Budget theory
Encyclopedia
Budget theory is the academic study of political and social motivations behind government and civil society budgeting. Classic theorists in Public Budgeting
Public budgeting
Public Budgeting is a field of Public Administration and a discipline in the academic study thereof. Budgeting is characterized by its approaches, functions, formation, and type....

 include Henry Adams, William F. Willoughby
William F. Willoughby
William Franklin Willoughby was an author of public administration texts including works on budgeting. He often worked with his twin brother, Westel W...

, V. O. Key, Jr.
V. O. Key, Jr.
Valdimer Orlando Key, Jr. , usually known simply as V. O. Key, was an influential American political scientist known for his empirical study of elections and voting behavior.-Biography:...

, and, more recently, Aaron Wildavsky
Aaron Wildavsky
Aaron Wildavsky was an American political scientist known for his pioneering work in public policy, government budgeting, and risk management....

. Notable recent theorists include Baumgartner and Jones--Frank R. Baumgartner and Bryan D. Jones, Richard Fenno
Richard Fenno
Richard F. Fenno, Jr. is an American political scientist known for his pioneering work on the U.S. Congress and its members....

, Allen Schick
Allen Schick
Allen Schick is a governance fellow of the Brookings Institution and also a professor of political science at the Maryland School of Public Policy of University of Maryland, College Park...

, Dennis Ippolito
Dennis Ippolito
Dennis Ippolito is a professor of political science at Southern Methodist University and considered a leading historian and expert on governmental budget theory...

, Naomi Caiden, Irene Rubin, James D. Savage
James D. Savage
James D. Savage is a political science professor at the University of Virginia. He is an expert in government budget policies and budget theory. He completed his undergraduate degrees in political science and psychology at the University of California, Riverside, his graduate degrees in political...

, Thomas Greitens and Gary Wamsley
Gary Wamsley
Gary Wamsley is public administration specialist and professor emeritus at Virginia Tech's Center for Public Administration and Policy. He is perhaps best known as the coordinating editor of Refounding Public Administration, a work that followed from a well-known public administration paper called...

. Budget theory was a central topic during the Progressive Era
Progressive Era
The Progressive Era in the United States was a period of social activism and political reform that flourished from the 1890s to the 1920s. One main goal of the Progressive movement was purification of government, as Progressives tried to eliminate corruption by exposing and undercutting political...

 and was much discussed in municipal bureaus and other academic and quasi-academic facilities of that time such as the nascent Brookings Institution
Brookings Institution
The Brookings Institution is a nonprofit public policy organization based in Washington, D.C., in the United States. One of Washington's oldest think tanks, Brookings conducts research and education in the social sciences, primarily in economics, metropolitan policy, governance, foreign policy, and...

.

The executive budget
Executive budget
The executive budget is the budget for the executive branch of the United States government. It was established as one of the reforms during the Progressive Era and became a federal policy in 1921 under the Woodrow Wilson Administration. The process of creating the executive budget consists of...

 in USA was a financial innovation designed to empower city mayors and city managers with the capacity to implement needed policy reforms in the Progressive Era
Progressive Era
The Progressive Era in the United States was a period of social activism and political reform that flourished from the 1890s to the 1920s. One main goal of the Progressive movement was purification of government, as Progressives tried to eliminate corruption by exposing and undercutting political...

. Since that time, the executive budget has become a tool by which the president of the United States has been able to substantively shape policy and draw power to the president from Congress, which was originally charged with "holding the purse"(and still is constitutionally, as there is no federal-legislative authority to change the constitution outside the amendment process or for congress to legislate away their authority). This has resulted in an ever increasing role and power base for what is now called the Office of Management and Budget.

