Advantages and Disadvantages of Rational Models and Incremental Budgeting Models

Budgeting is often a highly technical and painstaking process, and it lies at the root of many contemporary political and social problems. Budgeting can be seen as a “life and death” set of issues since it is the representation of what politicians have decided is worth funding and what is unimportant. A budget, in other words, is the final analysis of government policy: who gets what, when, where are how. Ultimately, the political process of elections, voting, committees, ideologies and ideas all come down to budget numbers.

Rational Budgets

A “rational” budget is one where each item to be funded is laid out in anticipation of present needs. It does not look to the past—what needed funding before—but analyzes each new budgeting process afresh. Zero-based budgeting is one of the more important elements of the rational process, where each item to be funded starts from zero dollars. Such an approach has the advantage of saving money, since each agency and project funded must justify its use of tax dollars. There is no guarantee this year's budget will look like last year's. The drawback is the constant round of hearings for each and every agency to analyze its methods of spending money. The bureaucratic analysis necessary can be overwhelming. This is a difficult process where government agencies never know if they will be funded -- and how much -- from year to year.

Incremental Budgets

The incremental approach to budgeting sees the budget as an icon of a sort. It is the result of political compromises, and in a way, is the highest manifestation of the democratic process. Therefore, last year's budget is normative for this year's. In an incremental budgeting system, as the U.S. government uses, public agencies can count on a stable process where their own share of the federal pie will not grow or shrink radically.

Contrasts

The rational budget, in general, is the result of an ideology where a government, or some agency of human reason, can anticipate what a society will need from year to year. Such a budget does not respond to democracy, but only to technocracy: what experts and specialists might think is necessary for a society. In this case, a budget is not a reflection of a political process, but is the creation of specialist groups and/or politicians who decide what is worth funding and what is not, from year to year afresh. The incrementalist seems to be committed to funding programs of dubious usage simply because they have been funded in the past.

Issues

The incremental idea is also ideological in that it suggests a budget is the highest manifestation of political life. Budgets cannot be changed radically from year to year because it would upset the functioning of government, it would introduce too much instability, and rejects the compromises of politicians elected in the past without giving them a hearing. Budget numbers represent the ability of politicians, bureaucrats, committees and others working together to compromise on how taxpayer money should be spent. On the other hand, the incremental idea can be criticized for refusing to force agencies to justify themselves. The incrementalist sees budgets as political documents, while the rationalist sees them as economic ones, governed only by standards of efficiency.