Expenditure forecasting for the Department of Defense;

              Expenditure Forecasting
Jbr tt\e department of Ef^fense
By Sanford J. Ackerman and J. Thomas Presby
The effect of government expenditures on the state
of the national economy makes expenditures a cru­cial
element of federal fiscal policy. In order to exe­cute
fiscal policy successfully the Federal Government
must rely on expenditure forecasts of its agencies, and
forecasts of tax receipts. Because the Department of
Defense accounts for about one-half of total Federal ex­penditures,
the problem of forecasting Defense expendi­tures
is the most important problem of its kind in the
Federal Government.
Recognizing the significance of this problem, Robert
N. Anthony, Assistant Secretary of Defense (Comptrol­ler)
and Joseph S. Hoover, Principal Deputy Assistant
Secretary of Defense (Comptroller) provided the impetus
for the construction of a computer-based model and
information system of forecasting Defense expenditures.
The system was constructed during the summer of 1966
under the direction of Melvin H. Baker, Director of Plans
and Systems in the Program / Budget group of the De­fense
Department and Sheldon W. Taylor, Director of
Financial Analysis and Control in the Program / Budget
group. Touche, Ross, Bailey & Smart participated in the
design and implementation of the system as contractors
to the Defense Department.
The system is consistent with the innovations in gov­ernment
financial planning and control that have origi­nated
in the Department of Defense, such as program­ming,
planning, and budgeting systems (PPBS). This
method of forecasting is applicable to other Federal
agencies as well as to state and local governments.
This article suggests the kind of work that should be
done to forecast expenditures as a part of all basic
planning and budgeting procedures in government. It
deals specifically with a sophisticated department of the
Federal government —Defense. Although the most ob­vious
and most publicized examples of governmental
budgeting, authorization, and spending processes are
at the Federal level, they regularly occur at every level
of government. There are considerable differences in the
specific procedures followed and in the constitution of
the authorizing bodies, but the basic problems of budget
review, appropriation, and authorization are the same.
For that reason, discussion of the Federal processes
is appropriate background and introduction to a discus­sion
of expenditure forecasting.
The Federal Processes
The President's Budget is submitted to Congress as
10 THE QUARTERLY