In a constitutional system defined by separated institutions and shared powers, which institution determines budget policy, and under what authority, is fundamental. Besides setting spending levels, budgeting imposes a sequence of actions that reveals policies and priorities.Footnote 1 However, the US Constitution does not establish a specific budget process. The Constitution assigns taxing and spending powers to Congress (Section 9 of Article I). It states that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Therefore, budgetary decision making must be exercised through the lawmaking power. However, the organizational and procedural environment in which laws are enacted is largely a construct of congressional rules and statutory requirements that have evolved over time.
In the early twentieth century, complementary reforms of the legislative and executive branches produced enduring fundamental changes that expanded both congressional and presidential capacity. These reforms included changes in the way the executive branch conveys budgetary information to Congress, changes in the way Congress is organized to consider spending legislation, and changes in the way agency spending decisions are monitored and controlled. The existing literature provides some insight into these reforms, but there are shortcomings, particularly with respect to how they are connected. For this reason, this article looks to explain how and why Congress chose to reshape the budget process in the manner it did by examining congressional interest in the budget process broadly, rather than studying the individual parts in isolation, in order to better understand the intellectual and legislative history that led to the Budget and Accounting Act of 1921.Footnote 2
A general hypothesis to explain the context in which Congress adopts institutional or procedural reforms can be derived from the work of Eric Schickler. He posits distinct but partially contradictory kinds of collective interest that can motivate the design of legislative institutions, including a desire to bolster its capacity, power, and prestige.Footnote 3 When examining institutional or procedural reforms, however, I would suggest that a desire to solve a specific structural problem can also be seen as a distinct, but complementary, factor. I intend to show that the path to reform was rooted in consensus about a problem, not a solution, and that the persistence of congressional reform efforts is better understood in this context. Congress does not often rethink basic concepts, but it may be willing to adopt institutional or procedural innovations to try to address a specific problem, such as that presented by the budgetary system that existed at the end of the nineteenth century.
This way of looking at budget reform fits Stephen Skowronek’s ideas about the overall development of modern administrative controls during the same era. The structure of the existing administrative state, built on party and patronage, may have been inadequate for the tasks at hand, but Progressive Era reformers nevertheless had to work within the context of preexisting institutional relationships when thinking about a path from old to new processes of government.Footnote 4 Skowronek specifically addressed the advent of an executive budget with the Budget and Accounting Act of 1921 in the context of changes in civil administration and the rise of administrative power.Footnote 5
Most scholarship about the Budget and Accounting Act similarly focuses on questions of administrative power related to the presidency or presidential/congressional relations rather than on Congress or congressional interests. Even when congressional interests are discussed in connection to the Act, it is often in a negative context, as when Roderick Kiewiet and Mathew McCubbins describe the Act as an illustration of “abdication hypothesis.”Footnote 6 My contention, however, is that proposals for an executive budget were not successful until they became connected to other institutional changes intended to enhance congressional capacity to control spending. Therefore, the Budget and Accounting Act should not be viewed as a case of Congress abdicating its budget power by delegating it to the president but as a way for Congress to establish a more reliable basis for the executive branch to carry out congressional budgetary directives.
More recently, John A. Dearborn described the Act as a candid acknowledgment by Congress of its own institutional incapacity.Footnote 7 He suggests that the idea of granting the president formal license for agenda setting and greater executive organizational capacity animated reformers even prior to settling on budget reform as their primary vehicle and that alternative explanations cannot adequately account for the type of reform enacted.Footnote 8 Although he acknowledges that Congress had a collective-action problem with respect to budgetary matters,Footnote 9 he discounts its importance as a motivating factor because other contemporary reform proposals were available that would not have involved the president so that they are not sufficient for understanding why Congress chose to enact an executive budget system.Footnote 10 However, my argument is that when Congress fully embraced the idea of an executive budget in 1919, it was because it had become intertwined with other reform ideas and because it had been reframed, in part, as a means to overcome the insufficiency of earlier reform efforts such as antideficiency legislation. This approach is also useful for understanding why the legislation that was enacted featured not just provisions related to presidential representation, as argued by Dearborn, but also provisions related to budget execution, such as an independent audit of agency actions.
