Major Laws Governing the Federal Budget Process Law
Anti-Deficiency Act (enacted in 1870 as part of the legislative appropriations bill), 31 U.S.C. 1341-42; 1511-1519
- Provides that no department or government official can make payments, or obligate the U.S. government by contract, in excess of congressional appropriations (with criminal penalties for violations). The Act enforces Congress’ constitutional authority over the public purse. The Act also triggers government shutdowns when Congress fails to appropriate funds by the beginning of a new fiscal year
Budget and Accounting Act of 1921, P.L. No. 67-13, 42 Stat. 20 (June 10, 1921)
- Centralized Federal budgeting by creating the Bureau of the Budget (the predecessor to OMB) and codified submission of the President’s Budget. Also established the General Accounting Office (now the Government Accountability Office) to provide Congress with an independent audit of executive accounts and to report on violations of fiscal statutes.
Accounting and Auditing Act of 1950, P.L. 81-784, §117(a), 31 U.S.C. §3523(a)
- Authorized the GAO to audit the financial transactions of most executive, legislative, and judicial agencies and to prescribe, in consultation with the President and the Secretary of the Treasury, accounting standards
Congressional Budget and Impoundment Control Act of 1974, P.L. 93-344, 88 Stat. 297 (July 12, 1974)
Balanced Budget and Emergency Deficit Control Act of 1985 (Gramm-Rudman-Holllings), P.L. 99-177, Title II, 99 Stat. 1037, 1038 (Dec. 12, 1985)
- Established declining maximum deficit amounts (intended to lead to a balanced budget in FY1991) and a sequestration process (automatic budget cuts) as enforcement; also amended the ’74 Budget Act
Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987, P.L. 100-119, 101 Stat. 754 (Sept. 29, 1987)
- Moved the sequester trigger from GAO to OMB (due to a constitutional challenge) and revised and extended the deficit targets, aiming at a balanced budget in 1993. See Bowsher v. Synar (478 U.S. 714, 1986).
Budget Enforcement Act of 1990, P.L. 101-508, Title XIII, 104 Stat. at 1388-573 (Nov. 5, 1990)
- Replaced the ineffective G-R-H deficit targets with (1) discretionary spending limits and (2) a pay-as-you-go (PAYGO) requirement to offset entitlement increases and tax cuts—both enforced through automatic sequesters; enacted the Federal Credit Reform Act of 1990; and amended the ’74 Budget Act
Government Performance and Results Act (GPRA) P.L. 103-62, 107 Stat. 285 (Aug. 3, 1993)
- Requires agencies to submit to Congress multiyear strategic plans, annual performance plans, and annual performance reports.
Omnibus Budget Reconciliation Act of 1993, P.L. 103-66, Title XIV, 107 Stat. 312, 683 (Aug. 10, 1993)
- Extended the discretionary spending limits and PAYGO process through FY ’98.
Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 104-4, 109 Stat. 50 (Mar. 22, 1995)
- Unfunded mandates are Federal statutes or regulations that require state or local governments or private sector entities to achieve certain goals or fulfill certain functions without being provided any Federal funding. UMRA (1) requires congressional committees and CBO to identify and provide information on potential unfunded Federal mandates in legislation and (2) permits Members of Congress to raise certain points of order.
Line Item Veto Act, P.L. 104-130, 110 Stat. 1200 (April 9, 1996). (Ruled unconstitutional in 1998) subsequently ruled unconstitutional
- Granted the President authority to cancel discretionary spending, new direct spending, and limited tax benefits in legislation; later ruled unconstitutional by the Supreme Court.
Budget Enforcement Act of 1997, P.L. 105-33, 111 Stat. 251 (Aug. 5, 1997)
- Extended the discretionary spending limits and PAYGO process through FY 2002. Amended the ’74 Budget Act.
A bill to eliminate preexisting PAYGO balances, P.L. 107-312, 116 Stat. 2456 (Dec. 2, 2002)
- Required the Director of the Office of Management and Budget to reduce to zero any PAYGO balances of direct spending and receipts legislation for all fiscal years under the Balanced Budget and Emergency Deficit Control Act of 1985 (Gramm-Rudman-Hollings Act).
