Panel Paper: How CAN Experiences from Abroad Shape US Federal Budgeting? the Case of Fiscal Rules and MULTI-Year Budgeting

Friday, November 9, 2018
McKinley - Mezz Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Juan Pablo Martinez Guzman and Philip Joyce, University of Maryland

US federal budgeting is broken and dysfunctional. In recent years, the US government is unable to satisfy even the most basic conditions of an effectively operating budgeting process, such as the passage of routine appropriations before the start of the fiscal year, the enactment of budget resolutions, and keeping levels of fiscal deficit and debt under reasonable margins. It has been more than 40 years since the last comprehensive budget reform—the Congressional Budget and Impoundment Control Act of 1974—was signed into law. Over that intervening period, budgetary reforms in the US federal government have been largely unsuccessful, while many countries around the world have more innovative, and successful, budget reforms. The question that we address in this paper is what lessons these international reforms may have for the U.S.—Are there any process changes that would improve federal budgeting, either substantively or procedurally? We focus on two types of reforms: fiscal rules and multi-year budgeting. In terms of fiscal rules, we show that other advanced economies have, at best, a mixed record of success with rules at the national level. We examine the cases of Japan and Australia and show that rules have failed to promote fiscal responsibility. Our findings are more promising in terms of multi-year budgeting. We explore two successful cases where the budget process has transformed to avoid discussing appropriations every year and to foster the completion of multi-year policy goals. Those cases are France and the United Kingdom. We end by discussing alternatives to implement multi-year budgeting at the US federal government, including complementary reforms specific for the US context that would enhance the possibilities for success.