Federal Budget Process Reform in the 110th Congress: A Brief Overview
Federal Budget Process Reform in the
110 Congress: A Brief Overview
Updated November 20, 2008
Specialist in American National Government
Government and Finance Division
Federal Budget Process Reform in the
110th Congress: A Brief Overview
During the 110th Congress, the House and Senate have faced a wide array of
budget process reform proposals, pertaining to such matters as internal PAYGO rules
in the House and Senate; restoration of the statutory discretionary spending limits and
PAYGO requirement; earmarking; and modifications to the budget resolution,
reconciliation, and appropriations processes.
The House and Senate may pursue budget process reform in various ways,
including modifications to each chamber’s rules and practices, the enactment of
freestanding legislation, or the inclusion of budget process changes in other
budgetary legislation, such as budget resolutions or annual appropriations acts. This
report provides a context for congressional actions in this area and briefly discusses
selected actions and proposals in order to illustrate the diversity of issues involved.
On January 5, 2007, the House completed action on its rules package for the
110th Congress, H.Res. 6. Title IV of the measure included several budget process
changes dealing with such matters as earmark reform, a prohibition against using the
reconciliation process to reduce a surplus or incur a deficit, and the establishment of
a PAYGO rule for the House. Also, on January 9, the House adopted H.Res. 35, a
measure establishing a Select Intelligence Oversight Panel of the House
Appropriations Committee. The panel is charged with studying and reviewing
intelligence activities and the intelligence budget and making recommendations in
this area; it does not exercise jurisdiction over appropriations legislation for these
purposes. The panel includes Members of the House Appropriations Committee and
the House Permanent Select Committee on Intelligence.
The House and Senate agreed to the conference report on the FY2008 budget
resolution, S.Con.Res. 21, on May 17, 2007. The budget resolution contained several
procedural provisions, including, among other things, a bar in the Senate against the
consideration of reconciliation legislation that would reduce a surplus or incur a
deficit, a revision of the Senate’s PAYGO rule, and the extension of House and
Senate controls on advance appropriations. Additional procedural provisions are
included in the FY2009 budget resolution (S.Con.Res. 70/H.Con.Res. 312); final
House and Senate action on the measure has not been completed.
Some of the other legislation considered by the House and Senate includes (1)
P.L. 110-53 (August 31, 2007), the Implementing Recommendations of the 9/11
Commission Act of 2007, requiring annual disclosure of aggregate intelligence
funding (Section 601); (2) P.L. 110-81 (September 14, 2007), the Honest Leadership
and Open Government Act of 2007, establishing certain ethics reforms and (in
Section 521) a new Senate Rule XLIV on earmarking; and (3) H.Res. 491 (adopted
by the House on June 18, 2007), a measure dealing with the inclusion of earmarks in
conference reports on regular appropriations acts that were not submitted to the
conference by either chamber.
The report will be updated as developments warrant.
The Context of Budget Process Reform............................1
Selected Budget Process Reform Proposals..........................4
PAYGO Rules and Discretionary Spending Limits................4
Congressional Budget Resolution and Reconciliation..............8
Annual Appropriations Process...............................8
Item Veto/Expanded Rescission Authority......................9
Commission/Task Force on Long-Term Budgetary Issues.........10
Appendix. Citations to Selected Budget Process Laws...............13
Federal Budget Process Reform in the
110 Congress: A Brief Overview
Congress and the President regularly propose and make changes to the federal
budget process in order to achieve certain budgetary, economic, or political
objectives. This report briefly discusses the context in which federal budget process
changes are made and identifies selected reform proposals by major category. The
identification of reform proposals in this report is not intended to be comprehensive;
other CRS reports discuss different aspects of budget process reform in more detail.1
The Context of Budget Process Reform
The main impetus for budget process reform may arise from a variety of
sources. Congress initiated a thorough overhaul of its internal budget process and
ameliorated ongoing conflicts with President Richard Nixon over the withholding of
appropriated funds through enactment of the Congressional Budget and
Impoundment Control Act of 1974. President Bill Clinton, like many Presidents
before him, requested line-item veto authority, which Congress granted in 1996 in
the Line Item Veto Act (but was invalidated by court action in 1998). State and local
government officials were instrumental in securing passage of the Unfunded
Mandates Reform Act of 1995. Finally, special commissions, such as the President’s
National Commission on Terrorist Attacks Upon the United States (the “9/11
Commission”), have recommended changes in budget structure and procedure that
have been adopted. (Citations to laws identified in this report are provided in the
Perhaps more than any other factor over the years, concern about the size and
persistence of the federal deficit has animated calls for budget process reform. The
federal deficit, which amounted to $162 billion for FY2007, jumped to $455 billion2
for FY2008 in the face of a significant economic downturn. Media reports have
indicated that the deficit for FY2009, driven upward by further economic
deterioration and the need for economic stabilization and stimulus legislation, may
reach the $1 trillion level.3 The dramatic increase in the deficit, and its likely
1 CRS reports on budget process reform may be accessed in several ways, including by
subject term and author searches at the CRS website. Also, see CRS Report RL31478,
Federal Budget Process Reform: Analysis of Five Reform Issues, by James V. Saturno and
Bill Heniff Jr., for a discussion of selected reforms proposed in past years.
