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Tuesday, March 9, 1999 Published at 14:31 GMT


'Budgeting' abroad



Budget day is one of the top events in the UK political calendar, but how do other countries sort out their finances?

The process differs from country to country, but in most of them politicians have more time to debate and modify their budgets than in the UK. In some countries, it can become so contentious that it dominates the entire political process.

United States

The political process in the US is far more adversarial than in the UK, and the government usually has a more difficult time passing the legislation it wants.

That applies especially to the budget process, and in the last few years there have been particularly bitter battles between the Republican-controlled Congress and the Democratic president.

In 1995 and 1996 the result was a complete shutdown of government for several weeks. Civil servants were sent home, national parks closed and no new benefit claims processed, while Congress and the president argued about tax and spending reductions.

Although the growing budget surplus has eased the tension in the last two years, conflict over the budget is normal in the US political system.

'Labyrinthine complexity'


[ image: Centre of the labyrinth]
Centre of the labyrinth
The budget process in the United States is, in the words of US Congressman Christopher Cox, of "labyrinthine complexity, unparallelled either in our own history or in the practice of other Western countries".

This is no accident, as the founders of the US constitution feared above all the concentration of powers, and created a system of checks and balances that spread power around the system.

Money-raising bills (eg taxes) must originate in the House of Representatives. But it is the president who proposes the budget (spending plans), often using his State of the Union address at the beginning of the new session of Congress in January to outline his main proposals. If Congress modifies his proposals too much, he can veto the ensuing legislation.

The complex bargaining process involves the administration (the executive branch and president) and the two houses of Congress, which can each have different agendas. If different political parties are in charge of the different branches of government, the difficulties multiply.

Another peculiarity of the US system is that the "budget judgement", the economic estimates behind the tax and spending plans, are prepared entirely separately by the Council of Economic Advisors, who present their report to the president.

Congress also has its own set of economic forecasters, the Congressional Budget Office, who "score" the budget to see how much each measure really costs and whether the budget forecasts are too optimistic.

Pork-barrel politics

In reality most of the US budget process is done in backroom deals, as senators and congressmen, Republicans and Democrats, and Congress and the administration try to thrash out a compromise.

Another strong influence on the US budget process is "pork barrel politics" as parliamentarians try to redirect government spending to their home districts.

The long-extended political bargaining process led to an extension of the US fiscal year, which now begins on 1 October as opposed to 1 April in the UK. But even with nine months of debate, the Federal budget is rarely agreed on time.

Germany

In Germany the presentation of the budget bill is the UK's Queen's Speech and Budget Day rolled into one.

As a result, the three day 'Haushaltsdebatte' is the annual big set-piece of German politics.

Many of the government's initiatives are well known in advance, having been carefully agreed during long negotiations between the governing coalition parties.


[ image: Site of the biggest day in Germany's political calendar]
Site of the biggest day in Germany's political calendar
The three day debate is mainly a chance for the government to highlight the 'success' of its policies and outline its plans for the future. In their speeches, the chancellor, his finance minister and the rest of the cabinet will cover all policy areas, from spending issues to defence and foreign policy.

The opposition parties, meanwhile, will try to expose the chinks in the government's armour.

After the first reading of the budget bill in the Bundestag or Federal Parliament, it will be closely scrutinised by the parliamentary budget committee, which as a rule is chaired by an opposition MP.

The bill then goes to Germany's second chamber, the Bundesrat or Federal Council, where the country's regional states are represented.

Depending on electoral fortune, the Federal Council can be dominated by opposition parties. In fact this holds true most of the time.

As any budget must have the approval of the council, the government of the day is often forced to accept dramatic revisions of its plans.

After lengthy to-ing and fro-ing, the mutually approved budget bill is then enacted by parliament.

France


[ image: Less confrontation in Paris]
Less confrontation in Paris
In France the government's budget has an easier time in parliament than either Germany or the United States.

The finance bill is presented to the National Assembly together with a report on the general economic situation.

The budget proposals will be referred to the Committee of Finance, General Economy and Planning. Any changes will be presented as 'adjustments' to the finance bill.

The proposals are then passed on to the Senate for consideration within 20 days. It is here that the budget is likely to encounter the harshest, although mostly verbal, resistance.

The Senate may be controlled by opposition parties. The government may indulge them and give way on a few issues. However, if it commands a solid majority in the National Assembly it can dig in its heels and insist on its original proposals.

The government will have to tread more carefully if it has a slender majority based on a fractious coalition. The governing parties must find a compromise, preferably before the bill is presented to parliament.

If the prime minister is in a tight spot and needs to rely on every single vote, maverick parliamentarians - or parties - can wreak havoc and force last-minute changes.

Budget constraints

Whichever way a parliament works, there is one aspect that budgets around the world have in common: Politicians can merely tinker with the money they are spending.

A huge chunk of budget allocations is mandatory, being spent on social security, the health service, salaries for government employees and many other non-negotiable causes.

In the United States, for example, only around 20% of spending is discretionary.

It is the small remainder that all the budget battles are being fought over.



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