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Suggested Budgeting Service

The return of the budgeting organization from the Executive Office to the Treasury Department is here proposed in the interest of a unified finance department for the whole Government. It is understood, however, that this recommendation assumes a Treasury Department largely stripped of nonfiscal functions and thoroughly reorganized and integrated as to its fiscal processes. In other words, it is presumed that the general reorganization of the Treasury Department recommended in the preceding pages of this report will have been made as a condition of returning the budgeting function to this department. Under these circumstances, budgeting becomes at once a necessary and important element in the Treasury structure.

The return of budgeting to the Treasury Department has several advantages. It associates this work more closely with the other fiscal processes, thus helping to vitalize the planning of revenue and expenditure programs and making it possible to institute real controls, now largely lacking, in the execution of the budget. It serves to focus attention again on the preparation and execution of the budget, the primary job of the Budget Bureau. It assures cooperation between the vital fiscal services in realizing the policies and programs of the President. It removes the competition for fiscal power and prestige now existing between an independent Budget Bureau situated in the President's Office and the historic and well-established Treasury Department.

In spite of the fact that both organizations are directly responsible to the President, they now stand on an entirely different footing-one is headed by a member of the President's Cabinet who sits in on the determination of all top policy matters which come before that body, while the head of the other is now little more than a glorified secretary to the President who does not participate in Cabinet meetings. The Budget Director's present authority comes directly from the President and its weight and decisiveness depend entirely upon the support and time that the President can individually give to the budget work. This makes budgeting for the Government largely a personal matter and takes it out of the fiscal setting where it appropriately belongs. The tendency under these circumstances is for budgeting to drift into the eddies rather than keep in the main stream of the fiscal processes. This is notably true of the Budget Bureau's efforts in recent years to establish and maintain the effectiveness of the apportionment system in the execution of the budget. The system is now largely a failure because it does not have the support of vital fiscal processes which remain outside the Budget Bureau.

The experience and facts concerning Treasury operations are vital to the building of an adequate and properly grounded budget plan for the Government. The lack of emphasis on the revenue side of the budget at the present time is indicative of what happens when the budget-making organization is entirely divorced from the Treasury organization which produces the facts and figures on revenue trends and production.

These are some of our reasons for proposing the return of the budgeting organization to the Treasury Department and its integration with the fiscal processes of that department. The advantages of such an arrangement seem quite superior to the present set-up from a budgetary standpoint. While the Budget Bureau now performs certain managerial services for the President, these services are not its primary task and besides they may be successfully carried on by other units of the Executive Office. The controlling idea is, or should be, to place the budget organization in the best position to produce a comprehensive and understandable budget plan and to follow through on the execution of that plan.

It is proposed that the head of the Budgeting Service, the Budget Director, would continue to be appointed by and serve at the pleasure of the President. He would also have the status of an Assistant Secretary of the Treasury, and as such, would participate in the determination of top-policy matters in the Treasury Department. He would be represented in the President's Cabinet by the Secretary of the Treasury, who would, under the proposed reorganization of the Treasury, become indeed the finance minister of the Government.

SUMMARY OF RECOMMENDATIONS

Our study of the organization and processes of the Treasury Department indicates that it is not functioning effectively as the central financial department of the Executive Branch of the Government. In a government of such vast proportions as the present one, the lack of a modern and efficient financial department is a very serious shortcoming and one that should be rectified at the earliest possible moment.

We therefore recommend :

1. That the Treasury Department be made into a real department of finance which will integrate the essential financial processes of the Government. This will require that the present department be largely stripped of its nonfiscal functions and activities and that its fiscal services be properly reorganized.

2. That the Treasury Department concern itself primarily with the development of fiscal plans and policies for the President, the establishment of modern fiscal procedures and controls throughout the operating departments and establishments of the Government, and the production of financial facts and reports essential to the management of the Government and necessary for the information of Congress and the general public.

3. That the Treasury Department constitute a top policy group, consisting of the Secretary, the Under Secretary, the General Counsel, and the Assistant Secretaries, to delineate fiscal policies and generally to supervise departmental operations.

4. That the present fiscal functions of the Treasury Department be reorganized and integrated under two services—a Revenue Service and a new Fiscal Service. The Revenue Service would combine most of the present functions of Customs and Internal Revenue. The reorganized Fiscal Service would comprehend the existing Treasurer's office, the public debt, and allied services.

5. That there be added to the Treasury Department a new Accounting Service embodying a central accounting system and setting up essential controls over all receipts and expenditures of the Government.

6. That the Budget Bureau be returned to the Treasury Department and become a Budgeting Service in that department, operating in unison with the other fiscal processes of the Government.

Part Three

Report on

FEDERAL BUDGETING

То

The Fiscal, Budgeting and
Accounting Task Force

Prepared by

A. E. BUCK For the Institute of Public Administration

New York

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