Budgeting Based on Reality
Friday, May 2nd, 2008…prioritizing and making tradeoffs is infinitely more difficult when the government has made promises in flush times that it is hard-pressed to keep in lean times. And yet that seems to be the default mode of operation: commit windfalls when the economy is strong to long-term and popular causes, like entitlements and salaries and program expansions, that are politically difficult to rescind when the windfall evaporates.
If revenues were estimated and allocated based on the mean over some suitable period — say a typical business cycle — then decisions about priorities could be made in a relatively stable fiscal environment without the periodic panics that characterize the present budgeting process.