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p Formally, the budget represents a group of tables which outline in smaller or greater detail the different items of revenue and expenditure. But, as pointed out earlier, these tables conceal the real mechanism of state power and the determination of the most important political decisions. No government programme can be implemented without appropriating the necessary funds. Aaron Wildavsky, a specialist on problems of political decision-making, offers the following characteristic of the US budget: “Taken as a whole the federal budget is a representation in monetary terms of governmental activity. If politics is regarded in part as conflict over whose preferences shall prevail in the determination of national policy, then the budget records the outcomes of this struggle. If one asks, ’who gets what the government has to 37 give?’ then the answers for a moment in time are recorded in the budget. If one looks to politics as a process by which the government mobilizes resources to meet pressing problems, then the budget is a focus of these efforts."  [37•1 

p The government functions are thus specifically reflected in the budget structure. We shall analyse these functions in more detail in later chapters but shall confine ourselves in this section to a general characterisation of the features of the U.S. system of public finance.

p The state financial system in the USA corresponds to the three-level structure of organisation of political power: the federal government, the state governments and the local governments. Correspondingly there are three levels of financial organisation—federal finance, state finance and local finance.

p According to census statistics, the United States has more than 92,000 various government units, the overwhelming majority of which belongs to the lower, local level. Thus in 1962 total number of 91,158 government units included 3,040 counties, 17,144 towns and townships, 17,956 municipalities of big cities, 34,668 school districts and 18,301 other units (rural districts, police precincts, fire protection districts). Territorially the boundaries of these units do not coincide. Thus the residents of one county may belong to different municipalities, school districts, and so on. All these units secure their financing through taxes and excises, appropriations from higher level government, and the like, and they allocate these resources in the course of performing various functions within their jurisdiction. Each unit thus has its own financial draft plan which is included in the general category of local budgets. Units at a higher level—the state governments and the Federal Administration—also perform the full range of budget functions: collect taxes, spend money, issue loans. Such a structure of the financial system gives rise to the vast complex of intergovernmental financial relations and in addition requires considerable effort to co- ordinate operations at different levels. Moreover, the relations between the financial system of the state, on the one hand, 38 and the population and capitalist enterprises, on the other, are quite complicated.

p Duplication of functions, multistage system of taxation, absence of precise criteria for the separation of financial functions of various governmental units—all this makes the USA financial system inflexible and leads to the lack of coordination in the work of separate parts of the state financial mechanism.

p The principles governing the proportional distribution of tax receipts, collected by the state, among the various financial levels have become a most urgent political and social problem. The historically developed proportions, together with the steadily increasing share of the federal government, have ultimately led to a chronic financial crisis of the state and local governments and seriously restricted the possibilities of performing important social functions.

p The growth of military spending at the end of the 1960s caused by the participation of the United States in the war in Vietnam had much to do with the origin of the crisis of state and local nances. Walter W. Heller, an American economist, notes that “Vietnam, of course, has postponed the happy day when the hopes of the states for some new and generous form of federal financial support can be realized".  [38•1  The financial base of the state and local governments is extremely weak because of the specific tax structure which ensures a much smaller influx of revenue at the lower levels in comparison to the expanding requirements in additional funds for spending. “At the Federal level,” Heller writes, “economic growth and a powerful tax system, interacting under modern fiscal management, generate new revenues faster than they generate new demands on the Federal purse. But at the state-local level, the situation is reversed. Under the whiplash of prosperity, responsibilities are outstripping revenues. As Galbraith has suggested, prosperity gives the Federal government the revenues, and the state and local governments the problems."  [38•2 

p The leading place occupied by the federal budget is 39 determined not only by the high share in revenue and expenditure operations but by the nature of the governmental programmes financed under this budget which exert a profound and multifarious influence on the country’s economy, national economic policy and living standards of various groups of the population. The specific nature of the expenditure of the federal budget is shown in the following table (see p. 40).

p Military spending occupies the leading place in federal expenditures. Together with US government spending of an international nature, it comprises 52 per cent of all the federal government expenditures and more than one-third of the total government spending at all levels. The second big item in the federal budget is interest payments on the general debt. As for education, public health and other social needs, their share in the federal budget is relatively small.

