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Budget Process
Since the mid-1970s, Congress has used a budget process to determine government spending requirements, decide how to pay for them, and examine the relationship between spending and revenues. The process requires legislators to set overall goals for government spending and revenues—and then to tailor their actions to meet those goals. Congress makes many of its most difficult policy decisions during this exercise.
The budget process is a cyclical activity that starts early each year when the president sends budget proposals to Capitol Hill. The president's budget lays out priorities for the fiscal year that will begin October 1. Before Congress adjourns for the year, the Senate and House of Representatives will have created their own budget and provided the money needed to carry it out. Negotiations with the White House may narrow the differences between the two plans, but the congressional budget is likely to differ in important respects from that proposed by the president.
Lawmakers set their own priorities, deciding how much the government should spend and on what, whom to tax and by how much, and what gap should be allowed between spending and revenues. These decisions often bring Congress into sharp conflict with the president.
Beginnings
Through most of its history, Congress acted piecemeal on tax bills and spending bills; it had no way of assessing their impact on the federal budget as a whole. Although the Constitution entrusted Congress with the power of the purse, primary control over budget policy passed to the executive branch.
Congress first conferred budget-making authority on the president in passing the budget and accounting act of 1921. That law required the president to submit to Congress each year a budget detailing actual spending and revenues in the previous fiscal year, estimates for the year in progress, and the administration's proposals for the year ahead. The law also created a Bureau of the Budget (renamed the Office of Management and Budget in 1970) to assist the president.
Congress was not bound by the president's recommendations. It could provide more or less money for particular programs than the president requested, and it could change tax laws to draw in more or less revenue. But half a century went by before lawmakers began drawing up their own comprehensive budget plans.
Budget Act of 1974
The congressional budget process grew out of fights over spending control in the 1970s. Angered by President Richard Nixon's refusal to spend money it had appropriated—a practice known as impoundment of funds—Congress decided to set up its own budget system. The Congressional Budget and Impoundment Control Act of 1974 established a budget committee in each chamber to analyze the president's budget proposals and to recommend a congressional budget policy. The Congressional Budget Office was created to provide data and analyses to help Congress make its budget decisions.
The law required Congress each year to adopt a budget resolution setting overall targets for spending and revenues and establishing congressional spending priorities. (Originally, two budget resolutions were required, but the requirement for the second was eventually dropped.) Budget resolutions did not require the president's approval—but the president retained veto power over legislation to carry out the congressional plans.
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