2 Treasury Department, Monthly Treasury Statement, October 2008, p. 2.
3 See, for example, several reports refer to a statement issued by the Committee for a
persistence at high levels in the short term, can be expected to fuel strong interest in
The federal budget process is rooted in constitutional mandates, statutory
requirements, House and Senate rules and practices, and administrative directives.4
Thus, there are several avenues through which budget process changes can occur.
Either chamber may focus on changes in its rules, thereby minimizing the time
needed to effect the change and the scale of potential conflict needed to be resolved,
but at the same time possibly minimizing the impact of the changes. Broader and
potentially more consequential changes, involving statutes or constitutional
amendments, may entail a larger set of participants in the decision-making (i.e., the
other chamber, the President, state legislatures), likely escalating the effort required
to reach agreement and lengthening the time period before the changes take effect.
Legislative changes in the budget process may take the form of freestanding
bills or joint resolutions (e.g., the Line Item Veto Act), or may be incorporated into
other budgetary legislation, such as acts raising the debt limit (e.g., the Balanced
Budget and Emergency Deficit Control Act of 1985, also referred to as the Gramm-
Rudman-Hollings Act), implementing reconciliation instructions (e.g., the Budget
Enforcement Act of 1990), or providing annual appropriations (e.g., revisions in the
Senate’s cap on discretionary appropriations). Budget process changes also may be
included in the annual budget resolution (a concurrent resolution), or in simple House
or Senate resolutions.
In some years, changes made in the budget process were comprehensive. The
Budget and Accounting Act of 1921 established the executive budget process, the
Congressional Budget Act of 1974 created the congressional budget process, and the
Balanced Budget and Emergency Deficit Control Act of 1985 and the Budget
Enforcement Act of 1990 imposed additional budget controls on a temporary basis.5
In other years, such as 1987, 1993, and 1997, existing budget process statutes were
modified in a less comprehensive fashion and extended for limited periods. At other
times, Congress and the President enacted statutes changing only selected aspects of
the budget process; the Line Item Veto Act (of 1996) is one example. Finally, in
every Congress, the House and Senate have modified existing rules and practices
affecting the budget process and sometimes instituted new ones.
Like other types of legislation, statutes making changes in the budget process
are subject to review by the judiciary. In several major instances, the Supreme Court
has declared procedures established by Congress and the President to be invalid on
constitutional grounds. The one-House legislative veto (found in many acts,
Responsible Federal Budget, “CRFB Projects a One Trillion Dollar Deficit,” November 10,
4 For an overview of the federal budget process, see CRS Report 98-721, Introduction to the
Federal Budget Process, by Robert Keith.
5 A comprehensive listing and description of major budget process laws enacted over the
past century (and full legal citations to them) is provided in CRS Report RL30795, General
Management Laws: A Compendium, Clinton T. Brass (coordinator).
including the Impoundment Control Act of 1974), for example, was invalidated by
I.N.S. v. Chadha in 1983, 103 S.Ct. 715 (1983); the triggering of a sequester by the
Comptroller General under the Gramm-Rudman-Hollings Act was invalidated by
Bowsher v. Synar in 1986, 478 U.S. 714 (1986); and the Line Item Veto Act was
invalidated by Clinton v. City of New York in 1998, 118 S.Ct. 2091 (1998). In the
wake of court decisions, Congress and the President may successfully modify
legislation (e.g., 1987 legislation modifying the Gramm-Rudman-Hollings Act,
vesting the authority to trigger a sequester in the director of the Office of
Management and Budget), but sometimes persistent efforts to enact corrective
legislation do not succeed (e.g., line-item veto proposals).
Given that nearly every committee of the House and Senate has jurisdiction over
legislation with a budgetary impact, interest in the budget process and proposals to
change it radiate throughout both chambers. Although jurisdiction over executive
and congressional budget procedures generally resides with the Budget, Oversight
and Government Reform, and Rules Committees in the House, and with the Budget,
Homeland Security and Governmental Affairs, and Rules and Administration
Committees in the Senate, other House and Senate committees, particularly the
appropriations and tax committees, may exert influence over budget process changes
affecting their legislative interests.