p The multiplicity of functions of the contemporary state leads to multiplicity of fiscal operations. Correspondingly there are in use various budget concepts.  [39•1 

p For many years the term “Federal Budget" was associated with the concept of the Administrative Budget. This concept is reflected in the Budgeting and Accounting Act of 1921 which authorised the US President to regularly submit to the Congress a bill on the allocation of the federal financial resources among the various governmental departments and agencies. The Administrative Budget consequently reflected the operations of institutions for which the US Congress regularly makes appropriations. At first this form of the budget fully embraced all types of governmental activity. But the situation changed in the 1930s when the so-called “self-financing programmes" appeared which are not approved by Congress and are not included in the Administrative Budget. These programmes, most of which are covered by specially designated taxes and loans, include government social insurance funds and financial operations of a number of institutions controlled by the federal government. In the budget for the 1970 fiscal year these programmes were 40 Table 1-4 Expenditures of the Federal, State and Local Governments, by function, for 1968 fiscal year Amount, million dollars Percentage distribution Function All governments Federal State Local All governments Federal State Local National defence and international relations 83,874 83,874 — — 35.5 55.2 — — Space research and technology 4,645 4,645 — — 2.0 3.1 — — Postal service 6,485 6,485 — — 2.7 4.3 — — Education* 43,614* 7,184 24,279 30,237 18.5 4.7 40.2 47.0 Highways 14,654* 4,464 1 1 ,848 4,713 6.2 2.9 19.6 7.3 Natural resources 9,200* 7,001 2,005 522 3.9 4.6 3.3 0.8 Health and hospitals 10,580* 3,751 4,203 3,806 4.5 2.5 7.0 5.9 Public welfare 11,245* 6,794 8,649 4,828 4.8 4.5 14.3 7.5 Housing and urban renewal 2,841* 1,995 103 1,614 1.2 1.3 0.2 2.5 Air transportation 1 ,360* 917 96 448 0.6 0.6 0.2 0.7 Social insurance administration 1 ,378* 1,363 606 — 0.6 0.9 1.0 — Interest on general debt 14,873 11,607 1,128 2,138 6.3 7.6 1.9 3.3 Other and combined 31,601* 11,909 7,478 16,087 13.4 7.8 12.4 25.0 Total 236,348* 151,990 60,395 64,393 100.0 100.0 100.0 100.0

* Aggregates exclude duplicative transactions between levels of government. Source- Statistical Abstract of the United States 1970, p. 407.

2 3 41 estimated at $54,900 million, that is, they made up more than cne-fouth of the entire expenditure of the federal budget.

p The desire to more fully encompass and forecast government budget operations led to the employment of a wider concept, Consolidated Cash Budget. It registers all money receipts and payments between the federal government and the rest of the world, including operations not shown in the Administrative Budget. The specific feature of the Consolidated Cash Budget, besides fully encompassing financial operations, is that its combined totals (the excess of revenue over expenditure or deficit) determine changes in government borrowings.

p A third concept of the federal budget became popular in the 1960s. It is connected with the analysing of the public sector as an integral part of the entire economic system. We refer to the National Income Account Budget which includes only the operations of the federal government connected with the current production of goods and services. For its range this concept of the budget is close to the Consolidated Cash Budget but has a number of specific features.

p The parallel use of different budget concepts had great inconviniences. After working for several years a special body appointed by the President proposed an improved form, a Unified Budget.  [41•1  It is under this title that the federal budget has been compiled since the 1969 fiscal year.

