Key Reading on Federal Budgets, Deficits, and Taxes

Bank, Steven A.  War and taxes, by Steven A. Bank, Kirk J. Stark, and Joseph J. Thorndike.  Urban Institute, 2008.  224p index; ISBN 9780877667407  pbk, $26.50. Reviewed in 2009jan CHOICE.

46-2779  HJ2381  2008-16827 CIP   
 Nominally a history of American wartime taxation, this work also depicts the evolution of modern federal taxation. Bank and Stark (both, law, Univ. of California, Los Angeles) and Thorndike (director, Tax History Project) reveal how financing difficulties during the Revolution encouraged Constitutional affirmation of the federal government’s power to tax. When traditional taxes proved insufficient to fund the Civil War, an income tax was implemented. WW I institutionalized the income tax, making it a mainstay of peacetime taxation, while WW II transformed it from a class tax on the rich into a mass tax on the general population. The authors describe how, as wartime tax policy coalesced, deficit financing typically supported the war effort, threatening rapid price inflation as the unwanted alternative if taxes were not increased. Wartime tax efforts were also bolstered by the moral argument of equal sacrifice: if men were drafted, wealth should be drafted as well. In a closing chapter the authors consider the ongoing Iraq war. War taxation is now politically unappealing. Unlike earlier conflicts, tax reductions have accompanied the Iraq war as supply-siders argue that tax incentives spur economic growth, strengthening America in wartime. Overall, an engaging blend of history, economics, and contemporary public policy. Summing Up: Recommended. All collections. — R. S. Hewett, Drake University

Center on Budget and Policy Priorities.  Internet Resource. Reviewed in 1998sup CHOICE.
http://www.cbpp.org/index.html
35SUP-445 
 Once described by economics writer Robert Kuttner as a “combination of truth squad and quarterback in the campaign to prevent President Reagan from repealing the entire New Deal,” the Center on Budget and Policy Priorities (CBPP) has emerged as a national authority on policy issues impacting primarily lower-income individuals and families. Established in 1981, the Center is a nonpartisan, 51-member research organization and policy institute that focuses on budget issues and priorities as well as tax and poverty policies and programs while assisting federal and state governmental officials with practical decision-making suggestions and advice. The center’s Web site provides background material on the evolution of the CBPP as well as on its highly successful “Earned Income Tax Credit” (EITC) campaign, expanded fiscal work at the state level, and training programs for state-based organizations. More important for students and practitioners of public policy or fiscal administration, the CBPP site offers an extensive publications library on federal budget priorities, federal welfare and tax policies, state fiscal policies and safety nets, EITC analyses, labor market policies, poverty and income issues, and related topics on low-income housing, immigration, food assistance, and health. Current CBPP job vacancies and paid internship opportunities are also listed, along with an order form for CBPP publications and annual subscriptions. The CBPP Web site loads quickly, is well-organized and frequently updated, and is extremely easy to navigate. It provides an excellent resource for undergraduates, graduate students, and government officials. — J. L. Kaniss, Salem College

Congressional Budget Office.  Internet Resource. Reviewed in 1999oct CHOICE.
http://www.cbo.gov/
37-1209

 The Web site of the Congressional Budget Office (CBO) is an essential source for economists, policy makers, and anyone else who needs the same budgetary information as Congress. Created in 1974, the CBO’s mission is to provide Congress with objective, timely, nonpartisan analyses needed for economic and budget decisions and with the information and estimates required for the congressional budget process. Clearly organized with appropriate graphics and navigational guides, this site is divided into five major sections. Home Page offers three categories: Recently Released Publications, Data Highlights, and Web Announcements. About CBO is available in either English or Spanish, the only section of the site with that option; it provides detailed information on the CBO’s major responsibilities, organization, staffing, etc. Documents, the third section, is further divided into Studies and Reports, Cost Estimates, Testimony, Other Documents, and Search. Each document classification is explained in detail, as are the four different digital formats (HTML, PDF, PostScript, WordPerfect) available for user access to the documents. A listserv is available to provide notification when new documents are added to the site. Documents are full text and up-to-date (1995-present). A “Look up term” option, allowing the user to search a glossary, is provided at the end of each document. This should not be confused with the extensive Search subsection that allows a full text search (with Boolean operators and wildcards), a keyword search (actually a subject search as it searches only those keywords assigned to each document), and an advanced search (with categories, classes, and results sorting options). Section four, Job Opportunities, gives CBO vacancy announcements. Links (the final section) has relevant listings (e.g., General Accounting Office, International Monetary Fund). However, the “You are now leaving the Congressional Budget Office Website. Please wait 10 seconds or select the link below” is an unnecessary annoyance. All levels. — E. Coppola, Syracuse University

