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Economy and the National Budget


ISSUE:  Autumn 1927

The public at large is moderately interested in the results of government but the mere mechanism appears to be of concern only to the professors and the professionals of political science. The seemingly dry, confined and statistical activities of the Bureau of the Budget assuredly do not attract public scrutiny. Yet the interrelation of this new organ of the body politic on the one hand to the Executive arm, the Departments and Congress on the other, today forms one of the most anxious preoccupations of every Federal official.

The extent of the influence which the Budget Bureau has attained is clear in Washington. Neither the Administration nor the press has sought to make it clear to the public. Latent in the situation are all the objectionable possibilities that exist whenever the true source of governmental authority and responsibility is concealed. Partisan differences between President and Congress prevented budget legislation during the Taft and Wilson administrations. The Act of 1921 was universally hailed as a reform long overdue. At last the Government of the United States was, like any great corporation, to have a businesslike estimate of its income and expenses, a method of securing economical and efficient administration in its affairs.

This was an obvious estimate of the significance of the Budget Act. And it was this conception which General Dawes formulated and impressed upon both officials and public with all the force of his incisive energy and picturesque personality. And strictly along these lines he accomplished mighty things. Waste was discovered; overlapping functions eliminated; procedure simplified; Government methods of letting contracts improved; services co-ordinated. The Departments were cajoled or coerced into co-operation. Congress was friendly. General Dawes has always had sympathetic newspaper attention. Perhaps never has a great reform been launched more successfully.

After a year as Director, General Dawes retired, expressing his conclusions of the function of the budget in these modest terms: “One must remember that the Budget Bureau is concerned with the humbler and routine business of government. Unlike Cabinet officers it is concerned with no questions of policy.”

This conception, however, is in sharp contrast to that prevailing in European countries where the budget system has long existed. England is the best example. There the principle was fully recognized that under modern conditions the policy of the Government is directly reflected by an apportionment of funds for particular purposes. Without the money for dams and ditches a reclamation project remains a dream. Improvement of public health calls for doctors’ salaries and hospitals. Without a strong military establishment an aggressive attitude in foreign affairs is a dangerous gesture. Hence the importance of the budget in parliamentary countries, as a declaration of the Ministry’s policy. The Minister of Finance introduces. His duty is to make income balance outgo. When the appropriations are debated in detail, however, they are defended by the ministers of the departments affected. These must justify the proposed expenditures and they are subject to criticism equally on the ground that such appropriations are inadequate to fulfill a desired policy as that they are extravagant. An adverse vote upon any item of expenditure thus constitutes a reversal of the Government policy. And the Ministry resigns.

The inception of the budget system chanced to coincide with a period of demobilization and demoralization in the Federal Government. Doubtless with a view to hastening the return to normal conditions General Dawes, with the approval of President Harding, announced a specific sum as a “limiting total” of governmental expenditures for the coming year. It may be assumed that in this he contemplated not any extension of the budget function but primarily a sharp stimulus towards immediate economy. The effects of this move, however, were more far reaching. With the return to a peace time basis opportunities for eliminating large items of waste naturally became fewer and fewer. Such as existed, however, were diligently pursued. In his fourth annual report, the Director paid tribute to the “Interdepartmental Board on Simplified Office Procedure” whose activities attained their climax in “reducing the excessive numbers and sizes and grades of paper and in introducing economical compounds for moistening wet stencils.”

Yet a new administration was demanding even more economy than the last. The possibility became apparent of capitalizing General Dawes’ success and prestige into a precedent. And this precedent, applied and amplified during more normal years by President Coolidge and his Director, General Lord, in effect has converted the system into something on the order of the European budget—the expression and imposition of governmental policy. The President himself clearly recognizes this development—witness his statement:

“In view of the importance of the subject and to guard against misapprehension as to the nature of the budget—. It is the President’s budget. The estimates for appropriations therein are his estimates. There can not, therefore, be any conflict of procedure or policy between the President or Cabinet and the Director of the Budget Bureau. The budget as transmitted to Congress embodies the Administration policies which the President has decided to recommend.”

This was said early in 1923 at a meeting of the “business organization of the government.” As these meetings are solemnly held twice each year amplifications and specifications of “The Adniinistration Policies” might well be expected. Yet neither then nor at any time thereafter has the President, his Official Spokesman, or the Director of the Budget ever sought to define these policies or the results to be expected from the expenditures so recommended. The only policy ever discussed has been, to use the President’s adjective, the “undebatable” one of strict economy. In June, 1923, the President did, indeed, concede that “the day was not far distant when, the irreducible minimum having been reached, consideration would be given to that expansion of governmental activity which must attend a growing nation.” Yet only seven months later, and at the same assemblage, Mr. Coolidge resumed his original j)osition, that “These next four years will be years of constant pressure for economy. There must be no retreat.”

The procedure of these meetings does not vary from that originally planned by the inventive General Dawes with an eye, one may suspect, to terrorizing those officials who during the war had become confirmed spendthrifts of the public funds. The various Bureau Chiefs occupy the Auditorium.

The United States Army Band obliges with what the Annual Report of the Budget Bureau describes as “a program of appropriate airs.” Alas, moved doubtless by its own frugal principles, the Budget Bureau has never reprinted this program, invaluable though a knowledge of the numbers might be for reform organizations in serenading extravagant local bodies. The members of the Cabinet sit on the stage but take no more active part in the proceedings than do their subordinates below. The President and the Director of the Budget speak. What they say is broadcast, making the Director of the Budget perhaps the only other public official ever heard on the air with the President of the United States.

