The Federal Budget: Politics, Policy, Process.

• Author: Dearborn, Philip M.

Reviewed by GFOA member Philip M. Dearborn, director of intergovernmental finance at the U.S. Advisory Commission on Intergovernmental Relations.

This is a book that has been sorely needed. It provides a comprehensive explanation of the development and current operation of the federal budget process. It is written in a clear, simple fashion that permits non-budget readers to understand a very complex and confusing budget system while providing valuable insights for those already familiar with federal budgeting.

The book begins with a simple analysis of the condition of the federal budget as it existed at the end of fiscal year 1994, a view ahead into the next century, and some history about how the budget got into its current condition. Schick observes that federal government revenues were 18.3 percent of gross domestic product in 1960, before the Great Society and the Vietnam War, and before Medicare and Medicaid even existed, and they were still 18.3 percent in 1993. The result has been large intractable federal deficits that even severe curtailments of discretionary spending have not controlled. Defense spending is 35 percent below its 1985 peak after adjusting for inflation, and by 1999, domestic discretionary spending is projected to be a smaller percentage of gross domestic product than it was in 1960. The key federal budget problem is entitlements and what to do about them.

The arithmetic of budgeting is described next. This review includes explaining such things as the differences between general, special, and trust funds as they are used in federal budgeting; budgeting for on-budget entities; and how direct and guaranteed loans are treated. The author also does a good job of explaining the somewhat mystical relationship between federal budget authority and outlays. All of this leads up to five different definitions of the federal deficit. At this point, the reader begins to understand why even so-called budget experts have trouble understanding the federal budget.

As if this were not bad enough, the reader then is treated to the mysteries of the process, including features such as reconciliation, sequestration, scorekeeping, and spending ceilings. While this description of the early chapters sounds very technical, the writing is simple and easy to understand. Budget jargon and complexity have been avoided when possible, and sample full-page illustrations of actual budget examples with brief explanations are used here, as well as...