Farrier, Jasmine.  Passing the buck: Congress, the budget, and deficits.  University Press of Kentucky, 2004.  284p bibl index afp ISBN 0-8131-2335-6, $40.00. Reviewed in 2005apr CHOICE.
42-4916  JK1021  2004-10629 CIP 

 Since the 1921 Budget Act, Congress has consistently delegated budgetary power–“passing the buck” as Farrier terms it–to the presidency. Farrier (Univ. of Louisville) analyzes the major budget reforms that Congress has enacted over the past three decades–the 1974 Budget Act, Gramm-Rudman-Hollings, the Budget Enforcement Act of 1990, and the Line-Item Veto Act of 1996–in an attempt to understand the political determinants of congressional delegation in the budget process. To Farrier, budgetary delegation of power is at the heart of the complexities of representation. In an attempt to please their constituents, members of Congress try to please their constituents with federal dollars while at the same time avoiding blame for large deficits. This dilemma encourages delegating power to the president. Farrier argues that delegation of power has not improved the budget process. The executive branch, she notes, has yet to demonstrate that it is better at producing a national budget. Congress, Farrier concludes, does not get the institutional respect it deserves and needs to defend its institutional interest more readily. Overall, Farrier offers an excellent account of the political tensions inherent in the modern congressional budget process. Summing Up: Highly recommended. General readers and upper-division undergraduate and graduate students. — P. Fisher, Seton Hall University

Fiscal challenges: an interdisciplinary approach to budget policy, ed. by Elizabeth Garrett, Elizabeth A. Graddy, and Howell E. Jackson.  Cambridge, 2008.  455p bibl index ISBN 0-521-87731-8, $85.00; ISBN 9780521877312, $85.00. Reviewed in 2008oct CHOICE.
46-1006  HJ2051  2007-27738 CIP

 These 14 essays by lawyers, economists, political scientists, historians, and psychologists explore multiple aspects of government budget policy from the vantage of their home discipline. Much of the focus is on federal and state experience in the US (budget procedures, budget deficits, and debt), but there is one essay on the fiscal rules experience in the European Union. Some essays are primarily descriptive, detailing the federal budget process and processes used in the 50 states and state debt limits, for instance, while others balance more toward analysis from theoretical models. The works are all accessible to the nonexpert, not designed to develop operational or analytical skills, and generally focus on providing a sound introduction to their topic. One of the more interesting chapters discusses “budget gimmicks,” the little tricks known by budgeting experts but surprising to novices, which Congress and the president use to evade even the modest legal and procedural constraints placed on federal fiscal operations. An interesting feature of the work that reflects its intended use as textbook: each chapter is followed by a series of discussion questions that deal with the chapter topic. Summing Up: Recommended. Upper-division undergraduate through faculty audiences. — J. L. Mikesell, Indiana University–Bloomington

Ippolito, Dennis S.  Why budgets matter: budget policy and American politics.  Pennsylvania State, 2003.  329p bibl index afp ISBN 0-271-02259-0, $55.00. Reviewed in 2004jan CHOICE.
41-3101  HJ2051  2002-15450 CIP 
 
