Budget is considered one of the most significant elements of any country’s existence. It enables the state to develop by controlling the amount of financial issues in the country. It is an undisputable fact that government controls the budget process. The government realizes that budget is the most powerful tool in its arsenal. Consequently, the quality of the government decisions and the level of their acceptance depend on the features of the budget process that is applied. Obviously, the well-integrated budget process together with management functions and planning supplies better financial decisions that improve government operations. Accordingly, the process includes various members, namely business leaders, employees, and governmental administrators. They play a significant role in the development of the budget process since they operate it. Thus, the National Advisory Council on State Local Budgeting (NACSLB) was established to supply tools for governments to better the budgeting processes. Its main objectives are the education of the governments, guidance for improving their budgets, training, and experimentation during the work (Coven & Kogan, 2007). The mentioned objectives help to improve not only the budget issue but also the level of the country. In order to understand the very process of the budget development in the country one should have a clear vision of the governmental role in coping with the budget.
The most relevant thing that should be mentioned is the analysis of the budget process. Initially, the budget process is a wide process that possesses managerial, planning, political, and communication dimensions. It is comprised of actions that involve the implementation, development, and evaluation of an outline for the improvement of services and capital benefits. Accordingly, the perfect budget possesses several essential characteristics. It incorporates a long-lasting perspective, develops linkages to widen organizational objectives, and pays attention to outcomes and results of the budget decisions. Furthermore, it suggests sufficient cooperation with stakeholders, and supplies encouragement to government management respectively (The Federal Budget and Appropriations Process, n.d.). Consequently, one may admit that budgeting is not only an exercise in keeping balance revenues and spending during the year but also a complex strategy. It involves the political and managerial aspect, communication, and citizen involvement. What is more, its basic objectives are to assist the decision-makers in providing informed choices regarding the development of services and capital benefits and in supporting stakeholder contribution in the process.
Another important issue to remember is the role of budget practicing in the development of the general budget process. The budget practice is known as the procedure that helps to complete the elements of the budget process. It is vital for all governments and in all situations. It can be of hierarchical origin. In other words, one practice can assist to complete another practice. In fact, the Council has ignored a hierarchical practice of more than sole level. Every budget level possesses complex practices. The budget practices have to be closely connected with activities in the budget process. One should understand that a practice would not be a budget unless it provides the description, understanding the evaluation of the outline for the provision of the services. There are various ways of completing the budget practice. The governments can use several techniques to fulfill it.
Budget practices do not have specific time limits, but its tools and techniques can have (National Advisory Council on State and Local Budgeting, 1998). The key tools are considered as the specific methods of producing the practice. They help the governments to achieve the desirable goals. Nevertheless, several issues affect the prosperous performance of budget practices. Consequently, the mentioned issues should be taken into consideration, namely coping with the contrasts between governments, as well as with expectations and legal requirements. Therefore, the budget process is a complex notion that is closely related to other spheres of the governmental life such as politics, management, and communication. Moreover, it consists of several elements that should be fulfilled in order to reach the desirable objective. After analyzing the main concepts and peculiarities of the budget process, the next step will be the evaluation of the role of the federal government in managing it.
The budget process for the federal government is a multiple issue. It includes many subprocesses, techniques, procedures, and efforts of the personnel in the legislative and executive branches as well as the contribution of the President and the Members of Congress and other officials (Saturno, 2004).
The federal budget comprises the data about the revenues as well as spending, debts, and borrowing of the government. The revenues appear from taxes, but they are the basis from other derivations, namely licenses, fines, and duties. The spending consists of aspects such as budget authority, offsetting collections, outlays, and obligations. A great variety of data is counted according to the rules and codes that have increased over the years; they do not usually adapt to the way revenue and spending is reported for in other procedures.
