The aftereffects of a balanced federal budget.

• Author: Goldman, Elyse
• Position: Balancing the Federal Budget: Trimming the Herds or Eating the Seed Corn? - Book Review

Balancing the Federal Budget: Trimming the Herds or Eating the Seed Corn?

Published by Chatham House Publishers (888) 334-3327 www.chathamhouse.com 2003; 318 pages; $24.95

Balancing the Federal Budget, by Irene S. Rubin, offers a first-hand glimpse at how the federal government tried and finally succeeded in balancing the budget. Having spent a year and a half interviewing the various players in the federal budget process, she is able to offer the reader a very detailed and informative picture of the trials and tribulations the federal government faced as it attempted to balance the budget over a 17-year period beginning in 1981 and ending in 1998. Looking back at this lengthy period of downsizing, Rubin asks: Did the government merely eat the seed corn or did it succeed in trimming the herds?

What does eating the seed corn or trimming the herds mean? Rubin describes eating the seed corn as "taking actions that may have saved programs or even the agency in the short run, but that caused more problems in the out years." Eating the seed corn also refers to reductions in senior staff through retirement (known as reduction in force, or RIF) and the loss of institutional knowledge that ensued. Trimming the herds, on the other hand, "was defined in terms of the agency's ability to pare back its staffing and its expenditures in such a way that the quality of its services was maintained."

The book is laid out logically, which allows the reader to see the same recurring themes. Chapter 2, "What Happened and What Was Learned," describes the macro-level learning that occurred as the deficits grew. The chapter also highlights the two major budget acts passed during the period covered. The first piece of legislation, Gramm-Rudman-Hollings or the Balanced Budget and Emergency Deficit Control Act, was passed in 1985 as an attempt to curtail the growing federal deficit by reducing it by preset targets. The Budget Enforcement Act, passed in 1990, was a reaction to the inadequacies of Gramm-Rudman-Hollings. As Rubin describes it, "rather than trying to reduce the size of the deficit each year, the BEA tried to control spending and strengthen the norms of balance." This new way of approaching deficit reduction reflected the Clinton administration's National Performance Review, an attempt to make government more responsive to the public and to make it run more efficiently and effectively.

To illustrate whether agencies ate the seed corn or trimmed the herds...