 Ippolito (Southern Methodist Univ.) provides a review of American budget policy from the beginning (1789) to the present. He divides history into six eras: small government (1789-1860), growing government (1860-1915), transition to modern government (1915-40), war and defense (1940-70), social welfare (1970-90), and reconciliation and balance budgets (1990-2001). History shows continuing concern with balanced budgets but near-perpetual deficits. Ippolito mixes historical anecdotes with tabular data to develop his arguments about the impacts of policy on the federal budget. He employs no statistical tests to parse the causes of the patterns, and most of the tables come from published government sources. Spending is the primary focus, with emphasis on how entitlements have driven budget outcomes in recent decades and promise even more difficult problems in the future. He also notes major tax policy impacts (tariff policy in the late 1800s, WW II and postwar financing, Tax Reform Act of 1986, etc.). This work is particularly notable because it starts with the very beginnings of the US in 1789; most analysis of federal finance concentrates on the post-WW II era. Summing Up: Highly recommended. Upper-division undergraduate through faculty collections. — J. L. Mikesell, Indiana University-Bloomington

Kelly, Robert E.  The national debt of the United States.  2nd ed.  McFarland, 2008.  393p bibl index afp; ISBN 9780786432332 pbk, $45.00. Reviewed in 2008aug CHOICE.
45-6904  HJ8119  2007-49741 CIP
 
 Kelly (retired CPA, corporate consultant, and columnist) presents brief histories of the growth of US public debt under the administrations of 12 presidents, from Franklin D. Roosevelt to George W. Bush. For each administration, he identifies sectors contributing to public debt growth and analyzes them with respect to the social, economic, and political settings of each period. Kelly discusses at length how presidents, members of Congress, political leaders, and judges affected fiscal policy, and he provides thumbnail characterizations of their personalities and prejudices. Detailed investigation focuses on the role each president played in major public budget decisions, which is supported by figures showing start-off debt and its subsequent development in each case. Kelly’s major conclusion is that the government’s power to borrow has been misused over the past four decades in a so-called orgy of social spending, propagated by human failures rather than compelling events; i.e., the political agendas of officials determined policy. This book is easily accessible to the general public and is especially useful because of its abundant time-sequenced tables. Many readers will find it appropriate to refer to so-called principles of economics textbooks on the controversial topic of rising debt in the US economy. Summing Up: Recommended. General readers, all levels of undergraduate students. — H. I. Liebling, emeritus, Lafayette College

LeLoup, Lance T.  Parties, rules, and the evolution of Congressional budgeting.  Ohio State, 2005.  250p index afp ISBN 0-8142-1007-4, $59.95; ISBN 0814290868 CD, $9.95; ISBN 0814251447 pbk, $21.95. Reviewed in 2006jun CHOICE.
43-6173  HJ2051  2005-10666 CIP 

 Congress can seem like a dry and daunting subject, especially its powers of the purse. Yet battles over the budget often define the struggle between the president and Congress. LeLoup (Washington State) seeks here to place important changes since the 1970s in rules and procedures governing the congressional budget process into the context of the modern literature on Congress. This literature features, among other things, disagreements about the role of parties in organizing congressional majorities versus committees as agents of the whole House. The main development this book tracks is the emergence of macrobudgeting, which consists of techniques for centralizing a congressional overview of expenditures and deficits. This development, LeLoup argues, addresses, without wholly supplanting, problems created by piecemeal budgeting that analysts claim has historically hindered congressional management of budgeting and put Congress at a disadvantage vis-D`a-vis the president. The author’s clear writing style and outstanding command of the political details makes accessible to students a story that might otherwise be technically challenging to them. Summing Up: Recommended. General readers, upper-division undergraduates and higher. — N. W. Polsby, University of California, Berkeley

Osbourne, David.  The price of government: getting the results we need in an age of permanent fiscal crisis, by David Osbourne and Peter Hutchinson.  Basic Books, 2004.  370p index afp ISBN 0-465-05363-7, $25.00. Reviewed in 2005feb CHOICE.
42-3544  HJ275  2004-540 CIP
 
