Its recommendations led directly to what later became the Congressional Budget and Impoundment Control Act of 1974. In that act, the Congress declared “that it is essential— (1) to assure effective congressional control over the budgetary process; (2) to provide for congressional determination each year of the appropriate level of Federal revenues and expenditures; (3) to provide a system of impoundment control; (4) to establish national budget priorities; and (5) to provide for the furnishing of information by the executive branch in a manner that will assist the Congress in discharging its duties.”
We all often forget that the 1974 act did not seek a specific result in terms of the deficit. Rather, it sought to assert the Congress’ role in setting overall federal fiscal policy and establishing spending priorities and to impose a structure and a timetable on the budget debate. The 1974 act also eliminated the Congress’ dependence on OMB for numbers and analysis by giving the Congress an independent source of budget numbers—the Congressional Budget Office (CBO). It settled the fight about impoundments by setting up a process for the President to report rescissions and deferrals. Gramm-Rudman- Hollings and the Budget Enforcement Act

It was not until the Balanced Budget and Emergency Deficit Control Act of 1985—commonly known as Gramm-Rudman-Hollings or GRH—that the focus of the process changed from increasing Congressional control over the budget to reducing the deficit. It did not seek to control economic, price- or demographic-driven growth in existing direct spending programs or tax expenditures, and these are the areas of greatest growth today. provide information about the long-term impact of decisions while recognizing the differences between short-term forecasts, medium-term projections, and a long-term perspective; provide information and be structured to focus on the important macro trade-offs, e.g., between consumption and investment; provide information necessary to make informed trade-offs on a variety of levels, e.g., between mission areas and between different tools; and be enforceable, provide for control and accountability, and be transparent. If, however, annual budget resolutions are to be replaced with biennial budget resolutions, then something like the “lookback” procedure described above could become very important. A 2-year appropriations cycle would change the nature of that control. It is also unclear how much time it would save. The budget process serves a wider purpose.
Why GAO Did This Study

Pursuant to a congressional request, GAO discussed the evolution of the budget process and challenges to changing the budget process.

What GAO Found

GAO noted that: (1) conflicts over who controlled the budget led to the Congressional Budget and Impoundment Control Act of 1974 and Congress' role in setting federal fiscal policies and establishing spending priorities; (2) the act also established the Congressional Budget Office as an independent source of budget numbers and set up a process for the President to report budget rescissions and deferrals; (3) in 1985, the focus of the budget process shifted from increasing congressional control over the budget to reducing the deficit; (4) later legislation held Congress accountable for the part of the budget under its direct control, but did not seek to control growth in direct spending programs or tax expenditures, which are the main reasons for continued budget growth; (5) the budget process should provide a long-term perspective, focus on macro trade-offs between consumption and investment expenditures, provide necessary information to make informed trade-off decisions between missions areas, be enforceable, provide for control and accountability, and be transparent; (6) streamlining parts of the budget process may cause problems in other budget processes; (7) if the use of multiyear fiscal policy agreements continues, then annual budget resolutions could be eliminated, but a lookback procedure would become very important; and (8) a 2-year appropriation cycle would change the nature of the budget process, but how much time would be saved is unclear.