Britain’s Is a Budget

April 29, 1957

Americans, groaning over their April 15 tax payments, must have read with a mixture of envy and incredulity the budget announced by the British Chancellor of the Exchequer on April 9. Here are we, confronting the largest peacetime spending plan in our entire history, and being told by the Administration that it is naïve of us to expect any tax relief this year. And there is Britain, planning to spend in the fiscal year 1958 less than in 1957, and giving appreciable tax relief to its own citizens.

Several important lessons can be drawn from this comparison. Suppose we begin by comparing the American and British budgets over the past eleven years. Let us compare, for example, the official estimate of expenditures, before the beginning of each fiscal year, with the actual expenditures made in that fiscal year. The following table is in billions of dollars for American fiscal years ending June 30, and in billions of pounds for British fiscal years ending March 31.

The first thing to be noticed is how close Britain’s estimates of expenditures come to the actuality and how widely our own government misses. In the eleven years 1947 to 1957, inclusive, the furthest the British Treasury came from predicting the result was in 1949; it missed by 7 percent. Its average percentage error for the eleven years was only 2.3 percent. Compare this with the American record for the ten completed years from 1947 to 1956 inclusive. (The actual 1957 result will not be known until the end of June.) For 1947 and 1948 the estimates missed by more than 11 percent; for 1953 and 1954 they missed by more than 13 percent. The average percentage error for the ten years was 7.62 percent.

It is true, of course, that the President must make his estimate of expenditures for a fiscal year almost six months before that year begins, whereas the British Chancellor of the Exchequer publishes his estimate about a week after the fiscal year has begun (and when it is definitely known what actual expenditures were in the fiscal year just closed). But even if we take the revised estimates of expenditures made by the President a whole year later, more than six months after a fiscal year has begun, his average percentage error turns out to be 5.52 percent.

WORTH DREAMING ABOUT

The basic reason for these differences is not that British Treasury experts can foresee the economic future better than ours can. The basic reason is that Britain has a responsible executive budget system and we have not. When the British Chancellor of the Exchequer presents the budget, he is presenting not a mere set of estimates or a hopeful guess, but a pledge, a program, and an overall bill. Parliament must accept or reject this as a unit; it cannot kick it around or simply disregard it. We could approach such a system here if Congress retained its power to reduce proposed expenditures but relinquished its power to increase them. New York and many other states have such a system. Even to give the President power to veto individual items in appropriation bills—a power for which Mr. Eisenhower has now asked—would help enormously.

The possible rewards of a responsible budget system to the American taxpayer are illustrated by Britain’s latest budget. The British Government plans to spend £4,827,000,000 in the next fiscal year. This is only 23.4 percent more than it spent in the 1947 fiscal year. We are still planning to spend about $71.5 billion in 1958, or 83.3 percent more than in our 1947 fiscal year. Now if we also were planning to spend only 23.4 percent more than in 1947, we would be planning to spend only $48.1 billion in 1958—a saving of $23.4 billion. . . .

Well, a responsible budget is at least worth dreaming about.