 Osborne (adviser to government officials, and writer, including Reinventing Government, coauthored with Ted Gaebler, 1992) and Hutchinson (financial management consultant to government officials) provide a highly readable, insightful account of the strategies and tools governments can employ to meet citizens’ demands for services in “an age of permanent financial crisis.” They argue that traditional governmental responses to revenue shortfalls, which include “across-the-board cuts” in expenditures and tax increases, are inadequate responses to current fiscal constraints. They contend that governments must instead focus on outcomes by restructuring budgetary decisions and processes to set priorities and make spending decisions in order to meet citizens’ policy expectations at the price they find palatable for the governmental services they demand. In making their case for a budgetary system that emphasizes “results rather than activities,” the authors employ cases from selected state and local governments to detail how “outcome budgeting” works. In addition, they discuss and illustrate, through an array of examples, a series of organizational, managerial, and leadership strategies public officials can use to realize results identified as important. This work will be of value to a fairly broad audience, from general readers to those whose study or work relates to public finance or public administration. Summing Up: Highly recommended. Public, academic, and professional library collections. — G. L. Malecha, University of Portland

Panagopoulos, Costas.  All roads lead to Congress: the $300 billion fight over highway funding, by Costas Panagopoulos and Joshua Schank.  CQ Press, 2008.  220p index afp; ISBN 9780872894617  pbk, $26.95. Reviewed in 2008jul CHOICE.
45-6449  KF4945  2007-34371 CIP
  
 A political scientist and a transportation planner who observed at close hand the passage of the Surface Transportation Safety Improvement Act of 2005, known as SAFETEA-LU, were inspired by the 2007 Interstate 35West bridge collapse in Minneapolis to write this book. Panagopoulos (Fordham Univ.) and Schank (Bipartisan Policy Center) present an enormously complex, high-stakes legislative struggle. Enacted every six years, this law controls the appropriation of some $300 billion annually from federal gas-tax revenues to the states for highway and mass transit construction and maintenance. It is one of the outstanding examples of distributional politics at the national level. The authors’ skill in revealing how this particular piece of legislative sausage is cooked destroys any faith the reader may have in Congress as a rationally deliberative body. Machiavellian advance maneuvers are performed by armies of young staffers; power is shamelessly wielded by powerful committee chairs; markup sessions and conference committees are scenes of duplicitous gaming; pitched battles take place between senators from “donor” (loser) and “donee” (winner) states; the process features manufactured delays, hidden funding formulas, and fraudulently “equitable” bonus adjustments. The consequence is that money that should go to deteriorating roads and rusting bridges is displaced to earmarked “bridges to nowhere.” Summing Up: Highly recommended. All readers. — C. T. Goodsell, emeritus, Virginia Polytechnic Institute and State University
    
Restoring fiscal sanity, 2005: meeting the long-run challenge, ed. by Alice M. Rivlin and Isabel Sawhill.  Brookings, 2005.  146p bibl index afp ISBN 0815774915  pbk, $16.95. Reviewed in 2005nov CHOICE.
43-1697  HJ2051   MARC
 
 In 2004, editors Rivlin and Sawhill (Brookings economists) commissioned papers by economists and other policy experts on the US federal deficits (Restoring Fiscal Sanity: How to Balance the Budget). With this new work, they have called upon the same authors to address federal budgeting challenges posed by two longer-term complementary problems–an aging US population and soaring Medicare and Medicaid costs. Individual contributions include essays on dimensions of the problem, the size and role of government, Social Security, health care, tax reform, and the politics of deficit reduction. On the whole, the volume tends to eschew polemics and the slightly-left-of-center Brookings slant to offer objective summaries, policy options, and well-reasoned recommendations. A book of this length cannot hope to cover all the background and contexts issues or do justice to the complexities and nuances, but it will engage the reader–and also provide ample notes on each agenda item. For those who care about the US’s economic future, this and the earlier volume are well worth the time and effort needed to digest the arguments and data. Summing Up: Highly recommended. Upper-division undergraduate through professional collections. — A. R. Sanderson, University of Chicago

Shaviro, Daniel N.  Taxes, spending, and the U.S. government’s march toward bankruptcy.  Cambridge, 2007.  251p bibl index ISBN 0-521-86933-1, $75.00; ISBN 0521689589 pbk, $29.99; ISBN 9780521689588 pbk, $29.99. Reviewed in 2007jul CHOICE.
44-6351  HJ257  2006-8552 CIP
 
