Linked to the problem of uncontrollable budgetary expenditures is the concept of “backdoor” spending. Identify and describe the internal conflict that results from backdoor spending. Additionally, identify the three principal types of backdoor spending, provide an example of each, and describe how this type of spending impairs the ability of the federal government to control expenditures.
What will be an ideal response?
Backdoor spending reflects spending decisions that are not made through the formal appropriations process. As to internal institutional conflict, students can identify either that these types of spending decisions reflect a conflict within Congress between substantive policy committees and appropriations committees, or identify that these spending decisions reflect the difficulties present when making the huge number of spending decisions that must be made each year through formal channels. The three principal types of backdoor spending are (1) borrowing authority, (2) contract authority, and (3) permanent appropriations. Borrowing authority connotes that an agency may borrow from Treasury money not appropriated to it through the formal appropriations process; examples include student loan guarantees and federal insurance programs. Borrowing authority impairs the ability of the government to control expenditures because the authority to make spending decisions is so widely diffused. Where applicable, contract authority allows agencies to enter into contracts that bind the government; examples include contracts for specified goods and services. Contract authority impairs the ability of the government to control expenditures because after the initial contract is let, the appropriations committee is placed in the awkward position of either appropriating the money to pay the obligation or forcing the agency to renege on its debts. Permanent appropriations are appropriations that require agencies to spend money for designated purposes regardless of other conditions; examples include payment of interest on the public debt or federal support of land grant colleges. Permanent appropriations reduce the discretion of the appropriations committee unless the committee chooses to renege on these standing commitments.
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