The first action in the 110th Congress to change budget procedures occurred on
the second day of session, January 5, 2007. The House, which unlike the Senate is
not a continuous body, must adopt its rules anew at the beginning of each Congress.
Traditionally, the House adopts its rules from the previous Congress, with
modifications (that may include changes in the budget process), in the form of a
simple resolution. The rules package for the 110th Congress, H.Res. 6, contained
several changes in the budget process, including a “pay-as-you-go” (PAYGO) rule
for the House (discussed below).6
A second opportunity for budget process changes came in March and April of
S.Con.Res. 21 (H.Con.Res. 99). Under authority referred to as the “elastic clause”
(in Section 301 of the 1974 Congressional Budget Act), either chamber may include
procedural provisions in the annual budget resolution that are consistent with the
purposes of the 1974 act. The two chambers reached final agreement on the FY2008
budget resolution on May 17, 2007, by agreeing to the conference report on
S.Con.Res. 21 (H.Rept. 110-153; May 16, 2007), by a vote of 214-209 in the House
and 52-40 in the Senate.
Additional procedural provisions were included in the FY2009 budget
resolution (H.Con.Res. 312 and S.Con.Res. 70), which passed the House and Senate
in March 2008. The two chambers reached final agreement on the FY2009 budget
resolution by agreeing to the conference report on S.Con.Res. 70 (H.Rept. 110-659;
6 For a detailed discussion regarding the changes in the budget process made by H.Res. 6,
see CRS Report RL34149, House Rules Changes Affecting the Congressional Budgetth
Process Made at the Beginning of the 110 Congress, by Bill Heniff Jr.
May 20, 2008), by a vote of 48-45 in the Senate, on June 4, and by a vote of 214-210
in the House, on June 5.
The two budget resolutions made various changes in budget enforcement
procedures applicable to the House and Senate, as discussed in more detail below.
Some of the other legislation involving budget process changes considered by
the House and Senate in the 110th Congress includes (1) P.L. 110-53 (August 31,
requiring annual disclosure of aggregate intelligence funding (Section 601); (2) P.L.
110-81 (September 14, 2007), the Honest Leadership and Open Government Act of
2007, establishing certain ethics reforms and (in Section 521) a new Senate Rule
XLIV on earmarking; and (3) H.Res. 491 (adopted by the House on June 18, 2007),
a measure dealing with the inclusion of earmarks in conference reports on regular
appropriations acts that were not submitted to the conference by either chamber.
Congress also may express its interest in the budget process in venues that do
not involve legislative activity. In the past, consideration in the Senate of
nominations to the position of director of the Office of Management and Budget
often has afforded the opportunity to discuss budget process reforms. Following his
announcement on June 19, 2007, that OMB director Rob Portman would resign in
August, President George W. Bush indicated that he would nominate Jim Nussle, a
former chairman of the House Budget Committee, to the position. Nominations to
the position of OMB director are considered, pursuant to S.Res. 445 (108th Cong.),
by both the Senate Budget Committee and the Senate Homeland Security and
Governmental Affairs Committee. The Senate confirmed the Nussle nomination on
September 4, 2007, by a vote of 69-24. Although budget process changes were not
a prominent part of the debate in committee and on the floor, a PAYGO requirement
and other procedural matters were discussed briefly.
Selected Budget Process Reform Proposals
Among the various budget process reform proposals that have been acted on
during the 110th Congress, or that are under discussion, many pertain to categories
such as internal PAYGO rules in the House and Senate; restoration of the statutory
discretionary spending limits and PAYGO requirement; earmarking; and
modifications to budget resolution, reconciliation, and appropriations processes. In
order to illustrate the diversity of proposals, these and other categories of reform are
discussed briefly below.
PAYGO Rules and Discretionary Spending Limits. For FY1991
through FY2002, federal budget legislation was constrained by statutory limits on
discretionary spending and a PAYGO requirement for direct spending (sometimes
referred to as mandatory spending) and revenue legislation. Both these budget
constraints were established by the Budget Enforcement Act of 1990, which amended
the Balanced Budget and Emergency Deficit Control Act of 1985. The discretionary
spending limits and the PAYGO requirement were enforced by sequestration, a
process by which violations were remedied by automatic, across-the-board spending
cuts. These statutory budget constraints were extended in 1993 and 1997 (and further
modified by other legislation), but the discretionary spending limits expired at the
end of FY2002 and the PAYGO requirement effectively was terminated in December
In recent years, there has been considerable interest in restoring, and possibly
making significant modifications to, the statutory enforcement procedures.7 Some
observers have argued that the budget enforcement mechanisms associated with the
BEA promoted fiscal discipline throughout the 1990s, and contributed to the federal
government achieving a total budget surplus in FY1998 — the first in almost 30
years — and the following three fiscal years.