Budget, Civil society and Constitutional economics

Constitutional economics
Constitutional economics
Constitutional economics is a research program in economics and constitutionalism that has been described as extending beyond the definition of 'the economic analysis of constitutional law' in explaining the choice "of alternative sets of legal-institutional-constitutional rules that constrain the...

 is a field of economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 and constitutionalism
Constitutionalism
Constitutionalism has a variety of meanings. Most generally, it is "a complex of ideas, attitudes, and patterns of behavior elaborating the principle that the authority of government derives from and is limited by a body of fundamental law"....

 which describes and analyzes the specific interrelationships between constitutional issues and functioning of the economy including budget process
Budget process
A budget process refers to the process by which governments create and approve a budget, which is as follows:* The Financial Service Department prepares worksheets to assist the department head in preparation of department budget estimates...

. The standards of constitutional economics when used during annual budget
Budget
A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...

 planning, as well as the latter's transparency to the society, are of the primary guiding importance to the implementation of the rule of law
Rule of law
The rule of law, sometimes called supremacy of law, is a legal maxim that says that governmental decisions should be made by applying known principles or laws with minimal discretion in their application...

. Also, the availability of an effective court system, to be used by the civil society
Civil society
Civil society is composed of the totality of many voluntary social relationships, civic and social organizations, and institutions that form the basis of a functioning society, as distinct from the force-backed structures of a state , the commercial institutions of the market, and private criminal...

 in situations of unfair government
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...

 spending and executive impoundment
Impoundment
Impoundment is the election of a President of the United States not to spend money that has been appropriated by the U.S. Congress. The precedent for presidential impoundment was first set by Thomas Jefferson in 1801. The power was available to all presidents up to and including Richard Nixon, and...

 of any previously authorized appropriations, becomes a key element for the success of any influential civil society.

The term “constitutional economics” was used by American economist – James M. Buchanan
James M. Buchanan
James McGill Buchanan, Jr. is an American economist known for his work on public choice theory, for which he received the 1986 Nobel Memorial Prize in Economic Sciences. Buchanan's work initiated research on how politicians' self-interest and non-economic forces affect government economic policy...

 – as a name for a new academic sub-discipline that in 1986 brought him the Nobel Prize in Economic Sciences for his “development of the contractual and constitutional bases for the theory of economic and political decision-making.” Buchanan rejects “any organic conception of the state as superior in wisdom, to the individuals who are its members.” This philosophical position is, in fact, the very subject matter of constitutional economics. Buchanan believes that a constitution, intended for use by at least several generations of citizens, must be able to adjust itself for pragmatic economic decisions and to balance interests of the state
State (polity)
A state is an organized political community, living under a government. States may be sovereign and may enjoy a monopoly on the legal initiation of force and are not dependent on, or subject to any other power or state. Many states are federated states which participate in a federal union...

 and society against those of individuals and their constitutional rights to personal freedom and private happiness.

The Russian school of constitutional economics was created in the early 21st century with the idea that CE allows for a combined economic and constitutional analysis in the legislative, first of all, budget process, thus helping to overcome arbitrariness in the economic and financial decision-making and to open entrance to civil society into budget process. This model of CE is based on the understanding that it is necessary to narrow the gap between practical enforcement of the economic, social and political rights granted by the constitution and the annual (or mid-term) economic policy, budget legislation and administrative policies conducted by the government. In 2006, the Russian Academy of Sciences
Russian Academy of Sciences
The Russian Academy of Sciences consists of the national academy of Russia and a network of scientific research institutes from across the Russian Federation as well as auxiliary scientific and social units like libraries, publishers and hospitals....

 has officially recognized constitutional economics as a separate academic sub-discipline.

Constitutional economics studies such issues as the proper national wealth
Wealth
Wealth is the abundance of valuable resources or material possessions. The word wealth is derived from the old English wela, which is from an Indo-European word stem...

 distribution including the government spending on the judiciary, which in many transitional and developing countries is completely controlled by the executive. The latter undermines the principle of powers' “checks and balances”, as it creates a critical financial dependence of the judiciary. It is important to distinguish between the two methods of corruption
Political corruption
Political corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by...

 of the judiciary
Judiciary
The judiciary is the system of courts that interprets and applies the law in the name of the state. The judiciary also provides a mechanism for the resolution of disputes...