Statutory Pay-As-You-Go Act of 2010 (usually known as “PAYGO”), P.L. 111-139, 124 Stat. 8 (February 12, 2010)
- Requires that the cost of new tax cuts or new entitlement spending (often called “mandatory spending”) must be fully offset by other entitlement spending cuts or revenue increases. The objective of PAYGO – which was originally adopted in 1990 – is to prevent new tax cuts or entitlement spending legislation from increasing deficits. However, provisions designated as emergencies are exempt from PAYGO, as are: costs associated with Medicare physicians’ payments, the estate and gift tax, the alternative minimum tax, and certain “middle-class” tax cuts.
Budget Control Act of 2011 (“BCA”) P.L. 112–25, S. 365, 125 Stat. 240 (August 2, 2011)
- Negotiated during a lengthy political impasse over raising the debt ceiling – added a new layer of enforcement in the budget process in order to reduce deficits. Tight statutory spending caps were imposed on total defense and non-defense discretionary spending for each year through FY 2021 in order to reduce deficits by more than $900 billion* over 9 years. The caps are enforced by automatic across-the-board budget cuts (“sequestration”) in appropriations bills if the caps are breached in any year. In addition, the BCA established a congressional “Super Committee” to achieve another $1.2 trillion* in long-term deficit reduction through entitlement and tax reforms. However, because the Super Committee failed to agree on a long-term deficit reduction package in the allotted time, additional budget cuts of $1.2 trillion* over nine years went into effect in the form of further reductions in the annual discretionary spending caps for each year through FY ‘21. Subsequently, however, the automatic spending cuts for FY 2013, were delayed for two months and modestly reduced by the January 1, 2013 “Fiscal Cliff Agreement,” which also extended most of the expiring Bush tax cuts. Under the Fiscal Cliff Agreement, the modestly reduced FY ’13 spending cuts went into effect in the Sequester of March 2013. The $1.2 trillion in additional discretionary spending cuts over nine years — triggered by the Super Committee’s failure – have been criticized because nearly the entire burden of this additional deficit reduction (more than 80%) was placed on discretionary spending. [*including interest payments]
Bipartisan Budget Act of 2013, P.L. 113–67 (December 26, 2013)
- The additional layer of cuts resulted in even tighter defense and nondefense discretionary caps for each year through 2021 – with levels that, in the view of many policymakers, did not adequately accommodate national security needs, annual inflation, a growing and aging population, necessary infrastructure growth and repairs, or rapidly growing veterans’ healthcare costs (which are funded by discretionary appropriations). Consequently, in late 2013, after political gridlock lead to a government shutdown in October, Congress and the White House agreed in the “Bipartisan Budget Act of 2013” to a two-year deal to increase the spending caps for FY 2014 and FY 2015.
Bipartisan Budget Act of 2015, P.L. 114-74, 129 Stat. 584 (November 2, 2015)
- Two years later, in the fall of 2015, Congress and the Administration faced a nearly identical budget stand-off and again came to a similar agreement to increase the spending caps for FY 2016 and FY 2017 in the Bipartisan Budget Act of 2015. The 2015 budget agreement increased total discretionary spending by $80 billion over the two-year period, plus an additional $32 billion in war funding. The budget law also avoided a debt crisis by suspending the federal debt ceiling through March 15, 2017.
Bipartisan Budget Act of 2018, Public Law 115-123 (February 9, 2018)
- In early 2018, Congress passed the “Bipartisan Budget Act of 2018” that raised the statutory caps on discretionary spending by a total of $296 billion over FY 2018 and FY 2019 — increasing defense by 15% in each year, and increasing non-defense spending by 12% in FY 2018 and 13% in FY 2019. The Act also suspending the debt ceiling through March 1, 2019.
It is likely that Congress and the Administration will negotiate another Bipartisan Budget Act for Fiscal Years 2020 and 2021 — the last two years of the BCA’s spending caps.