The US Budget Process: An Outsider’s View 3 Myths about the US Budget Process 3 Real Anomalies in the US Budget Process 3 Naïve Suggestions for Reform 2

3 Myths about the US Budget Process: #1: US Budget is Hopelessly Fragmented Australian Budget (A$ 386bn) France Public Expenditure in 2012 (€1,212bn) US Federal Budget in 2014 ($3,633bn) UK Public Expenditure in 2014 (£716bn)

3 Myths about the US Budget Process: #2: US Lacks Medium/Long-term Perspective 4

3 Myths about the US Budget Process: #3: US Has No Numerical Fiscal Rules 5 In how many years were numerical fiscal rules in place from 1985 to 2013? (30 OECD Countries) US Fiscal Rules LawRuleYears Graham- Rudman- Hollings Act Deficit targets Budget Enforcement Act Expenditure caps & PAYGO rules PAYGO ActPAYGO rules Present

3 Real Anomalies in the US Budget Process #1. Coverage of Fiscal Rules 6 How much of government does the fiscal rule cover? (30 OECD Countries) USA, Canada, Japan, Mexico, Norway, & Switzerland

3 Real Anomalies in the US Budget Process #2. Reversionary Budgets 7 What happens if the legislature doesn’t pass the Budget? (30 OECD Countries) USA, Mexico & Switzerland

3 Real Anomalies in the US Budget Process #3. Rescission of Expenditure 8 Can the Executive cut expenditure authorized by the legislature? (30 OECD Countries) USA, Italy, Japan, Norway, Switzerland, & Turkey

3 Naïve Suggestions for Reform: 1.More personal sanctions for failing to pass a budget: –President’s Budget is enacted automatically –Senators and Congressmen don’t get paid –No further legislation can be passed –Senate and Congress face snap election 2. Make appropriations limits not floors for expenditure –Give executive (back) the power to manage the budget –Reduce the need for emergency appropriations –Use performance framework to ensure accountability for delivery 3.Elevate long-term fiscal targets above basic legislation –In many countries fiscal rules are in constitution or organic law –In most countries they cover central and sub-national governments –Sanctions for non-compliance are sometime enforced by courts 9

3 Naïve Suggestions for Reform (Bonus): Why Not Amend the Constitution? CountryFiscal Rule Amendment Year of Ratification PolandDebt rule1999 SwitzerlandBalance and expenditure rule2001 AustriaBudget principles2009 GermanyStructural balance rule2009 Spain Structural balance, debt, expenditure limits 2011 ItalyStructural balance rule Countries with New Fiscal Rules in their Constitutions