Surname

Name:

Course:

Lecturer:

Date:

Describe the Problems with the Federal Budget Process

The Federal Budget Process was created in 2004 and directs revenue-raising and expenditure activities of the government during the fiscal year. It outlines the financial priorities of the government for a particular period. One of the major problems with the Federal budget process is that it is structurally manipulatable. A national budget whose flaws can easily be taken advantage of is detrimental to the state’s economy, because it will not focus on the priorities of the state and will not have limits. It fails to realize that the country’s resources are limited while its needs and wants are infinite, therefore they must be distributed efficiently and effectively in order to satisfy the most important needs first. The problem with the Federal budget process therefore, is that its structural loopholes allow for the misappropriation and wastage of the state’s resources leading to increased taxes and a higher budget deficit, which ultimately hampers the growth of the economy.

The second problem with the Federal budget process is that it fails to account for all the required spending during the year. For instance, it fails to make provisions for disasters, bad debt from other countries and budgetary leakages (McEachern 245). The monies that are budgeted for are rarely used in the prescribed manner, and this makes it challenging to prepare the budget for the following year, since it is not entirely comprehensible how the funds were used in the current year. Some important programs have to be taken off the budget in order to allocate funds for emerging expenses. This is because the budget does not usually allocate a provision for emergencies and disasters, therefore huge amounts of money often have to be diverted to natural calamities and other disasters; this occurs almost every fiscal year.

The third problem with the Federal budget process is that it is not resolute on whether it aims to reduce spending or to reduce the growth of the budget deficit. With this lack of focus, it eventually fails to look at the bigger picture and acts only in the short-term. This is the reason why the every fiscal year, the budget proposes an increase in government spending and increased taxation. This is also caused by the fact that the spending committees are decentralized, hence they fail to arrive at a single conclusion as each committee only seeks to fund its own project instead of looking for ways in which all the projects may be funded in order of their priority (McEachern 301). Therefore, the Federal budget process is hampered by the fact that it focuses too much on the short-term.

The fourth problem is that the Federal budget process is too complicated for most people to comprehend it. This makes it difficult for lawmakers and policy makers to prepare a budget effectively; it is too intricate for the individual who does not have sufficient knowledge and experience of it. It is for this reason that the budgetary process is long and complex, and its results are often flawed. The other problem that arises from its complexity is that the few people who can comprehend it may exploit it to their own advantage. The budgetary process should be simple enough yet structurally tight and secure to allow for understandability, transparency and easy execution of its policies.

The last problem is that there is rarely a consensus between Congress and the President; the two parties that are crucial to the formation of the Federal budget process. Therefore, the formation of the budget is usually a difficult and protracted process. In the end therefore, this parties are forced to make hurried decisions regarding the budget in order to meet the closing deadlines. This increases the likelihood of a flawed budget.

Works Cited

McEachern, William. Econ Macro 2. Mason, OH: South-Western Cengage Learning, 2010. Print.