Jonathan Kahn traces the origins of the executive budget movement to the development of accounting and public administration as new disciplines after the Civil War and how this development helped pave the way for budgeting to emerge as a concept for defining the scope and nature of governmental activities. Prior to the Civil War, he writes, budgeting as we know it today did not exist, but instead “revenue and expenditures, receipts and expenses, authorization, allocation, and disbursement all mixed together in a largely undifferentiated mass of cryptic ledgers that resisted interpretation or understanding.”Footnote 11
To overcome this haphazard accounting system, progressive reformers suggested the government had to adopt principles of scientific management in order to achieve economy and efficiency in governance.Footnote 12 Although efficiency often meant different things in different contexts, budget reform advocates used it to refer to technical gains that could be realized by using scientific management and professional administrative expertise to minimize wasteful procedures and outcomes.Footnote 13 By emphasizing scientific management, reformers intended to create a program of reform that was not based simply on an appeal to virtue but instead on professional expertise.Footnote 14 To Frederick A. Cleveland, a contemporary reform advocate, scientific management was fully explained “in the word ‘planning’ and in the phrase ‘execution of plans.’”Footnote 15 Furthermore, an executive budget system would not only implement principles of scientific management for government but also serve as a necessary precursor to the transparency that progressives believed would reduce corruption and encourage public accountability and responsible government.Footnote 16
Budget reform politics encompassed broader questions than just an executive budget, however, so to understand its full scope it is also necessary to address the question of Congress’s internal organization for considering spending legislation and its decision to reconsolidate committee jurisdiction over appropriations in a single committee. Studies do not routinely consider the connection between these two reforms as part of the history of the Budget and Accounting Act. Most instead address the appropriations question as a separate reform or approach it in the context of efforts to balance competing pressures.
For example, examining a century of budget process reform, W. Thomas Wander wrote that the budget process has overall been a system generally resistant to major alterations.Footnote 17 He notes that it is useful to understand changes to the budget process, when they do occur, as responses to internal or external pressures: decentralizing reforms as a general response to internal pressures, such as a desire for greater participation by Members in the distribution of federal funds, and centralizing reforms as a general response to external pressures, such as war. In particular, Wander cites the reconsolidation of appropriations jurisdiction that occurred in the House in 1920 (and subsequently in the Senate in 1922) as a response to external pressures, especially as a consequence of the centralization of executive branch decision making to meet the demands of the First World War.
Work concerning the decentralization of the appropriations process in the nineteenth century, most notably that of Charles H. Stewart, emphasizes internal congressional factors regarding the distribution of power.Footnote 18 Studies that include the later reconsolidation of appropriations jurisdiction, such as Wander and Schickler, focus primarily on how it reversed that distribution of internal power in order to increase congressional capacity to act as a counterforce to executive power, especially with respect to that created by the Budget and Accounting Act.
The reconsolidation of appropriations power was more than simply a means to counterbalance executive power. Congressional interest in legislative budget reform predated interest in an executive budget and it continued to be discussed as an alternative. One question then is when and how Congress joined the two reforms into a single effort.
This question is all the more salient in light of the work of Sean Gailmard and John W. Patty, who posit that congressional actions are central for understanding the development of the institutional capacity of the presidency. They argue that such capacity rests on implicit or explicit congressional support, including enactment of funding for the necessary institutional machinery. Consequently, the creation of an institutional presidency through the Budget and Accounting Act presents a paradox. Why, they ask, did Congress, “an institution capable of pugilistically defending its turf, accede in planting the seeds of a forest that would grow so tall as to overshadow, or even threaten to eclipse, Congress itself?”Footnote 19
To answer this question, I explore the legislative history of the Budget and Accounting Act in the context of congressional efforts over an extended period to exert control over the budget and its connection to appropriations jurisdiction reform. I argue that Congress was forced to evaluate the case for change because the existing system of congressional control over agency budget actions was inadequate and incremental changes had proved to be ineffective. The question of an executive budget became the main focus of debate, but a fuller understanding of the path to reform requires an examination of what problem Congress thought it was trying to solve.
