Opinion Editorial | |
| Wednesday, July 21, 1999 | |
25 Years Under The Budget Act |
This month marks an important anniversary. Twenty-five years ago on July 12, President Richard M. Nixon signed into law the Congressional Budget and Impoundment Control Act of 1974. It was one of the last pieces of legislation he ever signed before resigning from office the following month. There is no doubt that if Nixon had not been at the brink of impeachment over Watergate he surely would have vetoed this bill. Every president since has regretted that he didn't.
The reason that all presidents rue passage of the 1974 budget act is because its main purpose was to eliminate their impoundment authority. Impoundment, which had been utilized by every president since George Washington, gave the president a kind of line-item veto authority. If there was a provision of an appropriation bill he did not think was justified, he just didn't spend the money. This was called impoundment.
Naturally, Congress chafed at such line-item vetoes. This was not a left-right or Republican-Democrat issue, but one of institutional prerogatives: the legislative branch versus the executive branch, regardless of who was in power. However, as long as presidents were restrained in their use of impoundment, Congress acquiesced, not wishing to make a constitutional issue over some minor appropriation.
In 1974 this changed. As the wage and price controls that were imposed in 1971 began to break down and the OPEC oil embargo took effect in 1973, inflation skyrocketed. Nixon believed that reducing the federal budget deficit was critical to getting inflation under control. But faced with a hostile Congress, he began to rely more and more heavily on impoundment, much more so than previous presidents. This spurred Congress to try and outlaw the practice.
Republicans, faced with almost certain passage of an impoundment bill -- over a presidential veto if necessary -- decided to cut their losses by adding budget reform language to the legislation. That way they hoped to salvage something from a bill that was destined to become law no matter what they did. The final legislation established a new budget process in Congress, budget committees in the House and Senate, and the Congressional Budget Office. It has been amended many times since, incorporating the provisions of every major budget deal between Congress and the White House.
The motivation for the budget act was the budget deficits. Many members of Congress believed that they had come about simply because Congress never dealt with expenditures and revenues in their totality. If this could be done before it took up the annual appropriations bills, it was thought, Congress would make better fiscal decisions, thereby eliminating the deficit.
In retrospect, this was a naive view. In fact, what the new budget process did was to ratify deficits, rather than eliminate them. By requiring Congress to vote on a budget blueprint early in the year that explicitly acknowledged a deficit, the budget process actually removed the pain of voting for deficit-producing spending bills later in the year. Members of Congress did so in part because the CBO always warned that reducing the deficit too rapidly would cause a recession. Thus the net result of the 1974 budget legislation was to enlarge deficits rather than diminish them.
Now, at long last, the deficit era appears to be over. But few would credit the 1974 budget act. If anything, the budget process is now more of an impediment to intelligent budgeting than anything else. It imposes extraordinarily complex rules that take up incredible amounts of Congress's time without yielding any real benefits. Perhaps, therefore, it is time for the budget act to go, an unnecessary legacy of different economic times. Few will mourn its passing.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, July 21, 1999.
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