Ch06 COST-BENEFIT ANALYSIS AND GOVERNMENT INVESTMENTS（课件）- 《财政金融英文版》同步教学（人民大学版）

COST-BENEFIT ANALYSIS AND GOVERNMENT INVESTMENTS C h a p t e r 6 The Budget Process Discretionary programs: those that Congress must renew funding for each year Entitlement programs – spending for transfers (Social Security, Medicare, veteran’s benefits) that are determined by the number of individuals eligible for payments and are automatically funded Budget resolution: passed by Congress, it indicates funding levels for 19 broad federal spending categories for the next 5 years Budget authority: agencies allowed to spend in each of the 19 categories Program Budgeting Program – a combination of government activities producing a distinguishable output Program budgeting – a system of managing government expenditures by attempting to compare program proposals of all government agencies authorized to achieve similar objectives Program budgeting seeks to measure the outputs of agencies in quantitative terms. The goal is to find the minimum cost combination, or cost-effective program mix, that still achieves the mission. Cost-Effectiveness Analysis A technique for determining the minimum-cost combination of government programs to achieve a given objective Choose an objective that alternative government programs can achieve E.g., reduce deaths by disease, accidents by 5,000 people per year Provision of free smoke detectors Free inoculations against the flu Choose the mix of those programs that achieves the objective at minimum possible cost Cost-Effectiveness Analysis Incremental Budgeting Basing the current budget on the previous year’s budget with only minor changes in funding levels for various programs included in the budget In fact, the approach many governments actually use follows this view of budgeting as an incremental process Seeks to minimize resources that go into the budgetary process each year and make it easier to enact budgets Cost-Benefit Analysis A three-step process for determining the relative merits of alternative government projects over time: Enum