President Nixon signed his last major piece of legislation, the Congressional Budget and Impoundment Control Act of 1974 (CBA), just 12 days before the Supreme Court ruled that tapes of his conversations at the White House were to be turned over to the Congress. And 16 days later, on August 9, 1974, the President resigned his office.
It will remain an unanswered question as to whether Nixon would have signed the legislation if he had not been under investigation for the serious misuse of Presidential powers. After all, its raison d’etre was Nixon’s own impoundment of authorized and appropriated funds. The “Imperial President” likely would have wanted to retain his control over Congress’s spending decisions and signing the CBA weakened the executive’s position.
In just six days, a new fiscal year will begin, marking the 50th anniversary of that historic legislation, without a budget or appropriations to fund the government. Members of Congress, scholars and media pundits will focus on this “golden” anniversary of the law, and ask: How has it worked? Did it achieve its goals?
In 1976, I had the opportunity to participate in the federal budget process because of the CBA’s enactment, first as staff at the newly created Congressional Budget Office, then going on to become the longest serving staff director of the Senate Budget Committee. For much of the past 50 years, the CBA worked pretty much as the authors envisioned it would, though. I admit this assessment may be biased by my tenure.
The one basic and fundamental premise of public budgeting is to provide a means of discipling and informing decision makers of the choices they must make with the goal of maximizing benefits from available resources. In truth, budgeting is governing and governing requires budgeting.
The CBA was agnostic as it related to the level of debt and deficits the country would experience. In 1974 the deficit was 3.3% of GDP, a “mere” $53 billion, and the public debt was 24.5% of economy. Today the annual deficit is nearly 6% of GDP and public debt nearly 100% of the economy.
The authors of the Act -- besides dealing directly with procedures to address impoundment actions of the executive -- focused their reform on creating a process by which Congress could openly debate and methodically develop a budget for the country. In many ways it was an accounting tool that would track and enforce whatever decisions were made on spending and taxes for the coming year and beyond. If that meant running a deficit, so be it, at least the members would know what the consequences of their action would be.
Beginning with the Reagan Administration and throughout the 1980’s and 1990’s, deficit reduction became an explicit goal of the Act, beginning with the Balanced Budget and Emergency Deficit Reduction Act 1985 (Gramm-Rudman-Hollings). The process of producing an annual budget blueprint and enforcement procedures to implement broad spending and revenue levels, while politically difficult, nonetheless worked, if measured by the country achieving a balanced budget prior to September 11, 2001.
Only 13 times in the CBAs 50-year history has Congress not produced a budget (including this year) to guide and discipline decision makers, and 12 of those times occurred in the 21st Century. Two times under Democratic control and three under Republican control have they failed to produce a budget, but eight times (2011, 2012, 2013, 2014, 2015, 2019, 2020, 2024) when the House and Senate were of opposite party control.
As the country has become more politicized the Act has failed to truly inform and discipline members of Congress. It has become a tool to simply advance the majority party’s political agenda without a full appreciation of how those policies might impact the long-term fiscal outlook. This applies both to the Republicans’ use of the budget process in 2016 to repeal the Affordable Care Act (which ultimately failed), in 2017 to enact major tax cuts, and Democrats with the American Rescue Plan in 2021 and the Inflation Reduction Act of 2022.
Reforming the process for the next 50 years will not be easy. In an ultra-politicized environment during an election year, each party will want to design a process that benefits their political agenda.
I recently asked former Chairmen of the House and Senate Budget Committee if there was one reform they would recommend that would bring the process back to its original goal of informing and disciplining Congress to produce a bipartisan budget, what it would be.
Former Senator Kent Conrad (D-ND) responded that he would start with the fact that there is no consequence for failure to pass a budget resolution. “Leaders do not want to put their members through a politically perilous process when there is no consequence for failure to act,” he responded.
But there are consequences. Those include what we will likely see in a few days and have witnessed over the last many years – gridlock, lapses in government funding, shutdowns, brinkmanship and ultimately a loss of respect for the U.S. Congress.
Reforms that have been advanced over the last years both by Republicans and Democrats, by special commissions and committees, point to changes that might improve the budget process going forward. These include biennial budgeting, automatic debt limit increase upon adoption of a fiscally responsible budget resolution, establishing metric goals such as debt/GDP, making the reconciliation process only applicable for debt reduction, and automatic continuing resolution when everything else fails.
In the end, however, no reforms can work if there is no political will to enforce changes. What began 50 years ago with bipartisan support and strong political agreement to reform will be required again.