Initially, the budget is comprised of two basic groups of funds, namely federal funds and trust funds (National Advisory Council on State and Local Budgeting, 1998). The first ones include the general funds from the basic exercise of the taxing power and borrowing. They are not reserved by law. Trust funds are developed under the denomination of statutes that nominate them as trust funds. They are reserved by special purpose and laws. The Social Security funds are the biggest of the trust funds; the data is accounted under a Social Security payroll tax and utilized for paying Social Security benefits. Accordingly, there exists a unified budget. It involves both the trust and federal budget. The equilibrium in the trust funds is taken by the federal government. They are added up in the federal debt. Because these equilibriums make up for a budget deficit but they are incorporated in the federal debt, the yearly rise in the debt constantly surpasses the number of the budget deficit. Thus, it is feasible for the federal debt to increase when the federal government has a budget excess. In fact, the budget sums do not involve all the financial transactions of the federal government. The basic exceptions fall into two patterns, namely off-budget entities and government-sponsored enterprises (Heniff, Lynch, & Tollestrup, 2012).
Off-budget entities are banned by the law from the budget sums. The payment of the Social Security trust funds and spending for the Postal Service Fund are banned from the budget sums. The mentioned transactions are depicted individually in the budget. That is why the budget states two deficit or excess numbers – one banning the Social Security trust funds and the Postal Service Fund. Accordingly, the transactions of the government-owned companies are involved in the budget based on a net. The quantity depicted in the budget is the contrast between receipts and outlays.
The government-sponsored enterprises have been banned from the budget since they are considered the private ones. The federal government has not possessed its share in the enterprises, a great variety of which obtained their money from private sources. Moreover, they were developed by the federal government but their budgets were not considered by the President in the same way. The enterprises are involved in credit performance. They take money in capital markets and give them to farmers and enterprises. Generally, the mentioned enterprises have benefits measured in trillions of dollars. Any information about the government-sponsored enterprises is documented in the President’s budget. Nevertheless, some enterprises have kept on operating on this fundamental; the economic instability that happened in 2008 swapped the status of two the government-sponsored enterprises that had an important role in the mortgage market (Coven & Kogan, 2007). Furthermore, the Federal Housing Financial Agent has set down two things in conservatorship by exposing them to rule by the Federal Housing until the conservatorship is fetched to the end.
Analyzing the budgeting system, one may admit that the financial situation is quite unstable in the USA. Nevertheless, there is one drawback. According to Blundell-Wignall, Atkinson, and Lee (2008), there existed a budgeting crisis in the state in 2008. They admitted that the crisis was influenced by two factors, namely global macro policies and poor regulatory framework. The scholars compared the situation with “a dam overfilled with flooding water” (Blundell-Wignall, Atkinson, & Lee, 2008). In other words, interest rates at one percent in America and zero in Japan assisted in filling the overflowing. Consequently, it led to the excess leverage. The experts emphasized that the crisis had started in 2004 in such areas as “mortgage securitization and off-balance sheet activity” (Blundell-Wignall, Atkinson, & Lee, 2008). That pressure was great enough that it made the enormous damage. The experts believed that it was possible to change the situation by selling some debts to the private sector. As for me, I completely agree with such a solution. Nevertheless, I will propose to establish institutions that will arrange debt management. The mentioned organization should be formed under influence of the government. The procedure would take time but it would assist in making the country more financially stable.
To sum up, the budget is supposed to be the main tool in the development of every country. It plays the significant role in building the country. Consequently, government is responsible for dealing with budget process. The budget process is a complex notion that involves certain issues, namely political, financial, social, and even cultural ones. It is paramount to improve every aspect in order to reach the desirable perspective. One of the most important elements of the budget that helps to cope with the mentioned issues is budget practice. It is a technique that assists in accomplishing the budget process. It may be of the hierarchical origin where one process enables completion of the other one. Accordingly, the government uses various tools and techniques in order to complete the budget process. Analyzing the gathered information, one may admit that the government is a fundamental user of the budget. Here one may speak about the federal government. In fact, the federal government budget consists of complex issues, tools, and techniques. Moreover, it includes two types of funds, namely federal and trust ones. The federal funds are basic possessions from taxation. The trust funds are funds that are controlled by the law. The biggest elements of the trust funds are Social Security funds. These funds comprise the whole budget process. One may admit that federal government can provide improvement to the development of the budget and the prosperous future of the country. Despite the fact that there was a financial crisis, the profound improvement in the budget process would solve the problem.