ABSTRACT
This chapter examines federal government spending and budget policy, giving special attention to the role of government in the economy. It explores several popular myths concerning that role, examines some reform proposals, and offers suggestions to reform the budget process and an overall framework within which to evaluate government spending. The US government budgetary process relates primarily to the timing and character of budget recommendations, authorizations, appropriations, and spending. The creation of the new budget committees pursuant to the 1974 Budget Control Act was widely heralded as a major vehicle for tying aggregate spending and aggregate taxation together. In practice, it is unclear that much spending discipline has percolated down from the budget committees to the appropriations committees. Proponents of the balanced budget amendment claim that a balanced budget amendment would provide greater long-run flexibility than a spending limit in allowing changes in government spending in relation to gross national product.