Nineteenth Century Practices and the Persistence of Budgetary Problems
In the nineteenth century’s decentralized system, agency heads prepared for Congress estimates of the funding necessary to carry out their duties during the ensuing year. Each agency head then transmitted these budget estimates to the Secretary of the Treasury by October 15. The Secretary then compiled them without revision and transmitted them to Congress upon its opening in December of each year. Congress would then attempt to exercise control over agency spending actions through enactment of appropriations legislation that was often highly detailed or restrictive.Footnote 20 One contemporary criticism of this practice was that the level of detail effectively made congressional committees the true heads of the agencies, leaving their titular heads reduced to “confidential clerks.”Footnote 21 Furthermore, this system provided no clear constitutional context for the president to play a specific, defined role in terms of either review or coordination.Footnote 22
Congressional attempts to micromanage agency behavior placed the two at odds. Agencies would often submit unrealistic budget estimates knowing that they would be reduced by congressional appropriators but then make requests for additional appropriations during the year to make up the difference. Congress typically responded to these additional requests with what were termed “deficiency appropriations” several times a year. The frequency with which agencies combined insufficient annual budget estimates with deficiency requests meant that although they acknowledged legislative control of the budget in a formalistic sense, they often undermined its application by spending practices that created “coercive deficiencies.”Footnote 23
When reformers proposed an executive budget system, they often explained that giving the president responsibility for initiating a budget was important because the lack of “responsibility” they saw in agency budget estimates contributed to a highly inefficient system of interbranch conflict that undermined congressional control.Footnote 24
This situation was exacerbated by the decentralization of committee jurisdiction over appropriations in the House after 1885 (and in the Senate after 1899). Appropriators and agencies effectively shared a community of interest under this system, with the congressional committee that had jurisdiction over an agency’s appropriations also frequently having jurisdiction over its activities. Whatever interest a committee may have had in restraining an agency’s funding was often counterbalanced by their advocacy for its activities.Footnote 25 This arrangement left aggregate budgetary issues like persistent deficits more difficult to address when they arose. According to one contemporary criticism, this piecemeal approach thwarted better results because “no one knows in advance of action, what the government proposes to spend for the coming year. This can be arrived at only at or near the close of the session by summing up the various bills which have been acted on.”Footnote 26
Presidential budgeting power in the nineteenth century was equally unsystematic. Although some presidents attempted to coordinate or limit budget estimates before they were communicated to Congress, such attempts were intermittent and uneven.Footnote 27
The shortcomings of this system were on display by the early twentieth century. The combination of chronic coercive deficiencies and a decentralized approach to appropriations made it particularly difficult to meet the challenge of budget deficits, beginning with FY1904 and subsequently in FY1905, FY1908, FY1909, and FY1910.Footnote 28
In his 1908 report to Congress, Theodore Roosevelt’s Secretary of the Treasury, George Cortelyou, identified the oft-chaotic nature of the budgeting system as contributor to the nation’s fiscal problems. He complained that no single committee of the Congress was “charged with the comparison and coordination of the appropriations for different branches of the public service in order to distribute equitably any reductions or increases which may be warranted by the state of the revenue.”Footnote 29
The following year, President Taft’s Secretary of the Treasury, Franklin McVeagh, offered a broader critique of the status quo. He stated that the “absence of anything like a budget in our Government has undoubtedly led to a great deal of extravagant appropriation.” Agency estimates of expenditures were “constructed more or less for trading purposes with the appropriation committees,” and once they were delivered to Congress, they were turned over to “a series of unrelated committees which were obliged to deal with them in singular isolation” with no “corelation [sic] or cooperation of these committees.” The result was that “the Government arrived at the farthest extreme from a responsible budget.”Footnote 30
What interest Congress had regarding budget reform was focused primarily on establishing tighter control over agencies by requiring them to be more responsible for the estimates submitted to Congress in order to reduce the need for deficiency appropriations. This effort was illustrated by a provision in the Legislative, Executive, and Judicial Appropriation Act of June 22, 1906, to require that the estimates submitted by the heads of departments include all sums required for the next fiscal year, in order to reduce the need for subsequent deficiency requests.Footnote 31
In addition, Congress enacted major antideficiency legislation in 1905 and 1906 to try to limit the ability of agencies to obligate funds in excess of or in anticipation of appropriated amounts in order to create deficiencies that would coerce Congress to enact additional appropriations and thus contribute to deficits.Footnote 32
The practice of coercive deficiencies continued largely unabated, however.Footnote 33 By the time President Taft was inaugurated in 1909, the problem of deficits had risen to a sufficient level of concern that Congress included language in the Sundry Civil Appropriations Act for FY1910 providing that
if the estimates for appropriations, including the estimated amount necessary to meet all continuing and permanent appropriations, shall exceed the estimated revenues the Secretary of the Treasury shall transmit the estimates to Congress as heretofore required by law and at once … advise the Congress how in his judgment the estimated appropriations could with least injury to the public service be reduced so as to bring the appropriations within the estimated revenues, or, if such reduction be not in his judgment practicable without undue injury to the public service, that he may recommend to Congress such loans or new taxes as may be necessary to cover the deficiency.Footnote 34
