The Role of Congressional Budget Office in the Congress' budget policy

The establishment of the Congressional Budget Office (CBO) in 1974 was part of a package of measures adopted by the Congress to reassert its budgetary powers. This followed stand-offs between the legislature and the executive, particularly over the fact that the President was impounding spending that the Congress had approved in annual appropriations acts. The CBO’s creation also ended the executive’s monopoly as the sole provider to the Congress of budget information, forecasts and analysis. Partly as a result of the budget reforms in 1974, the Congress’s budgetary powers are the broadest of any legislature in the world. Prior to 1974, successive Presidents had restricted outlays to below the appropriations approved by the Congress – a procedure known as “impoundment”. Tensions between the legislature and the executive came to a head in 1973 when President Nixon refused to disburse nearly 12 billion dollars of congressionally appropriated funds and challenged the Congress to enact spending ceilings. The President wanted substantial authority to cut spending – a de facto line-item veto of appropriation acts. The Congress opposed the President’s proposal and instead sought to reform its budgetary role. Part of the Congress’s opposition was political: President Nixon (elected in 1972) was a Republican, whereas in the 93rd Congress (1973-74), the Democratic Party held the majority in both houses. A Joint Study Committee on Budget Control was created in the Congress, composed of 32 members of the House of Representatives and the Senate. The committee’s key mandate was to “propose procedures for improving Congressional control over budgetary outlays and receipt totals”. Fragmentation in the Congressional budget was also a problem that needed to be addressed. The committee prepared two reports in 1973 whose recommendations included first to establish a budget committee in each house, with responsibility for considering a Congressional budget resolution that provides ceilings on total discretionary spending, while previously no single Congressional committee was responsible for total federal spending. Second, a joint staff for the new budget committees, which would be headed by a legislative budget director whose “staff would be highly trained, professional and non-partisan”. California’s Legislative Analyst’s Office (established in 1941) was taken as a model for this recommendation. Various Congressional committees studied the proposals. The narrow scope of the legislature’s budget staff – serving only the proposed new budget committees – was incorporated in the House of Representatives version of the budget reform bill. In contrast, the Senate version recommended the creation of an independent Congressional Office of the Budget “with a highly competent staff to guide it in fiscal policy and budgetary considerations, similar in expertise to the President’s Office of Management and Budget (OMB)”. The Senate believed that a separate new agency was needed to serve the entire Congress and not only the newly created budget committees. The Senate version of the bill predominated when President Nixon signed the compromise new legislation into law in 12 July 1974 after receiving strong cross-party support. At the later stages of the Congressional debate, it was not so much a question of whether a CBO should be created, but what should be its size and scope... (segue)