Influencing the Budget

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dollar-sign.jpgA new president inherits an ongoing 3-ring “budget circus:” What influence can be exerted in each ring once taking office?

In Ring 1:  Fiscal Year 2009.  The first ring is the current year budget, which will be fiscal year 2009 when the new president takes office.  Spending in the remaining 9 months of that fiscal year generally will be hard to influence, except on the margins.  Contracting and hiring can be frozen temporarily by incoming appointees until they get their feet on the ground, but for the most part, the spending cycle will be pretty much on autopilot.  The greatest influence will be in the execution of the budget elements that had been adopted by Congress in the previous year:   Can performance be measured? What can be learned to improve operations and performance in the upcoming budget year?

In Ring 2:  Fiscal Year 2010.  The second ring is the coming year’s budget (fiscal year 2010, starting in October 2009), which will have been prepared by outgoing President Bush and left for the new president to add his or her revisions, to be submitted to Congress just weeks after the Inauguration.  Again, there will be little opportunity to make fundamental changes to the decisions that were made in the bowels of agencies almost a year earlier.  Oftentimes, the outgoing president as a courtesy prepares a “current services budget,” which assumes no new policy initiatives, and just funds programs at existing levels.  This can give the incoming president some wiggle room to offer new initiatives on top of the existing base of government services.  Still, the new spending proposals won’t go into effect for almost another year.  The greatest influence will likely be by White House policy councils and the Office of Management and Budget because most agencies leaders will not yet be in place.

In Ring 3:  Fiscal Year 2011.  The third ring is the following year’s budget (fiscal year 2011, starting in October 2010).  The agencies will start working on their budget submission for that year in February 2009 – just weeks after the new president takes office . . . . and, oftentimes, months before the new group of mid-level political appointees arrive to provide direction.  Still, this will be the first budget the new administration will have the full ability to craft, from the ground up, with its more detailed agenda.  The new agency leaders, once in place, will be able to redirect the activities that may have already begun before they got there.

The implication of the drawn-out budget process is that the new president’s administration will be half-over before having his or her spending priorities reflected in “money on the ground” that his or her administration developed.  And that leaves only one more complete budget cycle before the next election.

A four-year term seems long, but not for budgeters!  This drawn-out “opportunity for impact” oftentimes seems to be a surprise to incoming political appointees, especially if they come from the private sector and are used to being able to redirect priorities quickly. 

Are there other administrative “surprises” that an incoming Administration can expect?

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2 Responses to “Influencing the Budget”

  1. Norman M. Macdonald Says:

    This for some reason reminds me of Dante’s Inferno. I’ve heard the federal budget process called worse. I’ve heard from various folks that the new performance standards are budget driven and looks for effcentcy not effectiveness. Peter Drucker said “Effcientcy is doing the thing right. Effectiveness is doing the right thing.”

  2. John Kamensky Says:

    Hi Norm — Dante’s Inferno doesn’t hold a candle to the budget process — What I’ve described is what happens when the 3-ring circus WORKS! The reality is that, for the most part, it doesn’t:

    — Unforseen events, like major floods or hurricanes, can result in recission (reduction) in current-year monies. OMB will sometimes do an across-the-board cut of every agency to provide emergency funds for an unanticipated event. So if an agency has a plan for how it will spend its money prudently this year, it could suddenly have to scramble to make ends meet. The lesson: pad your budget.

    — Legislative delays, like the current fight over the Alternative Minimum Tax, will likely delay the start and end of the 2008 tax season . . . so the federal government will have to borrow or reallocate funds to cover current year expenses since anticipated monies won’t be coming into the Treasury by April 15 as planned by the budgeteers when they developed the FY 2008 budget more than a year ago.

    — Most fiscal years (like this year’s) starts with a continuing resolution to provide stop-gap funding because the appropriations bills haven’t been adopted. That means budget offices are crafting proposals for the next year’s budget without knowing what the current year’s budget will be.

    — Mistakes, like the offshore oil royalties contract snafu that will likely require the federal government to reimburse oil companies by up to $60 billion, can drive budget cuts in pending budget proposals to cover the unplanned costs.

    So the new President will actually be facing a more complicated picture than what I’d originally described!

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