Although not a call for an actual executive budget, it was the first occasion in which the Congress attempted to require information from the president in order to solve a fiscal problem, albeit in a limited capacity. Ultimately, this provision had little practical effect. A decade later, on the precipice of more substantial reform, Henry Adams characterized the FY1910 language as meaning that “when the treasury is empty, Congress wants the President to propose a plan of economies, but when the treasury is full, Congress wants no advice from the President.”Footnote 35
President Taft’s Commission on Economy and Efficiency and Its Aftermath
Although presidents occasionally turned to temporary commissions to study major administrative issues, such efforts were not always supported by Congress and had a mixed record of success.Footnote 36 In an effort to limit further study commissions without specific congressional approval, a provision was even inserted in the Sundry Civil Appropriations Act for FY1910 to deny the use of funds that purpose.Footnote 37
Consequently, President Taft chose to work through congressional leaders to initiate a study of budget reform. The result was a Senate amendment to the Sundry Civil Appropriations Act for FY1911, which its sponsor, Sen. Eugene Hale (R-ME), hoped would allow the President to recommend “something that will tend to limit and bring into reasonable space the enormous, the increasing, and alarming and appalling expenditures of the Government.”Footnote 38 The response from other Senators was tepid. Sen. Alexander S. Clay (D-GA), for example, said that although he would not oppose the amendment, he believed the only way to investigate possible savings was on a department by department basis.Footnote 39 Other Senators were more skeptical, such as Sen. John Bristow (R-KS) who said, “we shall go along here with $100,000 spent and we shall have another commission’s report to go into the archives with others which have been of no value to the American people.”Footnote 40 Even Hale was unenthusiastic, stating, “Quite likely it will not result in anything very remarkable.”Footnote 41 Nevertheless, Congress provided the funds for a study.Footnote 42
The study was conducted in two phases. The first phase, between October 1910 and March 1911, consisted of preliminary studies, largely under the direction of President Taft’s secretary, Charles Norton. The second phase comprised the establishment of a commission to study the data and make recommendations.Footnote 43 The men chosen by President Taft to serve on the Commission were drawn from a pool of men already experienced with budget reform issues.Footnote 44 President Taft named Frederick A. Cleveland to chair the Commission, with William F. Willoughby, Frank Goodnow, Walter Warwick, and Merritt Chance as members. President Taft took the additional step of placing the Commission organizationally within the White House and made it clear that all departments were expected to cooperate fully.Footnote 45
The Commission studied government organization and management practices broadly, as well as budgetary matters, and produced numerous reports. Among them, the most salient was The Need for a National Budget, issued June 27, 1912.Footnote 46
In the Commission’s view, an executive budget would facilitate a new relationship between Congress and the president. Instead of seeking to control administrative actions by restricting agency discretion, the Commission recommended that Congress delegate clearly administrative duties and enhance responsibility by requiring an accounting that would promote prompt and accurate disclosure of the exercise of the executive discretion or indiscretion.Footnote 47
A budget submitted to Congress by the president would become the administration’s “account of stewardship as well as its proposals for the future,” with the intent that it “present in summary form the facts necessary to shape the policy of the Government as well as to provide financial support.”Footnote 48 In the view of the Commission, the constitutional order would be preserved, and the prerogative of Congress protected, because Congress would still need to use its lawmaking power to enact budgetary legislation, but a presidential budget submission would serve as a better basis for “intelligent legislative action.”Footnote 49
The Commission changed the nature of the debate about a national budget. The question of whether there should be a national budget at all had developed into a more complicated and expansive examination of the president’s authority over the executive branch as a whole.Footnote 50 One scholar has even gone so far as to suggest that with the Commission’s report in 1912, the debate over strengthening the presidential role in budgeting was essentially complete.Footnote 51 Although the Commission’s report did lay the foundation for future debate, by recommending an executive budget structured as a unitary “program to be acted upon” with limited congressional revision, the Commission placed it “at odds both with contemporary practice and the separation of powers.”Footnote 52 Even so, President Taft’s embrace of the Commission’s recommendations helped the basic idea of an executive budget to gain eventual acceptance, especially among mainstream Republicans. However, when Democratic majorities took control in the House in the 62nd Congress (April 1911–March 1913) and in the Senate two years later in the 63rd Congress (March 1913–March 1915), interest in the idea of an executive budget waned. President Taft proposed sending departmental estimates to Congress in both the customary format and in the form of a budget consistent with the recommendations of the Commission, but Congress blocked the plan.Footnote 53 The Legislative, Executive, and Judicial Appropriations Act for FY1913 included a provision requiring
that until otherwise provided by law, the regular annual estimates of appropriations for expenses of the Government of the United States shall be prepared and submitted to Congress, by those charged with the duty of such preparation and submission, only in the form and at the time now required by law, and in no other form and at no other time.Footnote 54
For several years following Taft’s departure from office, there was little congressional interest in promoting an executive budget at the federal level, although the Commission’s recommendations had “far reaching influence on the states,” as executive budgeting gained more widespread support on the state and local levels.Footnote 55
