Government Budget Revolves Around Discretionary

¶ … government budget revolves around discretionary programs that the government must fund each year (e.g. health, housing, and highways), and entitlement programs that include spending allocated to program such as Medicare, Medicaid, and the military retirement fund. The President's request for budget specifications and/or emendations are reviewed by the house and Senate Budget Committee, which specifies budget authority about how the budget should best be allocated.

The government budget has many similarities to those made by a business in that decisions too are made according to a ranking system (i.e. priorities are seen to first) and cost-expense / loss factors are taken into consideration where the government seeks to gain the maximum amount of profit and the minimal degree of loss from their decisions.

The while is also formulated according to a master budget which is the document that the business / govenment puts together planning for all the expenses that the company will need to set aside for the coming years and allocation of the expenses. Very similar to a form that is formulated for fulfilling goals ahead of time, the master budget places deadlines, milestones, and complete delineations of the expected outcome of the budgetary allocation. The govenment uses a similar system.

Program proposals and objectives across all government divisions are compared in order to achieve similar results and goals. Program budgeting seeks to measure their objectives in quantifiable assessments and this too is similar to the way that a business quantifies and assesses its budgetary goals.

The goal in both cases is to choose the combination of program that will achieve the objective at minimal cost This is also called the cost-effective program mix where trade-off is conducted between the different programs of the various agencies in order to choose those that will give the best profit for the dollar invested. Cost-effectiveness analysis is also preformed in order to choose the program that will achieve a given objective with the least cost. There may, for instance, exist various programs for relieving PTSD in veterans.

The president may propose that the government should implement and fund an intervention. All would be assessed in order to choose that which is not only efficacious but also least costly. Occasionally, various programs may be mixed and their cost-effectiveness taken into account so that the result is as least costly as possible. Incremental budgeting is another government budgetary tools that are similar to that which industries use.

Incremental budgeting bases the current budget on the previous year's budget, implementing only minor changes in the programs that are on the budget. With this approach, poorly performing programs receive cuts in spending and disruptive conflict and change in government spending is reduced. Cost-benefit analysis is a tool used alike for business and government where the profit and advantage of projects are assessed over time to review whether they deliver.

Projects that are too costly and deliver minimal or null profit are terminated, whilst const-benefit analysis provides a tool that government and citizens can use to analyze the relative performance of the various government projects.