p The Unified Budget contains a considerably greater volume of information than the previous budgetary documents. It indicates the sums of new appropriations approved for the current year and the balance of appropriations remaining from earlier years; data on governmental credits to local authorities and foreign borrowers, the deficit of the budget and sources of covering it, changes in the cash balances of the Treasury, government loans. In size it is close to the Consolidated Cash Budget. Thus, in the 1969 fiscal year the Unified Budget revenues totalled $149,600 million, the Consolidated Cash Budget $153,600 million, the Administrative 42 Table 1-5 Federal Budget Receipts and Outlays, 1929-1973 (million dollars) 43 continued Fiscal year Receipts Outlays Surplus or deflci t 1965 116,833 118,430 -1,596 1966 130,856 134,652 -3,796 1967 149,552 158,254 -8,702 1968 153,671 178,833 -25,161 1969 187,784 184,548 3,236 1970 193,743 196,588 —2,845 1971 188,392 211,425 -23,033 1972 197,827 236,610 —38,783 1973 220,785 246,257 -25,472 Fiscal year Receipts Outlays Surplus or deficit Administrative Budget 1929 3,862 3,127 734 1930 4,058 3,320 738 1931 3,116 3,577 -462 1932 1,924 4,659 -2,735 1933 1,997 4,598 -2,602 1934 3,015 6,645 -3,630 1935 3,706 6,497 -2,791 1936 3,997 8,422 -4,425 1937 4,956 7,733 -2,777 1938 5,588 6,765 -1,177 1939 4,979 8,841 -3,862 Consolidated Cash Budget 1940 6,879 9,589 -2,710 1941 9,202 13,980 -4,778 1942 15,104 34,500 -19,396 1943 25,097 78,909 -53,812 1944 47,818 93,956 -46,138 1945 50,162 95,184 -45,022 1946 43,537 61,738 -18,201 1947 43,531 36,931 6,600 1948 45,357 36,493 8,864 1949 41,576 40,570 1,006 1950 40,940 43,147 —2,207 1951 53,390 45,797 7,593 1952 68,011 67,962 49 1953 71,495 76,769 —5,274 Unified Budget 1954 69,719 70,890 -1,170 1955 65,469 68,509 -3,041 1956 74,547 70,460 4,087 1957 79,990 76,741 3,249 1958 79,636 82,575 -2,939 1959 79,249 92,104 -12,855 1960 92,492 92,223 269 1961 94,389 97,795 -3,406 1962 99,676 106,813 -7,137 1963 106,560 1)1,311 -4,751 1964 112,662 118,584 -5,922

p Note: For the 1971 fiscal year the table contains preliminary data on the actual fulfilment of the budget and for the 1972 fiscal year the draft.

p Source: Economic Report of the President 1972, p. 269.

p Budget $115,900 million; the expenditures respectively were $158,400 million, $155,100 million and $125,700 million; the budget deficit was $9,300 million, $1,500 million and $9,800 million.

p With the introduction of the new category of the budget, the financial operations of the government were recalculated for a number of years including 1954 in accordance with the new system. For earlier years data of the Administrative and the Consolidated Cash Budget are used.

p 4. THE BUDGET-MAKING PROCESS

p Before going over to a detailed analysis of budgetary revenue and expenditure and the long-range shifts in the structure of the major financial operations of the federal government (Chapters II-1V) and state and local authorities (Chapter VI), it is necessary to discuss in brief the budgetary process or the “budget cycle" in the United States, i.e., the procedure of drafting, discussing and approving the budget. It would be wrong to think that this is a purely technical question. Here we deal with the essence of the intricate 44 mechanism employed in the making of political decisions in the USA. In the course of drafting the regular budgetary document, which takes many months, the aims and principles of the Administration’s policy, its programme on major problems of development are clearly revealed. During this period various political forces and groups manoeuvre and clash. “The size and shape of the budget,” Wildavsky writes, “is a matter of serious contention in our political life. Presidents, political parties, administrators, Congressmen, interest groups, and interested citizens vie with one another to have their preferences recorded in the budget. The victories and defeats, the compromises and the bargains, the realms of agreement and the spheres of conflict in regard to the role of national government in our society all appear in the budget. In the most integral sense the budget lies at the heart of the political process."  [44•1 

p In some American publications and textbooks on governmental finance the budgetary procedure in the USA is pictured as an integral part of the “democratic system of government”. It is asserted that the budgetary document, elaborated in this way, best reflects the “collective interests" of different groups and sections of American society. The authors of such works contend that only through political bargaining, conflict and compromise is it possible to assure “equal representation" of different social groups and thus bring about a situation in which not one of them can impose its will and decisions on the majority. The budgetary procedure in the United States is held up in contrast to other budgetary systems, including the planned principles of determining the budget structure, as an expression of the supreme values of bourgeois society—competition and free, enterprise.

