Power Of The Purse And The Congressional Budget Process – Guest Essayist: Amanda Hughes

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One of the most important tasks Congress must complete is to set a budget. It is especially important for members of Congress to understand how the budget works in order to best represent and serve the American people. For this reason, our United States Constitution framers recognized the need for a system that could remain within the knowledge and control of the people who would entrust power to their elected representatives concerning the nation’s finances.

The framers did not want to repeat what they observed in England where the king was able to direct funds rather than the citizenry directing funds. The framers instead put together a different form of government that left control or “power of the purse” in the hands of the people. This is how Congress, the legislative branch, was placed in charge of taxing and spending, a system by which voters could have a say in the direction of funds and hold their representatives accountable:

“All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.” –United States Constitution, Article I, Section 7, Clause 1

By the first Monday in February of each year, the Office of Management and Budget (OMB) is required to provide a report of the president’s priorities for the United States. The budget is set for the fiscal (monetary or budgetary) year that begins in October, and is required by law to cover at least five fiscal years. Currently, the federal budget covers 10 fiscal years:

“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.” –United States Constitution, Article I, Section 9, Clause 7

By 1791, the First Congress passed the first appropriations act to fund the government. In 1865, the House of Representatives separated the duties of writing tax policy and the duties of allocating funds into these two committees: the Committee on Ways and Means, and the Committee on Appropriations.

The House Committee on Ways and Means is in charge of writing tax policy that will determine how money is spent. The Committee on Ways and Means dates back to 1789 and is the oldest committee of the United States Congress. The Committee on Appropriations is in charge of dedicating funds for specific purposes.

Though the President of the United States starts the budget process by sending a request with the Administration’s policy and funding priorities to the Office of Management and Budget, it is Congress that runs the financial numbers and reports on projections and measures policy changes that may be recommended for upcoming years.

Next, the nonpartisan Congressional Budget Office sends analyses on the economic outlook to the House and Senate Budget Committees, which then uses the information researched by the Congressional Budget Office to put together a resolution and decide on proposed policy changes.

The budget process has come a long way since America’s founding. But, with the bringing in of revenue (tax money), complications and even quarrels over the integrity of the budget process and spending arose. By 1974, the Congressional Budget and Impoundment Control Act was established to reduce court suits over disputes between Congress and the President, among prior issues building up to that point, to help alleviate problems delaying the creation of each budget. The intention was to reform the process that would result in the best spending priorities rather than allow to remain a sense that the budget lacked stability.

Though changes in means to forecast economic strength and positive or negative outcomes have grown due to advancements in technology and computing, for example, Americans will undoubtedly continue to argue over spending and debt. Yet, America’s founders and Constitution framers knew all too well the warning signs accompanying a lack of discernment for the public monetary trust that could result in a declining economy:

“I, however, place economy among the first and most important of republican virtues, and public debt as the greatest of the dangers to be feared.” – Thomas Jefferson, Founder, Author of the Declaration of Independence, and Third U.S. President

Amanda Hughes serves as Outreach Director, and 90 Day Study Director, for Constituting America.  She is the author of Who Wants to Be Free? Make Sure You Do!, and a story contributor for the anthologies Loving Moments(2017) and Moments with Billy Graham(forthcoming).

Sources:

Office of the Historian – History, Art & Archives: United States House of Representatives http://history.house.gov/institution/origins-development/power-of-the-purse/

House Budget Committee – “Basics of the Current Federal Budget Process” https://budget.house.gov/budget-digest/basics-current-federal-budget-process/

Office of Management and Budget https://www.whitehouse.gov/omb/

Congressional Budget Office https://www.cbo.gov/about/overview

House Committee on Ways and Means https://waysandmeans.house.gov/about/

House Committee on Appropriations https://appropriations.house.gov/about/

Founders Online, “Thomas Jefferson to William Plumer, 21 July 1816” https://founders.archives.gov/documents/Jefferson/03-10-02-0152

1 reply
  1. Publius Senex Dassault
    Publius Senex Dassault says:

    Thank you Amanda for the essay. I was recently listening to Donald Hickey’s book, The War of 1812 – A Forgotten War. Even as early as 1812 the Legislature and Executive branches struggled with balancing budgets, devising tax policy and legislation. Like today the effectiveness or ineffectiveness impacts many aspects of American life from funding the military, in this case the war, or using embargoes tools of war. They reverberate through the economy. Embargoes combined with war demands caused the price of flour in the Boston to increase 4x prewar. But I digress. Thank you.

    PSD

    Reply

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