Nixon reorganized the Bureau of the Budget in l970, designating it the Office of Management and Budget (OMB). The Office of Management and Budget was similar in function to the Bureau, but a number of changes were made. The size of the staff was increased by 28 percent. Greater power was centralized in the OMB directorship (for instance, in l972 the OMB suspended housing subsidies without even consulting the Department of Housing and Urban Development; likewise, the Treasury Department was rarely consulted on tax changes). Finally, the OMB instituted a sweeping system for oversight of federal monies disbursed to the states. OMB Circular A-95 (February, l97l) encouraged states to establish multi-jurisdictional (e.g., multi-county) agencies to review all federal grant applications. These A-95 clearinghouses encouraged unified state planning but also brought the threat of greater state control over the access dissident local groups had to federal dollars.
The long evolution of centralized presidential influence over the budget process plus the specific abuses of the Nixon administration in impounding funds precipitated the Congressional Budget and Impoundments Act of 1974. This act required both branches of Congress to vote approval of presidential requests to terminate programs through withholding of funds ("rescission requests"). Through an "impoundment resolution" either branch can also prevent the deferral of appropriated funds.
The main thrust of the l974 act, however, was to revamp Congress's own method of handling the budget. For the first time Congress created a staff agency, the Congressional Budget Office, with a capacity to thoroughly and independently assess the budget data submitted by the president. The Congressional Budget Office also enabled Congress to tie spending and revenue policy, and to work from their own rather than from the president's budget estimates as a base upon which to make alterations.
Since the budget reforms of l974, Congress has worked from its own as well as executive budget documents. Of course, congressional documents provide for full discussion of the president's budgetary proposals. Congress receives two budgets from the president. The "current services budget," representing the budget for continuation of existing programs, is presented in January. Members of Congress compare these two budgets with the five-year projection of current spending developed by the Congressional Budget Office.
Between January and March the budget committees (created by the l974 reforms) meet in each branch of Congress. Hearings are held leading toward first budget resolution. This resolution takes spending needs and fiscal policy into account in setting a ceiling on the budget for the coming fiscal year. By March l5 all authorization committees are supposed to have evaluated the requests in the executive budget and to have submitted their own budget estimates. By April l the CBO presents to Congress its review of the executive budget. On April l5 the Budget Committees present the first concurrent resolution on the budget to their respective houses. Congress passes this resolution by May l5.
Also by May l5 all authorization bills are supposed to have cleared their committees. From then until the seventh day after Labor Day, Congress takes action on appropriations bills. In this the Congress is aided by many interim CBO reports which analyze the costs associated with each bill. By August the Budget Committees prepare a second budget resolution, which is passed by September l5. After this no bills involving expenditures can be considered for the remainder of the fiscal year. Between September l5 and September 25 Congress reconciles appropriations with the budget resolutions and the two budget resolutions with each other. On October l the new fiscal year begins.
The congressional budget process since l974 has accelerated the pace and comprehensiveness of budgeting at a national level. For the first time, the l974 reforms forced Congress to reconcile the total budget with individual spending request, rather than simply letting the total budget be the sum of the separately considered parts. Under these reforms, appropriations are only considered after an overall budget total target is set. The l974 changes also tightened congressional oversight of backdoor budget outlays (such as veterans'' benefits) not voted on by the appropriations committees.27
Ironically, however, the provision of the l974 act for reconciliation meetings (to reconcile House and Senate budgets) has provided a forum for intensive presidential influence. In l98l, for example, Reagan was asked to use the reconciliation process to achieve great success in his budget-cutting efforts. Though less important in recent years, reconciliation is now recognized as a distinctive aspect of federal budgeting.
Early predictions that the deadlines of the new congressional budget process would prove too inflexible have proved only partially correct. Both liberal and conservative leaders in Congress have labored hard to make the system work, motivated by a mutual desire to stave off the decline of congressional power in favor of presidential budgetary influence. On the other hand, budget expert Allen Schick has noted continuing serious problems of delays in enacting budget resolutions, appropriations, and authorizations, as well as noncompliance by Congress with spending limits through various forms of accounting legerdemain to understate deficits. All observers agree that the process is not enough to force Congress to avoid massive federal deficits or to confront the American people with the need for a choice between many reductions in defense, social security and other major spending programs on the one hand or a major tax increase on the other.
Because of this and the spectre of unprecedented budget deficits accumulated by the Reagan administration, in 1985 Congress acted with unusual speed to pass what is known as the Gramm-Rudman-Hollings Bill. This act mandated successively lower deficit limits between 1986 and 1991. If Congress does not reduce the deficit itself, the President is required to sequester accross-the-board amounts from most budget categories to achieve the stipulated reductions. (Social security, interest on the debt, and certain other budget categories are exempted). Gramm-Rudman-Hollings represented a recognition of the failure of the 1974 budget reforms to curtail massive deficits.
Federal budgeting in the post-Nixon era has been a politics of distrust between the executive and congressional branches. On the presidential side, the Office of Management and Budget has seen the impoundment provisions of the l974 budget reforms as an onerous and largely uncalled-for restriction of OMB discretion. (These provisions set stringent procedures for previously routine withholding of appropriated funds, procedures that the OMB felt necessary in order to cope flexibly with changing circumstances that Congress could not foresee.) When the president has called for rescissions (cancellation of budget authority previously approved by Congress), Congress has ordinarily not gone along. This in turn diminished presidential control over the bureaucracy, since previously the threat of rescission was one instrument used to force departments to "shape up." The Supreme Court case Chada v. INS (l983), however struck down the requirement for Congressional approval of spending deferrals under the Congressional Budget and Impoundment Act, restoring much of the Executive Power that had been threatened.
On the congressional side, the Congressional Budget Office, set up by the l974 reforms, has subjected presidential budgets to ever closer and more critical scrutiny. In addition, the CBO has developed its own capacity to make economic and budgetary projections, countering executive proposals not only in substantive terms (e.g., cost estimates for projects) but on the level of underlying premises (e.g., assumptions about future economic growth) as well. Increased scrutiny by Congress and the CBO translates into added paperwork on the executive side. The OMB, for example, has since l974 been required to provide a current services budget (what the budget would be without added services), mid-year budget reviews, cost estimates on far more proposals, and reports analyzing costs at lower and more complex levels. Distrust between the two branches has led to competition in the form of an information (and paperwork) explosion that is resented particularly by those who remember simpler procedures prior to l974.
Paradoxically, the tremendous escalation of analytic capacity in federal budgeting has, if anything, increased the political nature of the budgetary process. The effect of putting four hundred or so individuals to work in the CBO and other new budgeting arms of Congress has not been to routinize decision making by application of cost-benefit analysis, econometric modeling, or any other budget-related analytic technique. Rather, the effect has been to widen the capacity for political conflict between Congress and the presidency. By reducing the dependence of Congress on data supplied from the executive branch and by piercing the mystification of numbers by having "number-crunchers" on both sides, the reform has set the stage for challenges on a broader range of subjects. If the conflict now proceeds at a somewhat higher and more statistical level of dialogue, it is nonetheless still a conflict over priorities, values, and politics.
Source: D. Garson, by permission.