p The question arises, whether the extremely cumbersome and time-consuming procedure of drafting the budget ensures the making of truly unbiased and rational decisions equally acceptable to all or at least to a majority of American citizens? Is the most efficient allocation of the financial resources accumulated by the government thus attained? Does the system of numerous hearings and discussions of the 45 budget by tens of Congressional committees and subcommittees effectively control the actions of the Executive? In other words, does all this ensure the checks-and-balances of the government, the system so much praised in textbooks, wherein the financial decisions of governmental agencies are controlled by the President, the operations of the President checked by Congress and the actions of Congress determined by the American people?

p A discussion of these questions in the American press shows that it is impossible to give an affirmative answer to any of these questions. The American system of drafting and approving the budget is extremely wasteful in the sense of spending time and effort of governmental personnel; it in no way guarantees the economic rationality and the “just and equal representation" of all sections and groups of American society. Moreover, this system creates the ground for abuses and is exceptionally beneficial for powerful Big Business groups. The inexpediency of the budgetary system and the scandalous cases of abuse have been so widely publicised in the press that the question of a major reform of budgetary procedure has for many years been repeatedly raised and discussed by financial experts and political leaders.  [45•1 

p And now a few words about the existing system. Under the American Constitution, the President has no right to spend a single cent before the sum is approved by a corresponding legislative act which provides for the appropriation of money for some concrete government programme. The budgetary process is divided into two big cycles: 1) Drafting of the budget document which is entrusted to the US President but is practically prepared by the staff of his economic advisers; 2) examination and approval of the budget by the US Congress.

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p The American budgetary procedure differs essentially from that of other capitalist countries in that in the United States the original draft of the budget, as a rule, has very little in common with the finally accepted version. In Britain, for example, Parliament does not intervene in the budget- making process—it either approves or rejects the bills submitted by the government, expressing in the latter case a vote of no confidence in the government. In the United States, however, the budget bill submitted by the President is repeatedly redrafted in Congressional committees and subcommittees.

p The drafting of the budget starts long before the fiscal year begins (usually 18 months in advance).  [46•1  The heads of the government agencies and departments submit at the beginning of the preparatory period estimates of the material and manpower resources they need, and, on this basis, calculations are made of the necessary money appropriations. At this stage an important role is played by the Bureau of the Budget which is part of the Executive Office of the President. The main function of the Bureau of the Budget (in July 1970 it was renamed the Office of Management and Budget) is to evaluate the needs of departments, determine the necessary sums and draw up a draft of the planned budgetary expenditures. The head of this Office keeps in constant contact with the President and his economic advisers. That is why the final version of the budget bill reflects the President’s ideas and preferences, his evaluation of political aims and of the prospective economic development. As for budget revenue, it is forecast by the Council of Economic Advisers on the basis of the prospects of change in economic activity. In January of every calendar year the President submits to Congress a Budget Message which sums up the main trends and features of financial activity of the government in the forthcoming fiscal year. The detailed budget document is attached to the President’s Message.

p The serious imperfection of the budgetary procedure is revealed already at this stage. Since the budget is not a part of a national economic plan in which the major elements 47 and proportions of the economic process are balanced and mutually linked together, co-ordination of different government programmes is exceedingly difficult. Departments do not have precise objective criteria and guidelines for determining the prospects for the development of various programmes.

p In submitting applications for appropriations, the heads of departments follow the practice of “squeezing out" as much money as possible. Congress, on the other hand, tries to curtail to the utmost appropriations for needs which are considered secondary. This bureaucratic game, in which the departments try to get more and the Congress to give less, does not ensure the best procedure for the allocation of financial resources. The entire budgetary cycle ultimately is linked with the making of three major decisions at the three main levels: how much to ask (departments and government agencies), how much to recommend (the Office of Management and Budget) and how much to approve (the respective committees in the Senate and the House of Representatives).

p In principle the problem of evaluating and allocating budgetary appropriations is very intricate in itself. But under capitalism it is further complicated by the spontaneous nature of the production processes, the absence or a sufficient degree of coordination in the development of individual economic sectors, enterprises and regions. The lack of coordination is not eliminated and at times is even accentuated because of the employment of bureaucratic methods to coordinate the decisions of participants in the economic process. This is revealed with particular clarity during the allocation of budget appropriations when the purely mechanical procedure of curtailing programmes causes, in turn, a series of defensive measures by government departments and agencies designed to outwit the distributors of the government financial resources.

