The budget process and the size of the budget

Abstract

The new congressional budget process provides- members of Congress with a new set of institutional mechanisms for making budget decisions. This article addresses the question of whether or under what conditions rigid application of the new budget process (modeled as, first, selection of the size of the budget and, second, its division) produces smaller budgets than a piecemeal appropriations process in which the size of the budget is determined residually. The theoretical result is that the new process sometimes results in relatively large budgets. A testable implication of the theory is that given a choice of how stringently the budget process is to be employed, members of Congress jointly consider preferences and the expected outcomes under available institutional arrangements and select the arrangement (usually a rule) that yields the most favorable outcome. Empirical results from the budget process in the House from 1980 to 1983 are generally supportive of the theoretically derived hypothesis of rational choice of institutional arrangements.

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