bush 43 administration is committed to
performance budgeting

• Congress is more iffy
• Authorization committees are interested
• Appropriations committees are hostile

25
PART has led to a more blurred distinction
between management (procurement, personnel,
effectiveness, strategic planning) and budget
26
An important question Do good management
practices always translate into improved
management?
27
III. Regulatory Review

• Vice-President Cheney has given up the
  vice-presidents traditional lead role in the
  regulatory review process
• Instead hes focusing on congressional liaison
  and policy formulation
• Responsibility now rests with Andy Card and
  Domestic Policy Council

28
Three waves of regulatory effort

• FDR
• 1960s and 1970s (OSHA, HHS, EPA)cut across
  whole economy instead of particular sectors

29
3. Third Wave is Impact Analysis

• Begins with Jimmy Carter
• Reagan added requirement that all regulations be
  subjected to OMB review
• Governed by Administrative Process Act (APA)
• But then lays an OMB process on top (for example
  OMB reviews drafts of all proposed rules prior to
  publication and again before final adoption).

30
Evaluatory standards change with each president

• Reagan argued benefits of any regulation must
  outweigh its costs
• Clinton added cost effectiveness and changed
  outweigh to justify
• Bush 43 kept the Clinton executive order but
  enforces it differently (from OMB justification
  to departmental justification).

31
IV. Legislative Coordination and Clearance

• Governed by Circular 19
• Not really changed much since FDR
• Idea is that executive branch should speak with
  one voice on authorizing legislation
• That voice should be the presidents

32
That voice is presented through

• Testimony
• Draft bills
• SAPs (statements of policy), usually issued
  prior to floor debate, which tell members of
  congress how the president would like them to
  vote on both authorization and appropriation
  bills
• Substantive memos on every enrolled bill.

33
And a note on Bush 43

• He has submitted far fewer draft bills than his
  predecessors
• Instead he submits statements of goals and
  principles.

34
In the end,

• OMB has been a great help to presidents in terms
  of putting into practice presidential goals and
  objectivesespecially through PART and Regulatory
  Review
• Using the OMB this way has increased its
  politicization, at least to some degree.

35
But the case of OMB does raise certain questions

• Does its availability encourage presidents to
  take on too much?
• Does the Regulatory Review Process encourage
  presidents to by-pass Congress?

36
Some Additional Questions

• Does politicizing OMB harm the image of expertise
  needed to make the neutral administrative state
  work?
• What is the impact of the current OMB on the
  issues raised by Hess?

37
Just what are the stakes involved?

• 2005 FY Federal Budget estimated outlays of
  2,479 billion.
• But how much of that is discretionary spending?
• Lets look briefly at FY 2000.

38
2000 Federal Budget
39
Lets assume the president cuts discretionary
spending to 15......

• Thats approximately 372 billion of the 2,479
  billion budget.
• Is intra-branch deliberation enough to guarantee
  a truly deliberative process?
• Does Congress do its job sufficiently poorly to
  justify presidential control?
• Constitutionally, does it matter?