p In these conditions the calculation process loses the nature of an economic process and assumes the character of a political game. In setting the requested sums the heads of departments are usually least of all guided by considerations of economic rationality, comparative costs and effectiveness, rather they act on the principle of “what will go”. The general “rules of the game”, elaborated by practical experience, 48 are usually taken into account. It is known, for example, that new programmes pass through Congress with much difficulty. Jf a programme, however, has been launched and is handed down from budget to budget over a number of years it is much easier to get appropriations for it even if its inefficiency has been revealed. An “irrefutable” argument usually employed is: so much has already been spent on the programme that its closing would mean an admission that the amounts spent had been wasted. At the same time it is very difficult to convince Congress to accept some new, perhaps even very important, programme. That is why departments resort to various artifices. For example, the real cost of a programme is originally underestimated in the hope that once it is accepted it will be possible in future endlessly to “squeeze out" money from the Treasury for it. Thus Congress is deliberately misled as to the actual cost of a programme.

p The situation in the Office of Management and Budget, whose staff sees its major task in reducing appropriation requests by departments and agencies of the Government, does not improve the efficiency of the present fiscal system. The true character of calculations made in this Office is clearly revealed by Wildavsky who cites in his book excerpts from his conversation over appropriations for the National Institute of Health (NIH). A Bureau of the Budget official admitted that there were no precise schemes for evaluating the needs of medical institutions. On the question of criteria by which the Bureau of the Budget determines appropriations, the official stated that a kind of mechanical approach was taken, such as leaving it at the same level as last year or last year’s budget plus 10 per cent of new grants or simply a 10-per cent increase against last year.

p When the President transmits the proposed budget to the Congress, each item of expenditure is examined by the House and the Senate twice. The first round is called “ authorisation" and means the approval of the programme itself; the second round is called “appropriation”, that is, the allotment of necessary funds to fulfil the programme. Approval of the programme by no means implies that the appropriations will be automatically assigned for it. Strategic positions are held by the respective subcommittees in the House and the 49 Senate which ultimately make the major decision providing the programme with the necessary financial funds. Examination of the budget by Congressional committees ends with the adoption of the respective legislative acts (at present 13 regular appropriation bills are adopted). Each of them provides for the allocation of funds for implementing certain government functions (national defence, military construction, foreign aid, agricultural price support, etc.). Only after approval of the bill can the government department or agency write checks against the Treasury balances with the Federal Reserve System to make payments to its suppliers.

p The procedure of examining and approving the budget in the US Congress was developed over a long period of time. It was elaborated in expectation that people through its representatives in Congress would effectively supervise government spending. Realities, however, proved to be far removed from these expectations. American writers often characterise the budget-making process as “wasting time”, “archaic” and “ineffective”.

p Let us merely enumerate some of the most serious defects of this system.

p 1. Congress discusses not the budget as a whole but its separate sections or parts. Neither the House nor the Senate examine the budget in its entirety.

p Thus recommendations on the structure of budget revenues are examined by three committees: the Committee of Ways and Means of the House of Representatives, the Senate Finance Committee and a Joint Committee on Internal Revenue composed of a few leading members of these two committees. The work of all these bodies is considerably hampered by the customary delay in approving appropriation bills which are examined in other Congressional committees. Changes in tax rates and the introduction of new taxes is a very difficult and long process. So the work of the committees approving budget revenues is practically unco-ordinated with the planning of budget expenditures. The task of financial planning is further complicated by the practice of approving only new appropriations for the forthcoming fiscal year, whereas the Administration can utilise unspent balances of appropriations approved from previous years.

p The budget expenditure programmes are discussed in 50 each chamber in two rounds in a fragmentary way. Initially, specific programmes are discussed at the hearings of the respective legislative committees of Congress. Altogether there are 33 such committees (18 in the House and 15 in the Senate). In addition each committee has numerous subcommittees where the main work of examining the programmes is done.  [50•1  Bills on specific appropriations are examined by full committees.

p Finally all the differences between the House and the Senate are resolved through ad hoc conference committees. The discussion and approval of programmes takes many months.

