Sunday, February 17, 2013

Program Budgeting


Program budgeting is when the government wants to manage budgets and measure the outputs of agencies mainly in quantitative terms. The term discretionary programs are programs such as national defense, housing and education, health, and housing (Hyman, 2011). The arm of government responsible for discussing and possibly amending the budget after the request is received by the president is the Senate and the House of Representatives. Congress passes a budget resolution after members agrees on it. The United States gives a lot of attention to its national security because, when there is security, everyone is better off and people have the freedom to interact and do business without feeling insecure. Fordham (2008) notes that when studying national security, one finds congressional voting as an impediment to foreign policy because members have vested interests that make security issues to be contentious and unattainable. When taking meaningful steps on national security, congressional members use roll-calling to pass meaningful issues. Therefore, member interests are ideologically driven and seem to be the cause of political conflicts.

When program budgeting, the government looks at the cost-effectiveness of national security. When the government intends to look into the cost-effectiveness of its armed forces in terms of armaments, training, deployment, overseas bases, a justification of program spending is effected. According to Hyman (2011), program budgeting has been used in the United States for a limited time and that at the federal level, it was used in the 1960s and 1970s mainly during the Johnson and Carter administrations where during Johnsons’ time it was called “planning-programming-budgeting-system (PPBS) and Carter’s time it was known as “zero-based budgeting” (ZBB). For policy makers, cost-effectiveness implies the trade-offs between various programs and making collective budgeting for similar missions. This is like grouping together various departments that are part of the government ministerial composition. However, there are problems associated with improving resource allocation. Even the Congressional Budget Office (CBO) does not have effective measures for improving resource allocation.

In the case of national security, cost-benefit analysis can be determined by undertaking three crucial steps: enumerating costs and benefits of all proposed projects nationally and internationally, evaluating the costs and benefits in monetary terms, and making a discount of all net future benefits. A cost-benefit tableau could then be drawn to determine the costs and benefits of each program over the years. It is quite difficult to reduce the problem of selecting government implemented goods and services program to straightforward, purposeful decisive factor. Likewise, it is difficult to accurately measure social costs and similarly big differences exist on how to figure out what benefits and costs to include in projects. Perhaps, incorporating the budgetary needs of the national security with a similar agency would bring cost-effectiveness. To get the cost-effectiveness of two programs, it is best to get information on the prices of the two alternative programs. The approval of a program that shows little signs of cost effectiveness may put a stop to the attainment of efficiency by lowering the effectiveness of the other project.

References

Hyman, D.N. (2011). Public finance: A contemporary application of theory to policy (10th ed.). Mason, OH: South-Western, Cengage Learning. 

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