With the return of deficits, some have argued for restoring such statutory
mechanisms for fiscal discipline. A principal point of contention with regard to the
PAYGO requirement is whether it should apply to revenue legislation. While some
maintain that revenue reductions should not face the hurdle of a statutory PAYGO
requirement because they are needed to continue the economic growth that fuels
growing revenues, others assert that accommodating further revenue reductions in a
PAYGO requirement (i.e., by applying it only to direct spending) likely would
undermine efforts to achieve significant deficit reduction, in part by encouraging
some spending initiatives to be reformulated as revenue-losing provisions.
The FY2008 budget resolutions included a sense-of-the-Congress statement that
a statutory PAYGO requirement should be reinstated to help control the deficit
(Section 508 of S.Con.Res. 21).
In the case of the statutory limits on discretionary spending, one issue has been
the period of time for which they should be established. Advocates of two- or three-
year limits argue that the five-year framework employed earlier leads to limits that
are too unrealistic in the later years (due to changing circumstances). Limits that are
unrealistically high fail to impose discipline, while limits that are unrealistically low
encourage evasions through gimmickry and other means. Shorter term limits, they
argue, are more apt to be realistic and effective constraints on spending.
As a supplement to the statutory PAYGO requirement, the Senate established
its own PAYGO rule in 1993 as a provision in the FY1994 budget resolution. The
rule, which operates differently than the statutory requirement, has been modified
Over the years, several unsuccessful efforts were made to establish a PAYGO
rule in the House.8 As indicated previously, a PAYGO rule was contained in Title
IV (Section 405) of the House’s rules package for the 110th Congress, H.Res. 6. Title
IV was considered separately and adopted by the House on January 5, 2007, by a vote
of 280-152 (all five titles of H.Res. 6 were adopted by the House and took effect on
that day). The House’s PAYGO rule imposes a bar against revenue and direct
spending legislation that increases a deficit (or reduces a surplus) over different time
7 The House Budget Committee held a hearing on the matter, “Perspectives on Renewing
Statutory PAYGO,” on July 25, 2007.
8 For a review of these efforts, see CRS Report RL32835, PAYGO Rules for Budget
Enforcement in the House and Senate, by Robert Keith and Bill Heniff Jr. (archived).
periods (i.e., the six-year and 11-year periods beginning with the current fiscal year)
and makes no exception for revenue or direct spending proposals assumed in the
In May 2007, the Senate revised its PAYGO rule as part of the FY2008 budget
resolution (Section 201 of S.Con.Res. 21). The revised Senate rule conforms closely
to the new House rule, applying to the same two time periods and eliminating any
exception for revenue or direct spending proposals assumed in the budget resolution;
it expires on September 30, 2017.10
The revised Senate PAYGO rule is buttressed by another rule in the FY2008
budget resolution (Section 203 of S.Con.Res. 21) that would prohibit the
consideration of legislation increasing the deficit by more than $5 billion in any of
the four 10-year periods covering FY2018-FY2057. The pending budget resolution
for FY2009 would revise this rule by barring any deficit increases (i.e., without
regard to a threshold) in any of the four 10-year periods beginning with FY2019.
Both the PAYGO rule and the long-term deficits rule can be waived only by the
affirmative vote of three-fifths of the membership (60 Senators, if no seats are
Earmarking. Reform of congressional earmarking practices in appropriations,
direct spending, and tax legislation (and accompanying reports) was considered in
the issue. The issue has been addressed again by both chambers during the 110
While definitions of earmarking vary, an earmark generally is considered to be
an allocation of resources to specifically-targeted beneficiaries, either through
earmarks of discretionary or direct spending, limited tax benefits, or limited tariff
benefits. Earmarks may be proposed by the President or may be originated by
Congress. Concern about existing earmarking practices arose because some of them
were inserted into legislation or accompanying reports without any identification of
the sponsor, and the belief that many earmarks were not subject to proper scrutiny
and diverted resources to lesser-priority items or items without sufficient
justification, thereby contributing to wasteful spending or revenue loss.