p The second round leads to the approval of appropriations. The bills are discussed at the hearings of the Appropriation Committees of the House and the Senate, which have 13 subcommittees in the House and 14 in the Senate. Each bill may be repeatedly discussed from subcommittee to committee and the final joint conference of the committees of the two Houses for the settling of differences is repeated.

p It is clear that the fragmentary character of approving expenditures, and the lack of co-ordination in planning revenue and expenditure preclude a comprehensive approach to the budget as a single document.

p In this connection plans to reform the budgetary procedure have been repeatedly proposed in order to improve co-ordination of action by different committees of Congress. As early as 1946 the Reorganisation of the Legislature Act contained a proposal for setting up a Joint Budget Committee composed of members of the revenue and appropriations committees of both Houses. But a year later this committee failed to function: powerful forces in Congress (especially in the House of Representatives) were opposed to this committee and paralysed its work. Heads of the subcommittees, who held key positions and disposed of appropriations, did not wish to lose their influence in the US political scene by transferring some important functions to the Joint Committee.

p 2. Discussions of appropriations are usually limited to one fiscal year, thus blurring the legislators’ vision. Programmes 51 designated for many years operate chiefly in the military establishment. The result is that attention is concentrated primarily not on programmes in their entirety, nor on the fulfilment of a definite long-range economic task, but on the estimates of expenses of one or another government department for one year. It is clear that such an approach is by no means efficient.

p 3. Many American writers expose procedures which operate under the veil of a “democratic discussion" of the budget and “consideration of public interests”. The subcommittees discuss bills behind closed doors. Moreover, the process of decision-making in many of the subcommittees takes place under the dominating influence of the chairman or a group of members who hold their posts for many years. These legislators are often connected with “pressure groups”, with powerful lobbies, and they are able to push through decisions they want or to block for many years the passage of unwanted bills. Here for example is what Jacob Viner, a well-known American economist whom it is difficult to suspect of a biased attitude to the US Congress, has to say on this point: “There is ... the almost promiscuous and haphazard dispersal of power within each branch of the legislature, where the weakness of party discipline and the possession of nearly unlimited veto power and delaying power by the committee chairman, who acquire their posts by seniority regardless of the degree and quality of their ability, ... result in the process of legislation being largely subject to the idiosyncrasies and the special interests of a small group of men whose qualifications for meeting the heavier responsibilities they bear [whether it be qualities of ability or of character.—The Author.] are even more subject to the hazards of chance than the outcome of a horse-race or a football match. .. . The run-of-the-mill congressman or senator in initiating, delaying or modifying specific legislative proposals, which results in making extremely difficult and even impossible the attainment of coherence, timeliness, and self-consistency in the legislative processes as a whole and in making unduly important the role of the lobbyist for special interests, private or regional, who to attain his objectives, good or bad, often needs not the approval of the President or of the administration or

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p of the majority party as a whole or of national public opinion or of the press, but only the dedicated and not necessarily disinterested support of a small handful of free- wheeling legislators."  [52•1 

p 4. The central function of Congress as the “controller of public funds" is undermined by the fact that a substantial part of the resources can be spent by government departments essentially without any control. This applies to many categories of “self-financing programmes”. Furthermore, a discussion of the budget bill for the next fiscal year is only linked with approval of new obligational authority which do not contain the obligations of departments to spend this money and, what is most important, do not regulate the use of the “outstanding balance" of unutilised appropriations of previous years. This not only reduces to naught the control functions of Congress but also prevents the “closing out" of inefficient programmes approved by preceding Congresses. William Henderson and Helen Cameron point out: “ Congress may never really know how much money in toto it has appropriated for a particular function or agency and obviously cannot know the effects of an unknown expenditure pattern."  [52•2  The authors cite the following example: In the 1968 fiscal year with the administrative budget totalling $135,000 million, only $61,000 million (45 per cent) of all appropriations could be placed in the category of “ controlled”. Among the appropriations not subject to control are outlays under unutilised appropriations for previous years, expenditures under permanent programmes, expenditures of Government-owned enterprises, open programmes, liquidation of contracts, payments to trust funds and other operations.