Formally assembled are the responsible executives of a government ever increasing its population, its resources, its demands. A number are scientists of repute, in the public service at a personal sacrifice. To them their chief’s message is never “Let us accomplish something,” but always “Let us save.”

Small wonder that with such an impetus the budget organization should have exceeded even the normal bureaucratic tendency to expand its influence at the expense of others. Harding’s and Dawes’ emergency device, the “limiting total,” has been consistently applied to each department. Its amount has been publicly predicated upon a budgetary estimate of federal income which only in the past year has ever come within one hundred and forty-five million dollars of the actual receipts. In the preparation of the last budget the Bureau went a step farther, decreeing which activities some of the Departments should curtail in order to come within the limit.

Thus in a scant seven years this organ has attained an authority over the Executive Departments certainly comparable with that established by generations of civil servants at the British Treasury. The system, as now operated, provides no equal opportunity for a statement of the case pro and con of any project requiring public funds. The Budget Bureau has the last word and its advice is given in camera. No one but the President need know the reasons for its most important recommendations.

The years of this regime have been years of prosperity and large surpluses. In such a position a well managed corporation, while being generous to its stockholders, would also grasp the opportunity to put its plant into the best possible condition. But go into any public building outside of Washington; does its condition compare with a private structure of the same class? Or consider what in the case of our naval vessels has been given the polite official term “deferred maintenance”—bluntly, deterioration due to lack of repairs; or the effort on launching an extensive aviation program to finance it out of further cuts from an already reduced military establishment.

Such actions hardly accord with the expressed ideas of General Dawes. “The Budget Bureau is designed to give impartial advice to the President and Congress. . . . Because at the time of its establishment there was a great necessity for reducing governmental expenditures its activities which became most prominent were those where it acted as agent for Executive pressure in forcing down expenditures where not in contravention of Congressional mandate and efficiency. This is but one function of the Budget Bureau.

“It must be as willing to advise an increase in appropriation where the same is clearly in the interest of Government efficiency and true economy as to advise a reduction. . . It is only by this method under which it gives an impartial business judgment as to the necessity for expenditure in the functions of Government that it can in the long run maintain its proper influence with the Executive and with Congress and justify its existence.”

In the public mind, however, the Budget Bureau is still regarded, along the lines of General Dawes’ ideas, as a sort of efficiency expert. No doubt this is a misconception convenient to an administration bent upon conveying an impression of economy secured without curtailment of accomplishment. But it is not a situation well adapted to a true understanding of the state of the public business. It possesses, moreover, certain further disadvantages.

Appropriations for national defense are always a center of controversy. The Budget Act prohibits any Government official from recommending an increase in any item of the budget except by request of Congress. Now, for instance, to state that an army of 115,000 is not enough to fulfill our peace-time military policy comes pretty close to being a request for an increase in the budget item designed to maintain only 115,000. Officials and officers of the War Department prefer to keep silent. Then, in support of our dwindling defenses, irresponsible agitators make themselves heard instead, and their utterances are invariably far more provocative to foreign opinion than would be the sober statement of responsible officials.

President Wilson’s personal autocracy, followed by the scandals of the Harding Administration, successively diminished the prestige of the Cabinet. Continued operation of the budget system along present lines will further weaken the position of its members. Nominally responsible for the conduct of their Department, they will find that what determines their actual policy is the allotment of funds to their various activities by the President and his Director of the Budget. The latter does not share either the collective responsibility for the public business which the Cabinet possesses, or its members’ connection with their respective Departments. Yet his influence with the President may well exceed that of several members of the Cabinet. If such proves the case, these Secretaries cease to be “high officers of state” and become mere superintendents of an agglomeration of technical bureaus which must look to the Director of the Budget for the approval of each of their projects. Is it possible to correct these defects without destroying the valuable characteristics of the new system?

The remedy is comparatively simple. Acknowledge the budget for what it is—a declaration of the Administration policy.

Publicly explain and defend those policies in detail. The President can not be expected to cover more than the main outlines. The Director of the Budget is a permanent and non-partisan official. The obvious exponents of policies are the advisers of the President—the members of his Cabinet. In European countries these ministers appear before the legislature. Proposals to give them the same privilege in Congress have never been followed through. Yet they often appear in practice before committees of the Senate and House to give their views upon specific legislation. These committees are ordinarily well informed as to the needs and activities of their respective departments. Make the appearance before them of the members of the Cabinet a regular and formal event in connection with the submission of the budget. Allow time and latitude to the inquiry.

There will be partisan questions, of course, but the state of affairs in the different Departments will become public property. A Cabinet member will no longer be able to solace his conscience with some pale recommendation in an annual report, written only to be ignored. If unable to defend personally an Administration decision, he is more likely to resign than under present conditions where silent acquiescence suffices. The President will remain the ultimate master of his Administration, but the political consequences of such a possible resignation will deter him from entirely neglecting any given department. For even rubber stamp Cabinet members sometimes awaken to the true responsibilities of their positions.

It need not be assumed that such a procedure would offer a careless Administration the opportunities for excess which the present method affords to a penurious one. The Budget Bureau, being an agency of the President, could not by itself check any extravagant tendencies on his part. Congress can; its largesses have generally been in the direction of “log rolling” and “pork”; it has always been ready to assume the role of Watchdog of the Treasury where non-political Government services are concerned. Couple this tendency with an opportunity to put the Administration on the grill and further stimulus to a zeal for economy could hardly, be required.

It is noteworthy that the various original proponents of the budget system, President Taft among them, all specified such a feature in the procedure. Its omission has led to a conception of the budget as a Sacred Cow to be adored at the bidding of the High Priest instead of what it should become—a helpful instrument in the daily task of government.

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