Reinventing budgeting: A comparison between the United States and Italy

This dissertation is a comparative study on the national budgets of two countries: the United States and Italy. It revolves around the following principal research questions: what is the direction of the two budget systems? What are the major driving forces?; The author formulates the hypothesis that there is a convergence of the two systems. This hypothesis is tested by conducting an historical, cross-national analysis from the birth of the two nations to the present time. Both international and domestic forces (political, economic and social) are examined. Four historical periods are highlighted in relation to budget reforms. The first period spans from the birth of each nation to the First World War. The second period covers the years between the First and the Second World Wars. The third period goes from the post Second World War to the end of the 1970s. The fourth period covers the 1980s and the 1990s, until today. At the beginning, Italy and the United States were far apart carrying a different historical and cultural heritage and aiming at solving different internal problems. A national budget system was established in different times and with different characteristics. However, the principle of a balanced budget was a common feature. Later, the occurrence of drastic international events (World War I, the Great Depression, and World War II) pushed the two countries closer to each other. Both the United States and Italy experienced a growing expansion of government intervention and a large-scale deficit spending. Over the past decade, as a result of the profound transformation both at the international and domestic levels, the debate has focused on less role of government and a smaller role of the budget. Both countries are scaling back government intervention and welfare benefits. Institutional and administrative reforms are directed to reduce bureaucracy, to decentralize government activities, bring simplicity, transparency, and flexibility to administrative procedures. Deficit spending is being replaced by the balanced budget principle. A trend seems to be emerging toward budget simplification and toward budget uniformity. This study leads to the conclusion that the budgets of the two countries are converging. From the birth of each nation to the present time, under the pressure of the international as well as domestic environments, the policy makers have taken certain choices in the direction of a convergence in budgeting.