The Budget Process and the Size of the Budget

Abstract

The new congressional budget process provides- members of Congress with a new set \nof institutional mechanisms for making budget decisions. This article addresses the question \nof whether or under what conditions rigid application of the new budget process \n(modeled as, first, selection of the size of the budget and, second, its division) produces \nsmaller budgets than a piecemeal appropriations process in which the size of the budget is \ndetermined residually. The theoretical result is that the new process sometimes results in \nrelatively large budgets. A testable implication of the theory is that given a choice of how \nstringently the budget process is to be employed, members of Congress jointly consider \npreferences and the expected outcomes under available institutional arrangements and \nselect the arrangement (usually a rule) that yields the most favorable outcome. Empirical \nresults from the budget process in the House from 1980 to 1983 are generally supportive \nof the theoretically derived hypothesis of rational choice of institutional arrangements.

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