A Budget Reform Travelogue: Casting Fiscal Anchors and Clearing Financial Fog

Almost everyone seems to agree that America has a federal spending problem. According to Gallup, only 10 percent of Americans are completely unconcerned about the country’s federal spending and budget deficit. Yet the widespread anxiety among the remaining 90 percent doesn’t translate into support for spending cuts across the board. Even more surprising is the lack of support for reducing spending. Whether the topic was Medicare or assistance for needy people around the world, in no single category did more than 28 percent of respondents favor decreased spending.

It’s a striking paradox. While federal spending is largely perceived as problematic, there’s also wide resistance to cutting spending on specific items. Maybe it’s because Americans do it all the time: We fret about the big picture while hesitating to relinquish our personal slice of the pie.

However, the International Budget Partnership’s Open Budget Survey provided an analysis of the U.S. budgeting system that hints at an interesting narrative. Contrary to what people might think, the United States excels in budget oversight, scoring 83 points (higher than Sweden or New Zealand). It also receives a decent evaluation for transparency—reasonably so, given the role of independent institutions like the Congressional Budget Office and the Government Accountability Office. Then what is the Achilles heel?

Public participation.

In other words, the problem isn’t a shortage of information itself, but rather a lack of streamlined information, public engagement in the decision-making process, and a deficit of public understanding. The solution lies in crafting a system that sets clear, long-term fiscal goals while making budget information accessible and relevant to everyday Americans.

Managing a national budget isn’t unlike embarking on a personal fitness journey. In both cases, success hinges on commitment, expert guidance, and regular progress reports. While the United States finds itself stuck in the perpetual “I should start dieting… eventually” mindset—recognizing the need for fiscal fitness, listening to some advice, but struggling to move beyond having good intentions—that’s essentially what New Zealand did with its Fiscal Responsibility Act of 1994 (FRA), treating its fiscal health like a well-planned workout regimen.

The FRA established eight non-binding principles of responsible fiscal management, including reducing public debt to prudent levels and maintaining adequate net worth as an economic buffer. Every time the government sets a budget, it’s required to thoroughly justify its decisions according to these principles. Then, budgets designed with these principles in mind undergo parliamentary review before being distilled through five key reports and made available to the public.

The results of this grand experiment are on display for all to see. The government’s streamlined budget website and annual Budget Policy Statement showcase something rare in the world of public finance: clarity and conciseness. The report outlines overarching budget objectives, short-term fiscal intentions, long-term targets with a three-year economic forecast, and a 10-year expenditure management plan—a treasure trove of accessible information that makes sense to the average person.

But the real magic lies in the results. This policy didn’t just set principles and make information accessible; it vastly improved the country’s fiscal health. Until the early 1990s, the United States and New Zealand had surprisingly similar national debt levels and trajectories. However, since then, one country sharply reduced its public debt while the other did not. New Zealand’s government and think tanks attribute much of this fiscal turnaround to the FRA, praising it as an “effective commitment device that helped establish fiscal discipline.” It also provides the flexibility to respond to unexpected economic recessions.

Source: Public Finances in Modern History Database, International Monetary Fund

The New Zealand model demonstrates that establishing budgetary principles and making fiscal data more digestible can foster fiscal discipline within traditional political spheres. But that’s only part of the story. It could also help the public reconcile their conflicting views on national finances—worrying about the nation’s wallet while guarding our own interests—and address the lack of participation through public hearings and forums.

A Bipartisan Policy Center poll revealed a fascinating insight that shows how simply streamlining information could do much more than one might expect. While they initially found that most Americans believed the government was underspending in many areas, perceptions shifted significantly when participants were shown a “Federal Taxpayer Receipt,” a clear breakdown of government spending. Fewer people thought the government was underspending on areas like Social Security or interest on national debt. In other words, clear, accessible fiscal information can alter public perception and potentially narrow the gap between macro-level concerns and micro-level preferences.

Moreover, a transparent and reader-friendly budget platform can serve as a springboard for greater public involvement in fiscal decision-making. New Zealand’s results in the Open Budget Survey show they rank second out of 125 countries in public participation. Their budget policy statements aren’t merely informative documents—they’re also conversation starters. When their budget policy statements are published, citizens can offer direct feedback through a process called public submissions. Those who contribute particularly insightful comments are invited to parliamentary hearings where they can present their ideas directly to the Finance and Expenditure Committee. This system doesn’t just educate—it empowers. It transforms interested citizens into active participants in the budgeting process, creating a clear and impactful avenue for public engagement in national fiscal matters.

While the U.S. budget process differs from New Zealand’s, with Congress mainly holding the purse strings, the lessons are still profoundly relevant. The absence of clear, long-term fiscal guidelines and accessible budget information in America is a glaring oversight. Implementing a system of guiding principles for budget negotiations, coupled with a user-friendly platform to explain fiscal decisions, could be a significant step toward transforming our fiscal landscape. The time for such a change isn’t just ripe—it’s long overdue.