Budgetary Control in a Decentralized System: Meeting the Criteria for Fiscal Stability in the European Union

In: Public budgeting & finance, Band 14, Heft 4, S. 7-22

Abstract

This article provides a set of measures that are recommended to the leadership of the European Union to enhance budgetary balance and control within a highly decentralized system, one that requires the coordination of budgetary policy in more than a dozen nations. These measures are intended to be relevant to European budgetary coordination efforts but also appear to apply to U.S. federal initiatives to reduce the annual budget deficit and total debt. The individual measures recommended include holding increases in expenditures at or below the rate of GDP growth, establishing envelopes for major accounts, placing all entitlement on a pay‐as‐you‐go basis, means testing of entitlements and elimination of automatic entitlement indexing, considering the option of marginal reductions in some entitlement programs, and voting on budgets as single, omnibus packages. The proposal to establish executive line‐item budget authority also is evaluated‐and rejected.