Joyce Performance-Informed Budgeting in the United States—Tastes Great or Less Filling

8/8/2019 Joyce Performance-Informed Budgeting in the United StatesTastes Great or Less Filling

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Philip G. Joyce

November 3, 2010


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` Sustained economic recovery 2008-present

` Ballooning budget deficits

2009-?` Bringing more ofa performance orientation to the

budget process 1960-present (in fitsand starts, but not when something

else is more important)` How can these three coexist peacefully or

happily?


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Year Deficit

/Surplus

% GDP Debt

Held by

Public

%

GDP

1940 -2.9 -3.0 42.8 441950 -3.1 -1.1 219 80

1960 0.3 0.1 238.8 46

1970 -2.8 -0.3 283.2 28

1980 -73.8 -2.7 711.9 26

1990 -221 -3.9 2411.6 42

2000 236.2 2.4 3409.8 35

2010 Est -1342.0 -9.1 9221.0 61

3


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` Actual deficits: 2007: $161 billion (1.2% of GDP) 2008: $455 billion (3.2% of GDP) 2009: $1,413 billion (9.9% of GDP)

` Under current law, deficitsare very large in short run and declinein later years (but remember: only with no significant change inlaws/policy) FY10--$1,342 billion (9.1% of GDP) FY11--$1,066 billion (7.0% of GDP) FY12--$665 billion (4.2% of GDP)

FY13--$525 billion (3.1% of GDP)` These projectionsassume the scheduled expiration ofthe tax cuts

enacted in 2001 and 2003 (most cuts expire after 2010)

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` Extending all expiring tax provisions--$6.1 trillion

` Extend only Bush tax cuts$3.3 trillion

` Extend Bush tax cuts for only taxpayers < $250k$2.6 trillion

` Index the alternative minimum tax for inflation--$720 billion

` Increase discretionary spending at rate of GDP growth--$2.1trillion

` Freeze discretionary expendituresat 2010 level--$1.65 trillion(savings)

` Reduce troops in Iraqand Afghanistan to 30,000 by 2013--$1.5 trillion (savings)

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With

Tax CutsExtended

and AMT

Indexed

Budget Deficit or Surplus

Percentage of GDP


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Debt Burden Across Countries in 2007

Percentage of GDP

Source: OECD.

Luxem bourg

Australia

Norway

Ireland

New Zealand

M exico

Iceland

SwitzerlandCanada

Czech Republic

Denm ark

Slovak Republic

Korea

Spain

Finland

UNITED STATES

Sweden

Netherlands

Germ anyTurkey

Poland

United Kingdom

France

Austria

Hungary

Portugal

Belgium

Italy

Greece

Japan

0 20 40 60 80 100 120 140 160 180

2020 CBO

Baseline

W ith Tax Cuts

Extended and

AM T Indexed


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9/20

` Will the U.S. restore fiscal responsibility?

` Will there be targets, and what will they be?

` What will be the impact ofthe Obama deficit commission?

` What effect will the 2010 midterm election have?

` How substantial will the effort be to reduce the deficit in thePresidents fiscal year 2012 budget (February 2011)?

` Ifso, will this include an effortto reduce programs based onperformance considerations?

` Whataboutthe big four spending programs (Social Security,Medicare, Medicaid, and Defense), which represented 60

percent of federal spending in 2009?

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` Federal Performance-Informed Budgeting

` The Bush Agendaand Legacy

` The ObamaAgenda

` Observationsaboutthe ObamaAgenda inHistorical Context

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` Efforts date back 50 years` GPRA brought more attention` Focus hastypically been on OMB/Congress`

Performance-informed budgeting ismultidimensional` In particular, lots ofactivity in budget execution` Enduring challenges

Identifying and measuring outcomes Getting performance information used Establishing a culture of performance

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` Traffic light scorecard Apparentsubstantial progressfrom 1 green to 72; from 110

red to 14

` PART--1000 programs in 6 years Effective or moderately effective30% to 51%

` Conclusions by studies of PART Agenciessaid PART lacked credibility Decentralized approach does not work for crosscutting

functions Too much work/too little payoff for OMB/agencies

Congress wasapathetic or hostile One size fitsall approach Measures improved, butstill need work Hard to reconcile PART with GPRA

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` Uneven progress made in measuring outcomes

` Attempts made to reduce programs based onperformance (PART) notsupported by Congress

`

Much more success in budget execution(management)than government-wide resourceallocation

` Uneven commitment from top leadership indepartments/agencies

` Some confusion asto the appropriate locus ofperformance (department oragency v. program)


14/20

` Evaluating effects of economic stimulus

` Determining programsto reduce or eliminate aspart of deficit reduction

` Establishing high priority performance goals` Significant investment in a limited number of more

in-depth program evaluations


15/20

` Current estimate--$814 billion in total costs

` Major goal is job creation/saving Administration estimatesthat 6.8 million jobs will be

created/saved

` Recovery.gov tracksspending and jobs Very difficultto track jobs reliably

Current definitionanyone who works in an ARRA-funded job

` Broader definition involvestracking multiplier effect of

jobs


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` Obama 2010 Budget identified 121 programs forreduction or elimination ($17 billion) OMBsays 60% of cuts enacted by Congress

` Obama 2011 budget included 126 terminations,reductionsand savingstotaling $23 billion (FY11) Those savings would representa .7% reduction in spending

forFY11 It isuncertain how much will be approved by Congresssincethey lefttown without passing any appropriation bills

` In both FY10 and FY11 these reductions were argued

on the basis of lack of program effectiveness


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` These are agency directed

` Emphasis on goals where progress can be shownwithin 12 to 24 months

` The ultimate test ofan effective performance

managementsystem is whether it isused, notthenumber of goalsand measures produced.

` Majority of goalsare specific and measurable,although some are ambiguous Social Securityachieving an average speed ofanswer of

264 seconds by the national 800-number Educationasystem with rigorous processes for determiningteacher effectiveness


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` Performance measures can answer only so manyquestions. More sophisticated evaluations necessary todraw conclusions

` It is necessary to isolate the effect of governmentaction

from other possible influencing factors` Obamaadministration established competitive processto secure funds for evaluation 17 agencies funded to do evaluations of 36 programs In some cases funds provided to improve agency evaluation capacity

` A centralized approach to SELECTION of evaluationtopics, buta decentralized approach to the CONDUCTof evaluations


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` Agencies instructed to identify 5% of budgetsaslowest priority Unclear how performance plays out

` Also ongoing effortto reform procurement ($40 billionsavings estimate)

` Continued suggestion thatagenciesthat doevaluations will be favored

` Will deficit commission findings be embraced? Timing is problematic

` Transparentand open government Creation of performance dashboards


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` Notas high a priority as other issues (health reform, theeconomy)

` Short-term could force out long-term` More targeted, in-depth evaluation

` Transparency is majorstated focus` Quantitative measures may force outqualitative ones` Performance agenda must fit with pressuresto reducespending and the deficit

` Stated goal isuse, but notatall clear how that will be

achieved` Continued uneven results

Joyce Performance-Informed Budgeting in the United States—Tastes Great or Less Filling

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