ECONOMY THE FUNDAMENTAL PURPOSE OF THE

BUDGET

But despite these facts and these explanations, statistics similar to those quoted above are used by cheap politicians and by the press as the basis of public information. Similar statistics are given out by whom? We are advised: "See how much more the government is spending this year than last. It is altogether out of proportion to our increase of population or our assessed valuation. We must reduce. Economy is the paramount political issue." And whole batteries of political buncombe are unloosed in the name of economy.

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A famous saying may be truly paraphrased: O, Economy, what crimes are committed in thy name!" Politicians seeking office without any particular reason for their aspiration fall back on this convenient issue of economy. They get in office sometimes and always forget their campaign mistress. It served admirably as a catchword, and in that it served its purpose. The situation is exactly reflected in a fact about the English Parliament summarized thus: "If you want to raise a certain cheer in the House of Commons, make a general panegyric on economy. If you want to invite a sure defeat, propose a particular saving." (Bagehot, English Constitution.) But if, how ́ever, the legislator remembers his economy pledges he keeps them at the expense of the districts of the other fellows of the minority. Representative Fitzgerald thus puts the case bluntly: It may seem somewhat strange, but I hope it is not out of place, to

remind Members on this side of the House that the Democratic platform pledged us in favor of economy and to the abolishment of useless offices; but it did not declare, Mr. Chairman, that the party favored economy at the expense of Republicans and the abolition of useless offices in territory represented in this House by Republicans while favoring a different doctrine wherever a Democratic Representative would be affected." (Congressional Record, April 10, 1914, P. 7034.)

The messages of governors to the state legislatures offer many examples of the conception that economy is the main purpose of the budget. And by economy is meant not conservation, not frugal management, not value received in service for value given in public funds, but less money spent and less taxes raised.

In this connection it may be well to note that false view of economy finds expression usually in the first message of a governor. After the chastening experience of the responsibility of administering state affairs for even a single term, the a priori absurdities about economy contained in the first messages of governors are usually not repeated in the second.

In these messages, but more so in political campaigns preceding the election, the unrelated fact of increased cost is made the basis of the retrenchment program. Wherever an explanation is attempted, and it is not often, it is found most frequently among the following causes: poor business organization; too many bureaus, commissions or boards; generous legislative appropriations (which is a mere restatement of the fact of in

crease, not an explanation) and the paternalistic tendency of modern government. The real reason is the last. Government is doing many things that the Fathers never intended it should do, and so the call for a return to constitutional government. Paternalism, not economy, constitutional government, not economy? An expansion of government, not economy? These are the issues but issues that are hidden behind clap-trap about economy, reduced taxes and retrench

ment.

On the other hand, too, let it be added, the cry for economy is at times a purely demagogic appeal, a political trick, a convenient instrument of securing an election from a public whose memory does not extend over to the next election. Both radicals and conservatives, both Democrats and Republicans have used the economy issue in this way.

A governor of Wisconsin, in a message to the legislature, had this fine passage correcting the usual and false view of economy:

"This demand for economy, as I interpret it, does not mean that we should oppose those things that make for human progress; on the contrary, successful government, like all other successful institutions, must move forward and increase its usefulness to man. The people of Wisconsin want a government that is humane in its tendencies, truly progressive and responsive to the demands of a more complex civilization. In meeting these demands, however, we should not allow our zeal to lead us into costly, fads, nor should we forget that a waste of the people's substance is not helpful to the cause of human progress." (Communication of Governor E. L. Philipp to the Legislature of the state of Wisconsin, 1915.)

And the remedy almost invariably proposed for the policy of retrenchment of public expenditures is the budget system.

The undoubted fact of enormous governmental expenditures and the additional facts of a little dishonesty and much inefficiency of public officials, together with the other fact that we are passing under existing revenue measures from a period of surplus to a period of deficit financing — all these call for improved financial methods looking particularly to a periodic account of stewardship for public funds and to the periodic planning of public expenditures. The improved financial methods usually recommended are generally referred to as a budget procedure. Senator Burton, who used the comparisons first quoted, above, directs his paper to this conclusion: "One of the reforms most strongly urged in recent years by the advocates of national economy has been the inauguration of the budget system in the United States.”

CONVENTIONAL USES OF THE WORD

"BUDGET 99 1

Perhaps it is well after these preliminaries to understand clearly the terms we are using and to define them specifically for the purposes of this book.

I have occasionally heard earnest students who have read over a considerable part of the budget literature say in effect: "What is a budget? I have been

1" The budget system is a reform of a peculiar nature. It does not presume to introduce radical principles into our government; it does not in fact presum to introduce anything except system- an orderly and intelligible method of doing the same things that are now being done in a slip-shod and systemless manner."— William T. Donaldson, "The Budget," January, 1916, p. 6.

reading statements on the budget procedure in New York City and its comparative perfection and then I pick up a pamphlet by a leader of the budget propaganda in which he says that New York in a strict sense does not have a budget. And so I find confusion throughout. To some the budget is the document submitted by the executive officer or board; to others it is the appropriation act as it comes from the legislative body; to still others it is both. Some include the money to be raised and others omit this. Surely there must be some way out of this tangled skein."

And there is even from the standpoint of the conventional discussion and it is very simple. As ordinarily used the "budget" is an executive document containing certain information for the use of the legislature. It is the information regarding the past activities of the governmental departments together with their costs systematically arranged, together with the estimated needs for the governmental work for the next fiscal period. Accompanying this primary document of information is also a similar presentation of facts and estimates regarding the revenue and borrowing program of the government for recent fiscal periods and for the one immediately ahead. The budget 1 is merely the administrative experience of the last or current fiscal period systematized and organized for presentation to the legislature, together with recommendations as to expenditures and revenue for the forthcoming fiscal period. It is without effect until

1 Hereafter, as explained in the next section, the phrase budget proposals" will be substituted uniformly for the word “budget

as here defined.

2 The comparative tables of facts for preceding fiscal periods