The essential feature of earmark reform proposals is a bar against the
consideration of legislation that does not identify individual earmarks and the
Members who sponsored them, the distribution of such information in a way that
makes it readily available before the legislation is considered, and certification by
9 The new rule is discussed in more detail in CRS Report RL33850, The House’s “Pay-As-
You-Go” (PAYGO) Rule in the 110th Congress: A Brief Overview, by Robert Keith.
10 The Senate PAYGO rule is examined in CRS Report RL31943, Budget Enforcement
Procedures: Senate Pay-As-You-Go (PAYGO) Rule, by Bill Heniff Jr.
11 For a more detailed discussion of the matter, see CRS Report RL34462, Earmark Reform:
Comparison of New House and Senate Procedural Rules, by Sandy Streeter.
earmark sponsors that neither they nor their spouses have a financial interest in the
Earmark reform provisions, requiring the identification of earmarks and their
sponsors before legislation may be considered and imposing other restrictions on the
use of earmarks, were contained in Title IV (Section 404) of the House’s rules
package for the 110th Congress, H.Res. 6, adopted on January 5, 2007. The earmark
reform provisions were added to the rules of the House as Clause 9 of Rule XXI and
Clauses 16 and 17 of Rule XXIII.12 The earmark identification requirement applies
to all legislation; if no earmarks are included, then a statement to that effect must be
Later in the session, on June 18, 2007, the House adopted H.Res. 491, a measure
dealing (for the remainder of the 110th Congress) with the consideration of
conference reports on regular appropriations acts containing earmarks that were not
submitted to the conference by either chamber. The measure established a point of
order that is intended to curtail the practice of “air-dropping” earmark provisions, not
first passed by either chamber, into appropriations acts at the conference stage.
On January 18, the Senate adopted S. 1, ethics reform legislation. Title I of the
act, referred to separately as the Legislative Transparency and Accountability Act of
2007, included earmark reform provisions requiring the prior identification of
earmarks, and their sponsors, in all spending and revenue legislation, and various
other constraints on earmarking practices.14 Senator Robert C. Byrd, the chairman
of the Senate Appropriations Committee, announced on April 17 that the committee
would follow a policy of requiring earmark disclosure for the FY2008 appropriations
cycle, similar to the requirements set forth in S. 1.
On July 31, the House passed S. 1 with an amendment under the suspension of
the rules procedure, by a vote of 411-8. The Senate agreed to the House amendment,
by a vote of 83-14, on August 2, thus clearing the measure. President George W.
Bush signed the bill into law on September 14, as P.L. 110-81 (121 Stat. 735-776),
the Honest Leadership and Open Government Act of 2007. In its final form, P.L.
12 The requirements under the cited rules are explained in CRS Report RS22866, Earmark
Disclosure Rules in the House: Member and Committee Requirements, by Megan Suzanne
13 For examples of earmark identification for different types of measures, see (1)
Transportation-HUD Appropriations Act for FY2008; report to accompany H.R. 3074,
H.Rept. 110-238 (July 18, 2007), pp. 215-258; (2) National Defense Authorization Act for
Fiscal Year 2008; report to accompany H.R. 1585, H.Rept. 110-146 (May 11, 2007), pp.
H.Rept. 110-256, Pt. 1 (July 23, 2007), p. 396; and (4) Renewable Energy and Energy
Conservation Tax Act of 2007; report to accompany H.R. 2776, H.Rept. 110-214 (June 27,
2007), p. 119. The latter two examples contain statements that no earmarks, limited tax
benefits, or limited tariff benefits are included.
14 See CRS Report RL33852, Ethics, Lobbying, and Related Procedural Reforms Proposed
in S. 1, 110th Congress, by Jack Maskell, R. Eric Petersen, Bill Heniff Jr., Sandy Streeter,
and Todd B. Tatelman.
110-81 includes earmark reform provisions in Section 521 (Congressionally Directed
Spending), which are added to the Standing Rules of the Senate as a new Rule
Congressional Budget Resolution and Reconciliation. The
Congressional Budget Act of 1974 requires the House and Senate to adopt a budget
resolution each year, setting forth aggregate spending and revenue levels, and
spending levels by major functional categories, for at least five fiscal years. The
budget resolution, which is a concurrent resolution and therefore does not become
law, provides an overall budget plan that guides congressional action on individual
spending, revenue, and debt-limit measures. The 1974 act includes an optional
reconciliation procedure that provides for the development and consideration of
revenue, spending, and debt-limit legislation to carry out budget resolution policies;
enforcement of budget resolution policies also occurs by means of various points of
order that may be raised on the floor. Budget resolutions and reconciliation measures
are considered under expedited procedures in both chambers.
