Budgetary Decision Making in the Twentieth Century: Theories and Evidence

Article excerpt

ABSTRACT. Three rival internal change theories of budgeting have characterized the twentieth century. Internal change theories consider the importance of change made inside governments; exogenous factors do not have a significant bearing on outcomes in these approaches. The century started out with the rational/scientific, then moved to incrementalism by mid to late-century. The century ended with the garbage can model. This paper tests the descriptive power of each of these models on budget outcome data. The methods used in this study were time series modeling of monthly U.S. national government budget outcomes from 1968 to 1999. The results provide support for both incrementalism and rational/scientific budgeting. There was no support found in this study for the anarchical tendencies associated with the garbage can theory of budgeting. These results suggest that the garbage can model may not deserve its reputation as the dominant budgeting paradigm at the close of the twentieth century.

INTRODUCTION

Three rival internal change theories of budgeting have characterized the twentieth century. Internal change theories consider the importance of change made inside governments, exogenous factors do not have a significant bearing on outcomes in these approaches. The century started out with the rational/scientific, then moved to incrementalism by mid to late-century. The century ended with the garbage can model. This paper tests the descriptive power of each of these models on budget outcome data. The methods used in this study were time series modeling of monthly U.S. national government budget outcomes from 1968 to 1999 The results provide support for both incrementalism and rational/ scientific budgeting. There was no support found in this study for the anarchical tendencies associated with the garbage can theory of budgeting. These results suggest that the garbage can model may not deserve its reputation as the dominant budgeting paradigm at the close of the twentieth century.

The U.S. government in the late 1990s achieved budgetary surpluses only for the first time in almost 30 years. This new phenomena was expressed in the public's view toward the budget surplus. Recent public opinion polls have asked questions about what the federal government should do with the additional revenue.

- A Washington Post/Kaiser/Harvard 2000 Election Economy Survey (IPOLL, 2001) conducted in October 2000 asked "Which of these do you think should be the top priority for any surplus money in the federal budget: Cut federal income taxes, put it toward reducing the national debt, strengthen Social Security/Medicare, increase spending on other domestic programs, or national defense/military?" The highest response recorded at 44% was to strengthen Social Security/Medicare. The second highest response at 24% was to put the surplus toward reducing the national debt. Cutting federal income taxes received only 20% of respondents in this poll.

- In November 2000 a CBS News Poll (IPOLL, 2001) asked "Most people think the country is doing well economically, and there is currently a surplus in the government's budget. Do you think the surplus money should be given to taxpayers whose tax money contributed to it, or do you think the surplus money should be used to solve big problems the country hasn't been able to afford to solve before?" Half of the respondents believed the surplus money should solve big problems the country has not been able to afford. Only 38% believed that the surplus money should be given back to taxpayers.

- A Fox News/Opinion Dynamics Poll (IPOLL, 2001) conducted in October 2000 asked: "Which of the following statements do you agree with more? I'd rather pay higher taxes to support a larger government that provides more services. I'd rather pay lower taxes and have a smaller government that provides fewer services." The majority of respondents, 52% believed that they would rather pay

- Lower taxes and have smaller government while 32% wanted to pay higher taxes to support larger government. …