What interest there was in budget reform at the national level became focused on legislative reform, with two schools of thought represented by competing proposals offered by Representatives John J. Fitzgerald (D-NY, chairman of the Appropriations Committee) and Swagar Sherley (D-KY, member of the Appropriations Committee and later chairman). Whereas Fitzgerald’s proposal called for consolidation of jurisdiction over all appropriations measures in a single committee, Sherley called for a new House committee consisting of members from the Committees on Ways and Means, Appropriations, and Rules, as well as the other committees that shared jurisdiction over appropriations.Footnote 56 This new committee would report to the House the amount of revenue available for the next fiscal year and apportion that amount among the several appropriation bills, effectively imposing committee ceilings on the level of appropriations.Footnote 57
Although Sherley stated that it was time for Congress to “look to some system better than the antiquated method” it had, neither proposal advanced to floor consideration and Sherley described reform as “an impossible task.”Footnote 58
Notably, the men who had served on President Taft’s Commission moved on to other positions from which they would continue to play a significant role in the path to an executive budget.Footnote 59 Frederick Cleveland returned to head the Bureau of Municipal Research in New York where he continued to advocate for budget reform.Footnote 60 William F. Willoughby and Frank Goodnow were subsequently involved in the establishment of the Institute for Government Research (later the Brookings Institution), to investigate the theory and practice of governmental administration.Footnote 61 Willoughby as director of the Institute for Government Research often used its research efforts to advocate for establishing an executive budget, giving testimony, and communicating frequently with Congress, writing numerous articles, and even discussing the matter with both Presidents Wilson and Harding.Footnote 62
Continuing success with executive budgets on the municipal and state levels, coupled with the efforts of reformers to raise the profile of the issue on the national level, resulted in budget process reform being incorporated into national party platforms during the 1916 campaign. The Republican and Democratic platforms, however, continued to reflect the different approaches of the two parties. The Republican platform decried what it termed the “rejection of President Taft’s proposals and earnest efforts to secure economy and efficiency through the establishment of a simple businesslike budget system” and pledged support for “real reform in the administration of national finance.”Footnote 63 The Democratic platform focused instead on the legislative budget “in order that responsibility may be central, expenditures standardized, and waste and duplication in the public service as much as possible avoided … as a practicable first step towards a budget system.”Footnote 64
Although former Commissioner Frederick Cleveland continued to write in favor of an executive budget, he denigrated any form of legislative budget reform on its own as simply a variation of the current, inadequate system of budgeting by committee chairpersons. In one article by Cleveland with Arthur Buck, they wrote that any such proposal, if adopted, “would in time be relegated to the political scrap heap that is already piled high with time serving palliatives and ill adapted efforts at reform sought and achieved without disturbing the status quo ante.”Footnote 65 Only an executive budget would keep clear the responsibilities of both the president and Congress “so that no action can be taken which will shift or confuse responsibilities.”Footnote 66
The First World War and Renewed Interest
The expansion of government spending due to the First World War brought both annual expenditures and budget deficits to unprecedented levels.Footnote 67 This strained the federal government’s administrative and logistical capacity, and Congress had difficulty keeping up with the need for funds. For example, between April 1918 and March 1919, the executive branch submitted approximately 232 supplemental requests for appropriations to Congress.Footnote 68 The burden of coordinating the consideration of so many requests led Congress to look for new ways to deal with appropriations and brought about a renewed interest in budget reform.
The extraordinary demands of the war forced Congress to adapt or abandon some of its prior budgetary practices, such as the use of itemized appropriations. This was widely supplanted by making lump-sum appropriations for broad purposes set out in only the most general terms. By using lump-sum appropriations to meet the increased demands imposed by the war, Congress effectively gave the president and agency heads increased authority to direct money to the specific purposes they felt best met the emergency.Footnote 69
Although the practice of making lump-sum appropriations came under fire within Congress after the war, Congress never quite succeeded in restoring its prewar system of specific appropriations.Footnote 70 However, wartime experience with lump-sum appropriations seemed to open a pathway to a practical framework that could balance an executive budget and congressional prerogatives. Testifying before Congress in 1919, Willoughby suggested that
one of the greatest advantages that is going to come from a budget system is that it is going to give Congress another method of control other than that of itemization. … If you provided for a system where the lump sum appropriation had to be accounted for under certain heads and the original estimate would have to be accompanied by a detailed statement of supporting data as to the personnel they expected to employ and how they expected to expend the money, then … instead of the committee bothering itself as to what should be the salary of the keeper of a vaccine station, it could concentrate itself on the really important features of the appropriation.Footnote 71
The Executive Budget—First Attempt
In 1919, Republicans regained majorities in both chambers and brought discussion of an executive budget back to the fore. Speaker of the House Frederick Gillett appointed James Good (R-IA, chairman of the Appropriations Committee) to head a Select Committee on the Budget and take the lead on the issue. The committee comprised seven Republicans and five Democrats, drawn primarily from committees having jurisdiction over budgetary matters. The Select Committee held extensive hearings on the establishment of a national budget and received testimony from 36 witnesses over 11 days in September and October of 1919 including William Willoughby, Frank Goodnow, Frederick Cleveland, Secretary of the Treasury Carter Glass, and former President Taft.Footnote 72
The Select Committee, however, did not simply endorse the executive budget system that had been recommended by the Commission in 1912. For example, although former President Taft testified that “you might stiffen the budget if you provided it [revision] should be done only on a two-thirds majority,”Footnote 73 the Committee ultimately discarded this and other aspects of the Commission’s recommendations that they regarded as undermining congressional prerogatives.