Some Members of Congress, as well as the President, have argued that the
budget resolution would be more effective in enforcing budget policy by making it
a joint resolution requiring the President’s approval. A joint budget resolution would
directly involve the President in congressional actions on the budget early in the
process. If the President and Congress reach an impasse on a joint budget resolution,
however, some are concerned that action on spending and revenue bills might be
During the 1980s and much of the 1990s, reconciliation was used principally as
a means of reducing the deficit. While some reconciliation measures included
spending increases or revenue reductions, the net impact of the legislation was to
reduce the deficit. In recent years, the reconciliation process has been used mainly
to expedite the passage of legislation that increases the deficit, primarily through
Some Members in the House and Senate have argued that the reconciliation
process should be altered so that it may be used only to reduce the deficit. As partth
of the changes in the budget process included in the rules package for the 110
Congress, H.Res. 6, the House included a ban (in Section 402) against the
consideration of a budget resolution containing reconciliation directives that would
increase the deficit or reduce the surplus over the six-year or 11-year periods
beginning with the current fiscal year. The Senate included a similar ban for the
same two time periods in the FY2008 budget resolution (Section 202 of S.Con.Res.
Annual Appropriations Process. Discretionary spending, which amounts
to more than one-third of federal spending, is provided each year in regular,
15 Section 521 of the act may be found at 121 Stat. 760-764. The requirements under the
Senate rule are explained in CRS Report RS22867, Earmark Disclosure Rules in the Senate:
Member and Committee Requirements, by Megan Suzanne Lynch.
supplemental, and continuing appropriations acts. Discretionary spending funds most
of the routine operations of federal agencies.
At the beginning of the 109th Congress, the House and Senate Appropriations
Committees consolidated and realigned their subcommittees in order to streamline
the appropriations process, facilitate the timely enactment of appropriations bills, and
minimize the likelihood of using consolidated appropriations acts.16 Both
committees disbanded their VA-HUD Subcommittee, and the House Appropriations
Committee disbanded two others (District of Columbia and Legislative Branch),
leaving 12 Senate and 10 House appropriations subcommittees.
At the start of the 110th Congress, further adjustments in subcommittee
alignments of the House and Senate Appropriations Committees were made, leaving
each committee with 12 subcommittees. Among the changes made, each committee
established a Financial Services and General Government Subcommittee and the
House Appropriations Committee reestablished a Legislative Branch Subcommittee.
On January 9, the House adopted H.Res. 35, a measure establishing a Select
Intelligence Oversight Panel of the House Appropriations Committee. The panel is
charged with studying and reviewing intelligence activities and the intelligence
budget and making recommendations in this area; it does not exercise jurisdiction
over appropriations legislation for these purposes. The panel includes Members of
the House Appropriations Committee and the House Permanent Select Committee
on Intelligence. This action represents the House’s response to one of the
recommendations of the 9/11 Commission.
When a regular appropriations act or a continuing resolution is not in place after
the start of the fiscal year on October 1, an agency does not have the legal authority
to incur obligations in order to function and must shut down, resulting in the furlough
of federal employees and disruptions in service. In order to prevent a government
shutdown (or the threat of one) due to the expiration of funding, some Members have
proposed establishing an automatic continuing resolution; see, for example, the
Government Shutdown Prevention Act (S. 2070 and H.R. 3583, introduced by
Senator Jim DeMint and Representative Jeb Hensarling).17 An automatic continuing
resolution would provide an uninterrupted source of funding for discretionary
activities in the event one or more regular appropriations acts are not enacted by the
start of a new fiscal year. While such a device could eliminate or reduce employee
furloughs and service disruptions, some view an automatic continuing resolution as
substituting a formulaic response for deliberate and informed decision-making.
Item Veto/Expanded Rescission Authority. When a spending or revenue
act is sent to the President for his consideration, he must approve or veto the measure
in its entirety. After a spending measure has become law, the President may impound
16 For a further discussion on reorganization of the appropriations subcommittees, see CRS
Report RL31572, Appropriations Subcommittee Structure: History of Changes from 1920-
17 This topic is discussed in CRS Report RL30339, Preventing Federal Government
Shutdowns: Proposals for an Automatic Continuing Resolution, by Robert Keith.
funds through rescission, which cancels the funding, or deferral, which delays the
expenditure of funds. Congress exercises its responsibilities in this area through
procedures established under the Congressional Budget and Impoundment Control
Act of 1974 and the regular legislative process.
