In "Fiscal Management Implications" Christine Martell and Paul Teske explain the downsides of limiting the size and scope of government.
Colorado state has amended its constitution in 1992 with a Taxpayer Bill of Rights (TABOR), the strictest Tax & Expenditure Limitations (TELs) to date. By limiting the scope and size of government, TABOR has also limited the governmental capabilities of weathering economic recessions and employing sound fiscal management practices.
The reasons for this loss of fiscal control is the increasingly part of budget already earmarked, privatization, and the shift of responsibilities. In the financial and educational field, binding TELs reduced Colorado ability to invest in a rainy-day fund and the access to quality public education.
Authors conclude affirming that public administrators have to determine whether the trade-offs of increasingly restrictive budgets - through earmarks, mandatory expenditure and direct democracy - are worth the adoption of a TEL.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2007.00752.x/abstract
segunda-feira, 28 de fevereiro de 2011
The roles of Budget Stabilization Fund
In "Substitution and Supplementation Between Co-Functional Policy Instruments" Yilin Hou and Gene Brewer talk about the two roles that Budget Stabilization Fund (BSF) have on General Fund Balances (GFB).
The first role is substitution. BSF is created by policy-makers in order to ward off spending pressure and limitations from balanced budget requirements of GFB. States take savings from GFB and place them into BSF.
The second role of BSF is supplemental. By increasing state's total savings substantially, BSF helps public administrators mitigate revenue shortfalls during economic downturns.
Although BSF roles help GFB, these multiple policy instruments are only effective at initial stages. During policy implementation process, both BSF and GFB encounter internal and external resistance resulting in increased budget displacement by supplemental policy overtime.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2010.02223.x/full
The first role is substitution. BSF is created by policy-makers in order to ward off spending pressure and limitations from balanced budget requirements of GFB. States take savings from GFB and place them into BSF.
The second role of BSF is supplemental. By increasing state's total savings substantially, BSF helps public administrators mitigate revenue shortfalls during economic downturns.
Although BSF roles help GFB, these multiple policy instruments are only effective at initial stages. During policy implementation process, both BSF and GFB encounter internal and external resistance resulting in increased budget displacement by supplemental policy overtime.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2010.02223.x/full
Multiyear Countercyclical Budget
In “Budgeting for Fiscal Stability” Yilin Hou defends a Multiyear Countercyclical Budget (MCB) to deal with uncertainty.
Rather than annual budgets aiming balanced budget requirements, MCB ensures stability during fluctuating economic conditions by creating stabilization funds (General Fund Surplus and Budget Stabilization Fund).
MCB encourages cutbacks during surplus years and overspending during lean years. Fiscal revenues accumulated during boom years create surplus funds to be available in lean years to maintain fiscal stability.
The other benefits of MCB is that it addresses cyclical deficit budget by requiring governments i) to prioritize and express policy goals explicitly and consistently, ii) to force current policies to fit the multiyear strategy, and iii) to help mitigate cyclical fiscal deficits (structural deficits has to do with mismatch between revenue and expenditure and managerial deficit is a result of poor management).
The challenges to adopt MCB are mainly political and technical. MCB supporters have to convince legislators that they can also benefit from this budgetary politics. The technical difficult of MCB is to estimate accurate future revenues and expenditures. “Fiscal Conservatism” tends to underestimate revenue and overestimate expenditure, hence putting at risk the maintenance of public services during recessions.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2006.00638.x/abstract
Rather than annual budgets aiming balanced budget requirements, MCB ensures stability during fluctuating economic conditions by creating stabilization funds (General Fund Surplus and Budget Stabilization Fund).
MCB encourages cutbacks during surplus years and overspending during lean years. Fiscal revenues accumulated during boom years create surplus funds to be available in lean years to maintain fiscal stability.
The other benefits of MCB is that it addresses cyclical deficit budget by requiring governments i) to prioritize and express policy goals explicitly and consistently, ii) to force current policies to fit the multiyear strategy, and iii) to help mitigate cyclical fiscal deficits (structural deficits has to do with mismatch between revenue and expenditure and managerial deficit is a result of poor management).
The challenges to adopt MCB are mainly political and technical. MCB supporters have to convince legislators that they can also benefit from this budgetary politics. The technical difficult of MCB is to estimate accurate future revenues and expenditures. “Fiscal Conservatism” tends to underestimate revenue and overestimate expenditure, hence putting at risk the maintenance of public services during recessions.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2006.00638.x/abstract
quarta-feira, 23 de fevereiro de 2011
Fiscal Reform
In "The Blur Between Spending and Taxes" Gregory Mankiw defends a fiscal proposal which addresses the long-term budget imbalance in the US' economy.
The Bowles-Simpson proposal argues that the federal budget needs to move toward fiscal sustainability and the best way to do so is broadening and lowering tax rates. These measures are expected to increase government revenue and distort incentives less.
However, the left wing disagrees with any action that reduce marginal tax rates on the rich and right pundits are suspicious of any measure that increases government revenues.
Despite political differences, Mankiw affirms that Bowles-Simpson's proposal is the best one to address the nation's fiscal challenges and thus both parties should agree on it.
http://www.nytimes.com/2010/11/21/business/economy/21view.html
The Bowles-Simpson proposal argues that the federal budget needs to move toward fiscal sustainability and the best way to do so is broadening and lowering tax rates. These measures are expected to increase government revenue and distort incentives less.