The Select Committee also suggested that executive budget reform should be coupled with legislative budget reform and recommended reconsolidation of appropriations jurisdiction. The Committee took this two-pronged approach because, according to Good, without the central authority of the president to review and prioritize them, departmental estimates would continue to be “a patchwork and not a structure,” and a single appropriating committee would be necessary because of the great deal of time needed for “exploding the visionary schemes of bureau chiefs, for which no administration would be willing to stand sponsor.”Footnote 74
Rep. Good recruited Willoughby to assist in drafting the legislation that came to be generally referred to as the Good bill. As described in the report accompanying the bill when it was reported, the new budget system contemplated consolidated budget estimates submitted to Congress for “such revision as in its opinion is deemed desirable.”Footnote 75 The Select Committee’s proposal anticipated that members of the Cabinet would assist the president, thereby substituting “teamwork in the executive departments for the unorganized work of each of the members of his Cabinet.”Footnote 76 The president would have the authority to review and revise agency budget estimates before making a consolidated submission to Congress and thus could steer the debate on budget priorities. However, there would be no new restriction on congressional authority to determine the form and level of expenditures. Another important aspect of the Good bill was the inclusion of a provision replacing the audit function in the Department of the Treasury with a new Auditing Department that would operate independently of the president so that it could “furnish information to Congress and to its committees regarding the expenditures of the Government.” An independent Comptroller General “could and would be expected to criticize extravagance, duplications, and inefficiencies in executive departments … without fear of removal.”Footnote 77
The Good bill was not without critics. Cleveland and Buck described it as holding out the appearance of an executive budget but lacking the essentials. In their opinion, other than a consolidated budget submission, “the provisions made are no more than those which in the past have brought to pass results that every true American abhors—‘invisible’ and ‘irresponsible’ government,” and that “there would be almost no gain in furtherance of efforts to establish ‘visible’ and ‘responsible’ government.”Footnote 78
The bill (H.R. 9783, 66th Congress) was reported from the Select Committee on October 8, 1919, and subsequently brought to the floor for consideration on October 17. Good defended the bill, stating that it did not take from Congress the duty to “make the most thorough examination of the estimates found in the budget, nor does it in any way restrict or limit the power of Congress to act on the budget.” Estimates found in the budget, however, would “come to Congress after a more mature deliberation by the executive departments.”Footnote 79 Support was echoed by Rep. Joseph W. Byrns (D-TN, ranking Democrat on the Appropriations Committee and a member of the Select Committee) who stated that it was one of the most important pieces of legislation that would come before Congress in that session.Footnote 80 Rep. Burton French (R-ID) added that a major benefit of the proposed new system was the presence of an independent auditing agency that would help alleviate “administrative abuses” and allow Congress to forego itemized appropriations in favor of lump-sum appropriations.Footnote 81 Debate continued on October 18, 20, and 21, when the House completed consideration of the bill, passing it 285-3.Footnote 82
The Senate also formed its own Special Committee on Consideration of a National Budget on July 14, 1919, chaired by Medill McCormick (R-IL), who had previously advocated budget reform while in the House.Footnote 83 The Senate committee comprised five Republicans in addition to McCormick and four Democrats. Preoccupied by the Treaty of Versailles, however, the Senate did not devote its attention to budget reform during the remainder of the session.