p 5. What extremely complicates the procedure of adopting the budget in the Congress and results in a waste of time is the fact that at the beginning of the fiscal year government departments and agencies as a rule do not know what sum will be allotted to them for the coming year. Thus, by 53 July 1, 1969, that is, at the beginning of the fiscal year, not one of 13 regular appropriation bills was approved by Congress. At the beginning of August 1969, six bills passed through the House, two through the Senate, but not one was approved at the joint conference of committees where final agreement between the two Houses of Congress is reached. At the beginning of October, 1969, only one bill, covering altogether two per cent of the appropriations, was enacted and became law. Lastly, in March 1970, only four months before the end of the fiscal year, one bill, amounting to $19,000 million, was still not approved (it was vetoed by the President).  [53•1  The passage^of bills, requiring additional appropriations including expenditures for purposes not envisaged in the major bills, is even more delayed. One bill of this kind was signed by the President on July 22, 1970, i.e., three weeks after the end of the fiscal year.  [53•2 

p 6. The President has the right to veto a bill and return it to Congress for repeated examination. But the peculiarity of this action is that a veto can effect only the entire bill and not some specific part or item. This creates another loophole for various abuses and the railroading through of appropriations beneficial for definite groups, corporations or individuals. Various items which obviously run counter to the public interest but which the President, as individual Congressmen hope, will be forced to accept in order not to reject the bill as a whole, are tacked on to a general bill that includes hundreds of items. Usually these hopes are justified.  [53•3 

p These and many other defects of the budgetary procedure are targets of withering criticism. But the fact that they are preserved shows that the complexities of this procedure are of advantage to some forces in American society and are products of the pattern and peculiarities of the entire political system. Attempts to improve the efficiency of the 54 budgetary procedure by adopting and applying in practice normative criteria, are doomed because they irreconcilably contradict political reality, the system of organisation of political power in the United States. “The budget,” Wildavsky writes, “is the lifeblood of the government, the financial reflection of what the government does or intends to do. A theory that contains criteria for determining what ought to be in the budget is nothing less than a theory stating what the government ought to do....

p “A normative theory of budgeting would be a comprehensive and specific political theory detailing what the government’s activities ought to be at a particular time. A normative theory of budgeting, therefore, is Utopian in the fullest sense of that word."  [54•1 

p Wildavsky lays bare the essence of the budgetary process, seeing it as an answer to the question, “whose preferences are to prevail in disputes about which activities are to be carried on to what degree, in the light of limited resources. The problem is not only ’how shall budgetary benefits be maximized?’ as if it made no difference who received them, but also ’who shall receive budgetary benefits and how much?’ "  [54•2  The author correctly points to the impossibility of finding a satisfactory solution to the problem of allocating budgetary funds in the conditions of the socio-political system existing in the USA. It is impossible to treat as a single collective with common aims, a society, in which classes and social groups are divided by irreconcilable contradictions. It is impossible to find “a purely economic solution to the question" and to try to maximise the budgetary benefits irrespective of the problem of distribution of income, that is, without furnishing an answer to-the political question: for what groups (to be more exact, classes) one or another governmental measure is of benefit, who will gain and who will lose by its implementation?

p In the early 1960s, a budget programming was for the first time instituted by the US Department of Defence on the initiative of Robert McNamara who was at that time Defence Secretary. A programme of long-term planning of the 55 military expenditure was formulated at two levels: first, the drawing up of a five-year plan of the basic programmes and second, the planning of departmental weapons systems within each programme. The direct and indirect expenses for each section were calculated and the “benefits”, if they can be called such, from the application of different alternative “systems”, were evaluated.

p In 1965 President Johnson decided to extend the planning-programming-budgeting system (PPB) to other governmental departments.  [55•1 

Budget programming can promote a more precise determination of the efficiency of various programmes and thereby eliminate the most glaring absurdities of the present budgetary process. But it in no way changes the system of priorities and the existing procedure upon which the main political decisions are based: the chief criteria of the budgetary structure are already determined from the outside, regardless of the “scientific” recommendations and conclusions of experts. Behind-the-scenes pressure of powerful “interest groups”, linked with the Congressional “ appropriation machine”, definitely precludes any possibility of optimising the US budgetary procedure.