Advocates of greater budget discipline proposed the Line Item Veto Act, which
became law in 1996 (P.L. 104-130) but was struck down by the Supreme Court on
June 25, 1988, in Clinton v. City of New York, 118 S.Ct. 2091 (1998). Under this act,
the President was authorized to strike individual items of discretionary spending,
direct spending, and certain limited tax benefits in any law.
In the years following the Supreme Court decision, various proposals have been
made in Congress to grant item veto authority to the President in a manner that passes
constitutional muster or to otherwise expand his rescission powers.18 President Bush,
in 2006, proposed a “legislative line-item veto,” under which Congress would have
to consider proposed rescissions in an expedited manner. The House passed H.R.
4890, the Legislative Line Item Veto Act of 2006, on June 22, 2006, by a vote of
247-172. In the Senate, the Budget Committee reported S. 3521, the Stop Over
Spending Act of 2006, on July 14, 2006 (S.Rept. 109-283), but the Senate did not
consider the bill. Title I of the bill contained the Legislative Line Item Veto Act of
While advocates of the item veto or expanded rescission powers for the
President contend that such tools will enhance budgetary discipline, critics suggest
that their usefulness for budgetary discipline is overstated and that they may
adversely affect the balance of power between Congress and the President over
The Senate considered a legislative line-item veto proposal in the 110th
Congress, in the form of an amendment offered by Senator Judd Gregg, first to S. 1
and then to minimum wage legislation, H.R. 2; in both instances, the Gregg
amendment ultimately was withdrawn.
Commission/Task Force on Long-Term Budgetary Issues.
Considerable attention has been focused recently on the large imbalances projected
in the federal budget over the long term, particularly with respect to the Social19
Security, Medicare, and Medicaid programs. One device advocated by some as a
means of compelling action on long-term budgetary issues is a bipartisan commission
or task force empowered to recommend legislative changes that would correct or
mitigate the imbalances.
18 Additional information on the proposals affecting the rescission process and line-item
veto authority, see (1) CRS Report RL33365, Line Item Veto: A Constitutional Analysis of
Recent Proposals, by Morton Rosenberg; and (2) CRS Report RL33635, Item Veto and
Expanded Impoundment Proposals: Legislative History and Current Status, by Virginia A.
19 For additional information, see (1) Congressional Budget Office, The Long-Term Budget
Outlook, December 2007; and (2) Government Accountability Office, The Nation’s
Long-Term Fiscal Outlook: August 2007 Update, GAO-07-1261R (September 2007).
The Bipartisan Task Force for Responsible Fiscal Action Act of 2007 (S. 2063,
introduced by Senators Kent Conrad and Judd Gregg, and H.R. 3655, introduced by
Representatives Jim Cooper and Frank Wolf), for example, would establish a
bipartisan, 16-member task force (including the Treasury Secretary and another
member from the executive branch, and seven members each from the House and
Senate). The task force would be charged with developing legislative
recommendations (by December 9, 2008) to significantly improve the long-term
balances in the federal budget, including the balances in Social Security and
Medicare; the recommendations would need to be approved by at least 12 of the task
force members. Under the proposal, the recommendations would be considered by
the House and Senate during the 2009 congressional session (during the first year of
the new presidential administration), under expedited legislative procedures that
would limit consideration to 100 hours in each chamber and bar amendments.20
Advocates of the commission or task force approach argue that it would be an
effective means of surmounting political opposition and achieving an end result
because of the bipartisan nature of the group, the avoidance of preconditions with
respect to policy options (i.e., all options would be “on the table”), and the action-
forcing nature of expedited legislative procedures. Adherents to the use of regular
legislative procedures to deal with these issues maintain that while they may entail
a more time-consuming and difficult route, they afford more openness and
participation in the decision-making process and are more likely to lead to
widespread acceptance of the results.
Capital Budgeting. Unlike many states, the federal government does not
employ separate capital and operating budgets; instead, all revenue and spending is
merged together into a “unified” budget. Information on capital budgeting, however,
has been provided for many years as a separate chapter in one of the volumes of the
President’s budget.21 Interest in adopting a capital budget for the federal government
has been examined from time to time. In 1999, a commission established by
President Bill Clinton pursuant to Executive Order 13037 (March 3, 1997), the
President’s Commission to Study Capital Budgeting, recommended several changes
in budgetary practice but did not recommend the adoption of a formal capital22
Advocates of capital budgeting generally regard it as a means of boosting
resources for infrastructure needs (e.g., surface transportation and aviation systems
struggling to meet capacity and deteriorating water infrastructure), overcoming an
alleged bias against capital spending in the current budget process, and rationalizing
20 The proposal is explained by Senators Conrad and Gregg in the Congressional Record
(daily ed.), September 18, 2007, pp. S11662-S11665.
