Why Budgets Matter: Budget Policy and American Politics. By Dennis S. Ippolito. (University Park: Pennsylvania State University Press, 2003. xiv, 329 pp. $55.00, ISBN 0-271-02259-0.)

Abstract

Historians have generally been more interested in specific federal policies than the federal budget in aggregate. The political scientist Dennis S. Ippolito makes a strong case that the overall budget merits attention as “a measure of political reality that uses money” (p. xiii). His purpose is to illuminate the political significance of budget policy from the nation's founding to the present and beyond and to explore what budget policy outcomes tell us about past struggles over the size and role of the federal government. The book is organized chronologically into six historical eras. From 1789 to 1860, federal budgets were relatively small and usually balanced, but the lack of an executive budget process undermined fiscal management during wars and financial emergencies. From 1860 to 1915, the politically dominant Republicans discarded Jeffersonian small government ideals to spend on subsidies, internal improvements, and veterans' pensions, which soaked up the bountiful revenues produced by protective tariffs, but the lack of centralized fiscal control led to recurring deficits when the economy fluctuated. From 1915 to 1940, the federal budget benefited from new revenue sources (income taxes) and stronger fiscal planning (the Budget and Accounting Act of 1921). Building on this, the New Deal created the programmatic base of modern domestic politics. From 1940 to 1970, permanent defense expansion accompanied substantial domestic program development, but strong fiscal control exercised by presidents and Congress kept the budget in balance or nearly so until the late 1960s. From 1970 to 1990 the Great Society's legacy of social welfare expansion and the continuing need for strong defense placed unprecedented pressure on the budget, and the absence of political consensus over the means of preserving a nexus between spending and revenues produced the age of deficits. In the 1990s, Ippolito persuasively argues, the key issue between the political parties of whether to balance the budget at high or low levels of revenue was won by President Bill Clinton and the Democrats, and “their victory carried through into spending policy” (p. 288).