Although President Wilson had expressed support for administrative reform as an academic in the 1880s, his support for an executive budget was tepid.Footnote 84 Nevertheless, he expressed support for budget reform in his annual message to Congress in December 1919, stating,
I hope that Congress will bring to a conclusion at this session legislation looking to the establishment of a budget system. That there should be one single authority responsible for the making of all appropriations and that appropriations should be made not independently of each other, but with reference to one single plan of expenditure properly related to the nation’s income, there can be no doubt. I believe the burden of preparing the budget must, in the nature of the case, if the work is to be properly done and responsibility concentrated instead of divided, rest upon the executive. The budget so prepared should be submitted to and approved or amended by a single committee of each House of Congress and no single appropriation should be made by the Congress, except such as may have been included in the budget prepared by the executive or added by the particular committee of Congress charged with the budget legislation.Footnote 85
Soon after, the Senate Special Committee began to hold hearings of its own, taking testimony from 11 witnesses over six days in December 1919 and January 1920, most of whom had previously testified before the House committee.Footnote 86
There were a number of minor differences between the House and Senate versions of the bill. Chief among these was the question of the proper administrative location for the new budget bureau. Sen. McCormick was strongly in favor of placing it within the Department of the Treasury (as well as leaving responsibility for audits with the department) rather than being directly under the president and giving the Secretary of the Treasury ultimate responsibility for giving directives regarding estimates to other cabinet secretaries. The measure was reported on April 13, 1920, with the committee report stating that “The need for budgetary reform is obvious” and that the chief question was “how best to adopt the budget idea to our existing practices in financial administration.”Footnote 87 The bill was subsequently considered by the Senate on April 28, 29, and 30 and passed by voice vote on May 1.Footnote 88
Rep. Good and Sen. McCormick headed conference delegations to negotiate the differences between the two versions. McCormick ultimately prevailed on the placement of the budget bureau in the Treasury Department, and Good prevailed on the question of making the auditing agency independent. The conference report was reported back to both houses on May 26Footnote 89 and subsequently passed by voice vote in the Senate on May 27 and the House on May 29, clearing the measure for President Wilson.Footnote 90
The Legislative Budget—Consolidating Appropriations Power in the House
Having passed the bill to create an executive budget, the House turned its attention to the question of a legislative budget on June 1. Rep. Simeon D. Fess (R-OH) stated that a measure consolidating appropriations jurisdiction (H. Res. 324) was “the last step to make the budget system a reality. It is supplemental to the budget bill, and is necessary to make it workable.”Footnote 91
As demonstrated in the congressional debates that followed, Members who voiced support for reconsolidation did so based on two main premises: (1) that a single committee would be better able to impose a reduction in spending and eliminate duplication of efforts by different departments and (2) that a single committee would be in a better position to review the president’s budget submission. Both viewpoints acknowledged the importance of enhancing congressional capacity and power, in many cases explicitly connected the two with a desire to counterbalance the reorganization of the executive branch that would be put into place by the Budget and Accounting Act. These connections ultimately motivated enough Members for the resolution to be successful and the House to undo the decentralizing actions of the previous century.Footnote 92
The chief reason expressed by the opposition was the size of the single appropriating committee that would result. The Appropriations Committee would be expanded from 21 members to 35, making it the largest committee in the House, but this would provide for only 10 new committee assignments for the majority and four for the minority, far fewer than the number of representatives sitting on the seven committees that would lose their jurisdiction over appropriations. As Rep. Gilbert Haugen (R-IA), chairman of the Agriculture Committee, asked on the floor, “Shall 35 Members be given jurisdiction over appropriations instead of the 153 Members that now have jurisdiction over them?”Footnote 93 Although Rep. Haugen expressed concern that consolidating appropriations in a committee of just 35 would produce “autocratic rule,” other Members expressed opposition because a committee with only 35 members to oversee such a broad jurisdiction would be less representative of the country at large, involving “limited and circumscribed viewpoints.”Footnote 94
Leading the debate in favor of reconsolidation, Rep. Good argued how “ridiculous and unbusinesslike” it was to have a system in which the Committee on Military Affairs “reports two bills—one the Army bill and one the Military Academy bill; but the Committee on Appropriations reports out a bill carrying all of the clerk hire for employees in the War Department in the District of Columbia, and also reports the fortifications bill,” as well as any deficiency bills covering the War Department. It was a system in which
the right hand does not know what the left hand doeth, and we find through all of our appropriation bills duplications in the service, we find waste and extravagance. We see great departments going to one committee for an appropriation, and if the funds are not granted they go to another, and not infrequently they succeed. How are you going to eliminate waste under this plan of divided authority?Footnote 95
As an alternative, Rep. Sydney Anderson (R-MN) offered a proposal, similar to the earlier proposal of Rep. Sherley, to create a new committee to oversee appropriations and apportion the aggregate amount of expenditures among the eight current appropriating committees.Footnote 96 That proposal fell, 79-121,Footnote 97 but H. Res. 324 was adopted by a vote of 200-117, putting a legislative budget in place in the House.Footnote 98
Veto
Despite Congress’s the overwhelming vote in favor of the budget bill and President Wilson’s previous support, he vetoed the bill on June 4, 1920. In his statement accompanying his veto, he objected to a provision concerning the head of the new General Accounting Office. The bill provided for the Comptroller General to be appointed by the president but allowed for removal by means of impeachment or a concurrent resolution (meaning by agreement of the two chambers without the participation of the president), for “neglect of duty, malfeasance, conviction of a felony, or conduct involving moral turpitude, and for no other cause or by no other manner.” Wilson insisted that it was unconstitutional for Congress either to prohibit the president from removing a presidential appointee from office or for Congress to be able to remove the Comptroller General.Footnote 99
The measure was returned to Congress, and the House considered a veto override. Although some Members continued to assert both the constitutional authority to provide for congressional removal power and the need to check presidential removal authority to preserve the Comptroller General’s independence, the vote to override the veto failed on June 4, 1920, 178-103.Footnote 100
Rep. Good attempted to revive consideration with a new measure (H.R. 14441), which passed the House by voice vote on June 5, but the Senate failed to act before the end of the Congress.Footnote 101
The Executive Budget—The Fight Rejoined
Having already succeeded in reconsolidating House appropriations jurisdiction, Rep. Good remained committed to achieving similar success with enacting an executive budget. President-elect Harding gave private assurances that he would support a new budget bill, and Congress turned its attention to making suitable adjustments.Footnote 102 In partial response to former President Wilson’s concerns over the Comptroller General, the new version provided that the President could appoint the Comptroller General to a single 15-year term and that he could be removed from office by a joint resolution, meaning that the president’s participation in removal would be preserved to some extent.