21 In the FY2009 budget, the discussion of capital budgeting is presented in the Analytical
Perspectives volume as Chapter 6, “Federal Investment” (pages 57-68), which is available
on the OMB website at
22 See the Report of the President’s Commission to Study Capital Budgeting, February 1,
decision-making in this area. Critics of capital budgeting assert that shifting a
significant portion of the budget to an accrual basis (in which costs are apportioned
over the lifetime of an asset rather than accounted for up front) would unduly
complicate the budget process and undermine the task of setting priorities over the
full range of governmental activities.23
As a first step toward improved budgeting for infrastructure needs, some have
advocated more information gathering and analysis in this area. Representative
Collin Peterson, for example, introduced H.R. 3538, the National Infrastructure
Improvement Act of 2007, on September 14, 2007. The bill would create a
bipartisan National Commission on the Infrastructure of the United States charged
with studying, among other things,
the methods used to finance the construction, acquisition, rehabilitation, and
maintenance of public works improvements (including general obligation bonds,
tax-credit bonds, revenue bonds, user fees, excise taxes, direct governmental
assistance, and private investment).
The commission is required under the bill to complete a study by February 15,
Biennial Budgeting. While many authorizations are enacted on a multiyear
cycle, Congress acts on budget resolutions and appropriations acts annually. Biennial
budgeting proposals would change the cycle under which Congress acts on budget
resolutions and appropriations acts (and annual authorization acts) to two years. A
leading example of such legislation is S. 2627, the Biennial Budgeting and
Appropriations Act, introduced by Senator Pete Domenici (the former chairman of
the Senate Budget Committee and a long-time advocate of biennial budgeting).
Biennial budgeting proposals are intended to reduce the amount of time
Congress spends on budgetary legislation, to allow more time for congressional
oversight of federal agencies and programs, and generally to provide for more
efficient budget decision-making. In the view of some, however, a biennial approach
could impair Congress’s ability to respond to changing economic and budgetary
ci rcum st ances.24
23 For more detailed information on capital budgeting, see (1) Congressional Budget Office,
Issues and Options in Infrastructure Investment, May 2008; General Accounting Office
(now the Government Accountability Office), Federal Capital Budgeting, GAO/T-AFMD
93-7, Testimony of Paul L. Posner, May 26, 1993. See also CBO and GAO testimony at the
joint hearing of the House Transportation and Infrastructure Committee and the House
Budget Committee on May 8, 2008, available at [http://budget.house.gov/hearings.aspx].
24 For a discussion of issues associated with biennial budgeting proposals, see CRS Report
RL30550, Biennial Budgeting: Issues and Options, by James V. Saturno.
Appendix. Citations to Selected Budget Process Laws
Budget and Accounting Act of 1921
P.L. 67-13; June 10, 1921; 42 Stat. 20-27.
Congressional Budget and Impoundment Control Act of 1974
P.L. 93-344; July 12, 1974; 88 Stat. 297-339.
Balanced Budget and Emergency Deficit Control Act of 1985
Title II of P.L. 99-177 (Increasing the Statutory Limit on the Public Debt);
December 12, 1985; 99 Stat. 1038-1101.
Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987
Title I of P.L. 100-119 (Increasing the Statutory Limit on the Public Debt);
September 29, 1987; 101 Stat. 754-784.
Budget Enforcement Act of 1990
Title XIII of P.L. 101-508 (Omnibus Budget Reconciliation Act of 1990);
November 5, 1990; 104 Stat. 1388-573 through 630.
Omnibus Budget Reconciliation Act of 1993
P.L. 103-66; August 10, 1993; 107 Stat. 683-685 (Title XIV).
Unfunded Mandates Reform Act of 1995
P.L. 104-4; March 22, 1995; 109 Stat. 48-71.
Line Item Veto Act
P.L. 104-130; April 9, 1996; 110 Stat. 1200-1212.
Budget Enforcement Act of 1997
Title X of P.L. 105-33 (Balanced Budget Act of 1997); August 5, 1997; 111 Stat.
Notes: Major portions of selected budget process laws are codified as follows —
2 U.S.C. 621, et seq. (Congressional Budget and Impoundment Control Act of
2 U.S.C. 900, et seq. (Balanced Budget and Emergency Deficit Control Act of
1985, as amended); and
For additional information on these and other budget process laws, see CRS Report
RL30795, General Management Laws: A Compendium, Clinton T. Brass (Coordinator),
Chapter III (Financial Management, Budget, and Accounting), pp. 93-195