 Shaviro (taxation, New York Univ. Law School) hopes to remedy the fiscal distress of the federal government by reengineering the language of government finance. In particular, he would shift attention away from annual deficits toward the long-term fiscal gap and toward redistributions between generations. These deficits represent short-term cash flow positions that can be easily manipulated for political advantage and misinterpreted as a gauge of the impact of tax and spending programs on the fiscal position. And when surpluses do occur, they may mislead as to how much they are actually improving the national fiscal position. Shaviro proposes a change in the focus of fiscal discussion to longer-term concepts, in particular measures that capture huge future liabilities being incurred now without regard to their ultimate consequences. Public finance professionals will applaud his analysis and proposals for a revised discussion. But will politicians, having short-term horizons based on the electoral cycle, respond with the politically challenging decisions necessary to reverse the prognosis? Summing Up: Recommended. Upper-division undergraduate through professional collections. — J. L. Mikesell, Indiana University–Bloomington
 
Slemrod, Joel.  Taxing ourselves: a citizen’s guide to the debate over taxes, by Joel Slemrod and John Bakija.  4th ed.  MIT, 2008.  382p bibl index afp; ISBN 9780262195737, $60.00; ISBN 9780262693639  pbk, $22.95. Reviewed in 2008jul CHOICE.
45-6306  HJ4652  2003-70625 CIP

 A nontechnical explanation of the US federal tax system is no small challenge, but economists Slemrod (Univ. of Michigan) and Bakija (Williams College) manage remarkably in this updated edition (CH, 2nd ed., Nov’00, 38-1676). They outline the federal tax structure (individual and corporate income, Social Security payroll, and estate and gift); assess it according to fairness, economic impact, simplicity, and enforceability; describe tax reform principles; and examine primary reform alternatives, including both improving the present system (emphasizing income taxation) and radical restructuring (mostly adopting some general consumption tax). They maintain a balanced assessment of the current and alternative systems with a thoughtful, accessible integration of current theoretical and empirical thinking about tax impacts. They take full advantage of the work of the President’s Advisory Panel on Federal Tax Reform and its proposals. Their last chapter is a voters’ guide to tax policy, which includes a reminder that tax policy choices extend beyond the question of what is best for one’s family. An important argument is that the best ought not prevent the good: even if the perfect system cannot be attained, smaller changes that can improve performance of the federal tax system should be pursued. Summing Up: Highly recommended. General readers; all levels of undergraduate and graduate students; professionals. — J. L. Mikesell, Indiana University—Bloomington

Wright, Robert E.  One nation under debt: Hamilton, Jefferson, and the history of what we owe.  McGraw-Hill, 2008.  419p bibl index; ISBN 9780071543934, $27.95.  Outstanding Title! Reviewed in 2008nov CHOICE.
46-1610  HJ8106   MARC 
 
 Wright (New York Univ., Stern School of Business, and the Museum of American Finance) provides a history of the origins of the US federal debt that should appeal to a broad audience. He writes in a lively narrative style, characteristic of good popular history. The book, however, departs from standard popular history in two directions. First, Wright integrates the evolution of the debt into a clear, compelling theory of economic development that focuses on the interaction between political institutions and financial markets. Second, his extensive analysis of primary sources on ownership and sales of government securities provides new insights about how active and widespread the market for government debt was in early America. The final chapter provides a quick summary of the development of the debt since the late 1830s and suggests reasons why the national debt may no longer play the positive role for economic development that it did early in the nation’s history. Economic historians will not find formal models or econometrics, but will find a well-told story, informed by economic theory and backed up with nearly 50 pages of tables and graphs. Summing Up: Highly recommended. General readers; students at all levels; researchers and faculty. — B. A. Hansen, University of Mary Washington

Editor’s note: Other pertinent titles with reviews forthcoming:

The politics of bad ideas: the great tax cut delusion and the decline of good government in America, by Bryan D. Jones and Walter Williams.  Pearson, 2008.  378p index  afp ISBN 9780205600793 pbk, $16.95

United States Department of the Treasury. 
http://www.ustreas.gov/