Although budgeting is rarely included in policy stages theory (and you will see on p. 47 that Peters himself does not include budgeting as a policy stage), it is an important part of the policy process. Sometimes it is considered to be part of implementation and sometimes it is considered part of policy formulation. Either way, the budget is just as important, if not more so, in determining the effectiveness and efficiency of a policy as the authorizing legislation or agency rules. An underfunded program will likely be seen as ineffective and an over-funded program will likely be seen as inefficient.
Peters goes into a lot of detail about types of budgets and approaches to budgeting. A lot of this goes beyond what you really need to know for a public policy class and delves into the management and administration literature. My hope is that you have learned three major lessons from this chapter:
1) The budget process is complex and takes a long time to complete. Planning for budgets begins almost a year and a half prior to when the budget is enacted. It starts with the president's economic advisers, it moves to the agencies, comes back to OMB and the president for review. In early February, the president releases his budget publicly and the action moves to the legislative branch. The appropriations committees in both houses of Congress take the President's release into account and then after hearings and negotiations send their own versions to the floor of their respective houses. Often the president's, Senate's, and House's bills are all very different reflecting the different political ideologies of their leadership. Once the appropriations bills pass both houses, they go to conference where leaders from both houses attempt to eliminate the differences between the two bills. The resulting reconciliation bill is voted on by both houses and goes to the President once it passes. The president can veto, sign, or let pass the bill as a whole. All of this has to be finished by mid-September for a new budget to take effect. It should be no surprise that the deadline is rarely met, particularly when both houses are divided politically, so Congress is often forced to pass continuing resolutions, which fund programs at the same level as the previous fiscal year (remember, fiscal years are October-September).
2) Congress has very little control over a large portion of the budget. Annually, only about 30% of the budget is discretionary spending, the rest can't be changed without substantial, politically unpopular policy change. The remaining 70% includes entitlement programs like Medicare and Social Security and interest on the debt. For more information see the Center on Budget and Policy Priorities' fact sheets on the budget. This means that during all of the negotiations and hearings about the budgets, most of the disagreements and advocacy effort concerns a small piece of the budget pie. Organizations that may be allies during other parts of the year sometimes end up as adversaries during budget debates.
3) The budget, deficit, and debt all suffer from definitional problems. How they are counted and what is included is often strategic, and rarely represents "the truth" of federal spending and debt
4) The system is full of perverse incentives, or incentives that make the process less efficient. The short-term focus, out of date projections, lack of line-item veto, pork barrel spending, overhang, supplemental appropriations, and incrementalism may all lead to budgets that are larger than necessary and an inefficient use of funds.
Of course, this isn't to say that government spending is bad (although there are certainly economists and politicians who would argue that point). There are, however, places where funding could be more efficiently allocated. I want you to keep this is mind when you read the program evaluation chapter. Funding and implementation both have as much of an effect on program performance as the legislation itself.
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