However, the left wing disagrees with any action that reduce marginal tax rates on the rich and right pundits are suspicious of any measure that increases government revenues.
Despite political differences, Mankiw affirms that Bowles-Simpson's proposal is the best one to address the nation's fiscal challenges and thus both parties should agree on it.
http://www.nytimes.com/2010/11/21/business/economy/21view.html
US Federal Budget Reform
The White House issued in December 2010 "The Moment of Truth: Report on the National Commission on Fiscal Responsibility and Reform".
The objective of this report is found in the preamble: "America cannot be great if we go broke".
The Federal Government plans to use the guidelines of this report to tackle an unsustainable budget plan, to anticipate austerity measures that might be triggered if China, the largest foreign holder of US' debt, loses confidence that the US government is able to repays its loans.
The plan to address the nation's overwhelming debt burden, make Social Security solvent, reduce long-term growth of health care spending, and cut red tape consists of a fiscal restraint program that promotes reform and efficiency forcing the government to produce better results and save money.
The components of this fiscal restraint program are:
1) Discretionary Spending Cuts. The consequences of this measure are i) force budget discipline in Congress, ii) include enforcement mechanisms, and iii) cut low-priority programs.
2) Comprehensive Tax Reform. This reform requires to i) sharply reduce rates, ii) broaden the base, iii) simplify tax code, iv) reform corporate tax, v) cap revenue to avoid excessive taxation, and vi) cut spending in tax code.
3) Health Care Cost Containment. Achieve this goal by implementing a common-sense reform to i) physician payments, ii) cost-sharing, iii) malpractice law, iv) prescription drug costs, iv) government-subsidized medical education
4) Mandatory Savings. For these savings it is necessary to i) cut agriculture subsidies, ii) modernize military & civil service retirement systems, and iii) reform student loan programs.
5) Social Security Reforms. "Reform it for its own sake, not for deficit reduction".
6) Process Changes. In other words, reform the budget process to ensure that the debt remains on a stable path.
http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf
The objective of this report is found in the preamble: "America cannot be great if we go broke".
The Federal Government plans to use the guidelines of this report to tackle an unsustainable budget plan, to anticipate austerity measures that might be triggered if China, the largest foreign holder of US' debt, loses confidence that the US government is able to repays its loans.
The plan to address the nation's overwhelming debt burden, make Social Security solvent, reduce long-term growth of health care spending, and cut red tape consists of a fiscal restraint program that promotes reform and efficiency forcing the government to produce better results and save money.
The components of this fiscal restraint program are:
1) Discretionary Spending Cuts. The consequences of this measure are i) force budget discipline in Congress, ii) include enforcement mechanisms, and iii) cut low-priority programs.
2) Comprehensive Tax Reform. This reform requires to i) sharply reduce rates, ii) broaden the base, iii) simplify tax code, iv) reform corporate tax, v) cap revenue to avoid excessive taxation, and vi) cut spending in tax code.
3) Health Care Cost Containment. Achieve this goal by implementing a common-sense reform to i) physician payments, ii) cost-sharing, iii) malpractice law, iv) prescription drug costs, iv) government-subsidized medical education
4) Mandatory Savings. For these savings it is necessary to i) cut agriculture subsidies, ii) modernize military & civil service retirement systems, and iii) reform student loan programs.
5) Social Security Reforms. "Reform it for its own sake, not for deficit reduction".
6) Process Changes. In other words, reform the budget process to ensure that the debt remains on a stable path.
http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf
terça-feira, 22 de fevereiro de 2011
Administrative Law and Independent Commission
In “Regulating Business and Independent Commission” Marver Bernstein highlights the lifecycle of organized groups.
Independent Commissions usually emerge after public outcries over poor management in state companies.
i) Gestation: in this period, interest groups react against a newly-established independent commission since it promotes a rearrangement of political power.
ii) Youth: regulated groups still enjoy better organization and influence than regulators.
iii) Maturity: regulator agency crystallizes its program but start protecting its own system against substantial internal change as it becomes part of the status quo.
iv) Old Age: independent commission presents a bureaucratic conduct and ethical problems.
In this context:
How does the government establish regulatory agencies which maintain their original direction?
http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=6357784
Independent Commissions usually emerge after public outcries over poor management in state companies.
i) Gestation: in this period, interest groups react against a newly-established independent commission since it promotes a rearrangement of political power.
ii) Youth: regulated groups still enjoy better organization and influence than regulators.
iii) Maturity: regulator agency crystallizes its program but start protecting its own system against substantial internal change as it becomes part of the status quo.
iv) Old Age: independent commission presents a bureaucratic conduct and ethical problems.
In this context:
How does the government establish regulatory agencies which maintain their original direction?
http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=6357784
sexta-feira, 18 de fevereiro de 2011
Budget and Fiscal Discipline
How to create a budget process predictable and accountable when governments have increasingly contracted out and a large part of budget has been removed from public review?
This is the question that Irene Rubin poses in "The Great Unraveling: Federal Budgeting, 1998 - 2006".
In the United States the failure to fund Medicare and Social Security depicts the urgency to review federal budgetary processes. Chronic deficits have to be addressed by the return of fiscal discipline.
This is the question that Irene Rubin poses in "The Great Unraveling: Federal Budgeting, 1998 - 2006".
In the United States the failure to fund Medicare and Social Security depicts the urgency to review federal budgetary processes. Chronic deficits have to be addressed by the return of fiscal discipline.
Assinar:
Postagens (Atom)