Question

Why are political representatives not allowed to simply decide on all areas of spending? What limits are in place? How does this distort the idea that Fiscal Policy can be used to solely direct an economy? Explain. How does the approach for proposing a budget (i.e. Garbage Pail or Policy Window) influence the types of ideas that governments spend money on? Explain. How does either process lead to spending on ideas/items that promote long - term economic growth? How does either process lead to spending on ideas/items that do not have positive consequences on the economy?

Answer 1

Political representatives cannot simply decide about the areas of spending. Officials are in place that decide which areas should get what amount of funding, and everything is to be put forward in the Congress and voted for during the presentation of the budget. If the majority of Congressmen vote against a spending, the money is not sanctioned in that regard.

Presentation of the government budget influences a lot of matters. Garbage can is like a place for ideas to dump, so when expenditures are presented in such a way the distribution may be scattered. The politicians would be divided among themselves and the expenditures would be sanctioned among a plethora of different activities. This may also lead to some expenditures that necessarily do not have a positive effect on the economy. However, it may result in the overall development of the economy in the long run.

On the other hand, under policy window there is only a window of opportunity-- which implies that people can either vote for or against the policy. The expenditures would be directed in one direction in this case. In the long run, this strategy would prove to be fruitful as the expenditures would be directed and results would be clear, which are extremely important for policy formulation and improvisation.