: the state (through budget planning and various privileges – being the most dangerous), and the private. The state corruption of the judiciary makes it almost impossible for any business to optimally facilitate the growth and development of national market economy
Market economy
A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a state-directed or planned economy. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed...

.

See also

  • public budgeting
    Public budgeting
    Public Budgeting is a field of Public Administration and a discipline in the academic study thereof. Budgeting is characterized by its approaches, functions, formation, and type....

  • budget deficit
  • budget surplus
  • budget crisis
    Budget crisis
    A budget crisis is an informal name for a situation in which the legislative and the executive in a presidential system deadlock and are unable to pass a budget. In presidential systems, the legislature has the power to pass a budget, but the executive often has a veto in which there are...

  • Canadian federal budget
    Canadian federal budget
    In Canada, federal budgets are presented annually by the Government of Canada to identify planned government spending, expected government revenue, and forecast economic conditions for the upcoming year....

  • Comprehensive income
    Comprehensive income
    Comprehensive income is a specific term used in companies' financial reporting from the company-whole point of view. Because that use excludes the effects of changing ownership interest, an economic measure of comprehensive income is necessary for financial analysis from the shareholders' point...

  • Constitutional economics
    Constitutional economics
    Constitutional economics is a research program in economics and constitutionalism that has been described as extending beyond the definition of 'the economic analysis of constitutional law' in explaining the choice "of alternative sets of legal-institutional-constitutional rules that constrain the...

  • Corporate finance
    Corporate finance
    Corporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize shareholder value while managing the firm's financial risks...

  • Crony capitalism
    Crony capitalism
    Crony capitalism is a term describing a capitalist economy in which success in business depends on close relationships between business people and government officials...

  • Form 10-K
    Form 10-K
    A Form 10-K is an annual report required by the U.S. Securities and Exchange Commission , that gives a comprehensive summary of a public company's performance...

  • Federal Accountability Act
    Federal Accountability Act
    The Federal Accountability Act is a statute introduced as Bill C-2 in the first session of the 39th Canadian Parliament on April 11, 2006, by the President of the Treasury Board, John Baird...

     (Canada)
  • Government Accountability Office
    Government Accountability Office
    The Government Accountability Office is the audit, evaluation, and investigative arm of the United States Congress. It is located in the legislative branch of the United States government.-History:...

  • Government Accountability Office investigations of the Department of Defense
    Government Accountability Office investigations of the Department of Defense
    Government Accountability Office investigations of the Department of Defense are typically audits in which the Government Accountability Office , the United States Congress’ investigative arm, studies how the Department of Defense spends taxpayer dollars...

  • Government-owned corporation
    Government-owned corporation
    A government-owned corporation, state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, or parastatal is a legal entity created by a government to undertake commercial activities on behalf of an owner government...

  • public administration
    Public administration
    Public Administration houses the implementation of government policy and an academic discipline that studies this implementation and that prepares civil servants for this work. As a "field of inquiry with a diverse scope" its "fundamental goal.....

  • public finance
    Public finance
    Public finance is the revenue and expenditure of public authoritiesThe purview of public finance is considered to be threefold: governmental effects on efficient allocation of resources, distribution of income, and macroeconomic stabilization.-Overview:The proper role of government provides a...

  • United States budget process
    United States budget process
    The process of creating the budget for the United States government is known as the budget process. The framework used by Congress to formulate the budget was established by the Budget and Accounting Act of 1921, the Congressional Budget and Impoundment Control Act of 1974, and by other budget...

  • Civil society
    Civil society
    Civil society is composed of the totality of many voluntary social relationships, civic and social organizations, and institutions that form the basis of a functioning society, as distinct from the force-backed structures of a state , the commercial institutions of the market, and private criminal...

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