The Budget Process: What is the history?
Today’s congressional budget process has its origins in the Congressional Budget and Impoundment Control Act of 1974. That law sought to create a coherent process for Congress' revenue and spending decisions and to constrain a president’s ability to impound funds appropriated by Congress.
- In 1972, newly reelected President Richard M. Nixon refused to spend funds appropriated by Congress for various social programs. Although the Constitution provides that a president may not spend money without a congressional appropriation, it was less clear whether he had to spend every dollar that Congress appropriated.
- Nixon’s impoundments were quickly challenged in court, and he lost every case at the appellate level except one. Before the Supreme Court could consider the issue, Congress moved explicitly to limit the president’s power to impound funds.
- But Nixon had an effective counterargument. He pointed out that Congress had no formal, orderly process of its own for adding up individual spending and revenue decisions and for relating total spending to total revenue. Nixon argued that if the president lacked the power to impound spending, total spending might expand without limit.
- Congress realized that Nixon had won the substantive argument and that it could not limit the president’s impoundment powers unless it created a formal budget process of its own. It responded by passing the Congressional Budget and Impoundment Control Act of 1974.