The Congressional Budget and Impoundment Control Act at 50: Goals, effects, and possible reforms

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The Congressional Budget and Impoundment Control Act of 1974 was an effort to re-establish Congressional control of the purse. Two elements have had the most lasting effects. The first was the creation of the Congressional Budget Office to provide the Congress with the information that was necessary to challenge the executive. Although CBO has functioned largely as anticipated by Alice Rivlin when she first organized the agency in 1975, it has become more influential than even the most optimistic of the founders might have envisioned, and is arguably the most successful of the Budget Act’s reforms. The second, the creation of the reconciliation process, was not seen as an important part of the reform 50 years ago, but has become the key way for congressional majorities to effect major changes in policy because it avoids a filibuster in the Senate. The results concerning the effects of the law on fiscal responsibility have been mixed. While reconciliation was used to reduce projected deficits in the 1980s and 1990s, since the late 1990s it has been more likely to be used to effect policies—tax cuts and spending increases—that add to deficits.

This paper reviews the original justification for the Congressional Budget Act, outlines its impacts relative to these aims, and focuses on CBO and reconciliation. It concludes with recommendations on how these two elements might be changed to permit the budget process to operate more effectively.

Is the Budget Act asking the Congress to do something—set overall budget priorities, rather than focus on narrow political or parochial interests—that it is just not well suited to do? Almost 35 years ago, political scientist Louis Fisher answered that question affirmatively. It might be that in our current hyper-polarized environment, it is even less likely that congressional budgeting—in a macro sense—can be successful. Fisher’s argument was that it was presidential leadership that promoted fiscal responsibility, and that expecting fiscal responsibility from the Congress was unreasonable. It should be noted, however, that presidential responsibility itself can be elusive, and one can come up with more examples of presidents who did NOT embrace fiscal responsibility than those who did.

So, if we do not conclude that congressional budgeting is hopeless, what does that mean? Unquestionably the Congressional Budget Act has fundamentally altered the relationship between the executive and legislative branches, as anticipated by the drafters of the law. The Congress is now better informed, and better able to operate on an equal footing with any president. Since the creation of CBO is now almost universally viewed as the main success story of the law, it is particularly important for the Congress to support and protect CBO if the legislative branch is to be able to operate on an equal footing with the executive. On the other hand, if the reform has not led to anything resembling budget control, much less fiscal responsibility (and it has not), this is in large part because the House and Senate budget committees (which were created by the 1974 law) have frequently not used the budget resolution as an opportunity to exercise their role in setting fiscal policy, rather than focusing on political posturing. If the Congress is to play a credible role in setting fiscal policy—particularly important given the projected trajectory for the federal debt—it needs to take that role seriously. This means making use of the resources it has not to simply score political points, but to make decisions that are in the long-term public interest. Otherwise, we may have to acknowledge the 1974 Act, as Fisher predicted, is largely a failed experiment.

Read the full paper here.