Both the Senate and House expedited their consideration of the new version of the bill. S. 1084 was introduced by Sen. McCormick on April 25, 1921, referred to committee, and reported back the same day. The following day, the measure was debated and passed by the Senate and sent to the House.Footnote 103 The House considered the Senate-passed bill on May 3 and 5, and passed it 344-9.Footnote 104
A conference committee was again convened to work out the persistent differences favored by Good and McCormick. In correspondence with former President Taft, Good described the negotiations as dealing with form, rather than substance.Footnote 105 The conference agreement was reported back to the House and Senate on May 25.Footnote 106 The conference report was passed by the Senate on May 26 and subsequently passed by the House on May 27 by a vote of 335-3.Footnote 107 The measure was then sent to President Harding, who signed it on June 10, 1921.
Conclusion
The budget system that emerged after 1921 incorporated elements from both the executive budget and legislative budget reform movements and ushered in a new era of fiscal management based on consolidated budgetary authority in both branches in order to reign in profligate agency budget actions.Footnote 108 Jun Ma and Yilin Hou describe the new system as implementing “two types of budgetary controls associated with two forms of accountability” in place of a single legislative control mechanism.Footnote 109 With the authority to propose a budget, the executive was now empowered to enforce uniform internal administrative controls, establishing bureaucratic accountability. At the same time, by making no change to Congress’s power to review presidential recommendations, the system retained a measure of legislative control and accountability.
The new budget system was more than a simple outgrowth of progressive idealism about responsible government. Its creation was the culmination of an extended and complex path to reform rooted in congressional efforts to solve persistent problems concerning budgetary control and deficits. Congress had found previous incremental changes, including antideficiency legislation, to be insufficient to alter the behavior of agency officials or eliminate deficits, but by combining Progressive Era concepts about how the federal government should be organized with practical problem solving, Congress found success.
For Congress, success meant that the new system, with a presidential budget—prepared under direction of the Bureau of the Budget and subject to revision to reflect presidential priorities—proved to be more consistently reliable as the basis for regular appropriations than were previous agency estimates of budget needs. The new consolidated format of budget submissions also allowed Congress to more readily determine spending priorities by acting through a single appropriating committee rather than eight. Finally, having the Bureau of the Budget oversee agency budget execution (and having the General Accounting Office available to perform an independent audit) also meant that agencies were more likely to stay within appropriated levels and less likely to resort to spending behaviors that would require additional funds after regular appropriations were enacted.Footnote 110
Although individual Members had disparate motivations for supporting the Budget and Accounting Act and some undoubtedly supported the expansion of administrative capacity for its own sake, it did not pass until reform advocates, like Rep. Good, succeeded in marrying various reforms together. Congressional actions between 1912 and 1921 demonstrate that executive budgeting reform legislation ultimately succeeded when and how it did because it became connected with other institutional changes intended by Congress to enhance its own capacity to control spending. The greatest institutional tension in the budget system before the Budget and Accounting Act had been between congressional appropriators and federal agencies, so this context is important for understanding congressional choices, particularly the decision to combine executive budgeting with consolidated appropriations jurisdiction and an independent auditor. This combination of multiple reforms was not only crucial to legislative success; it also enabled Congress to better address its persistent difficulties in achieving desired budgetary outcomes, and thereby it contributed to the long period of institutional stability that followed.
The legislative history of budget reform shows how pragmatic problem solving influenced the interplay of factors that shaped congressional choices concerning the structural changes adopted in the early twentieth century that continue to shape budgetary decision making today.Footnote 111
