FEDERAL BUDGETING PRIOR TO 1921

An important early step in the structural evolution of the budget process was the development of a standing committee system. In the House, a temporary Committee of Ways and Means was first created on July 24, 1789, to advise the House on matters of public finance. The establishment of a standing committee system in the Senate included a Committee on Finance in 1816 with parallel jurisdiction over money matters. The centralization of control over both revenues and expenditures in a single committee in each Chamber, combined with an abundance of revenues from the tariff, and the relatively modest scope of Federal expenditures, meant that the Nation's finances could be coherently maintained even without a formal budget process.

During this period, Congress began to specify objects of expenditure as a means of controlling executive branch actions. Language concerning amounts also became more specific at the urging of Albert Gallatin, Thomas Jefferson's Secretary of the Treasury and a former member of the House. The first appropriations had used the language ``there shall be appropriated a sum not exceeding . . . ,'' this language was modified to detail specific amounts to be appropriated.

The next major change in the budget process involved drawing a distinction between authorizations and appropriations as two separate processes. This separation is neither mandated nor described in the Constitution. Instead it has been developed and formalized pursuant to the constitutional authority of each Chamber to ``determine the rules of its proceedings.'' The origin of a formal rule mandating the separation of authorizations and appropriations dates to 1835 when the House discussed the increasing delays in enacting appropriations. A significant part of this delay was attributed to the inclusion in such bills of ``debatable matters of another character, new laws which created long debates in both Houses.''1 John Quincy Adams, then a Member of the House, suggested that in the future, the Committee of Ways and Means should ``strip these appropriation bills of every thing but were legitimate matters of appropriation, and such as were not . . . [be] made the subject of a separate bill.''2 Language was added to the Rules of the House in the 25th Congress (September 14, 1837) which stated, ``No appropriation shall be reported in such general appropriation bills, or be in order as an amendment thereto, for any expenditure not previously authorized by law.''

This bar against unauthorized appropriations was broadly interpreted by the House to include any legislation in appropriation bills as well, and, as early as 1842, the House had voted that the Committee of the Whole be instructed to strike provisions in an appropriation bill containing legislation or unauthorized appropriations.

The Senate did not formally adopt a parallel rule until 1850 when it prohibited amendments (i.e., Senate amendments to the House-passed appropriation bill) proposing additional appropriations unless it was for the purpose of carrying out the provisions of an existing law. Even then, it weakened this restriction by allowing exceptions. Today the Rules of the Senate impose some restrictions on amendments, but the Senate still does not operate with a general prohibition against unauthorized appropriations.

The expansion of the workload of the Committee of Ways and Means during and after the Civil War (especially due to banking, currency, and debt questions) led the House to establish two new committees in 1865 (Banking and Currency, and Appropriations) and to divide the workload among the three. The jurisdiction of the Senate Finance Committee was similarly divided in 1867 by unanimous consent. The remainder of the 1800s saw a gradual erosion of the jurisdiction of the appropriation committee, as numerous other committees were given the authority to bring various legislation to the floor without having it go through the Committee on Appropriations. The Senate followed the House's lead and similarly dispersed appropriations jurisdiction in the 1890s.

This dispersal of appropriations produced a hodge-podge of overlapping efforts compounded by a similar lack of coordination in the executive branch. Executive departments submitted their requests for funds directly to the various committees with spending jurisdiction, sometimes making duplicate or overlapping requests to more than one committee. Although the Treasury did begin compiling the requests of the various departments into a single ``Book of Estimates'' in 1878, there was no authority for the President to submit a single, coordinated budget proposal, or for Congress to consider one. The President was thus limited in his ability to influence or coordinate the efforts of nominally subordinate cabinet members.

Budgeting in the 19th century was thus quite different from the way it is understood and practiced today; there was an annual statement of what the Federal Government had done with revenues in the previous year, including whether there was a surplus or deficit, but no unified, formal proposal for the coming year and little attention to spending as a whole. A leading reform advocate, Charles Wallace Collins, wrote that ``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 a session by summing up the various bills which have been acted on.''3

The result was a pattern of increased Federal spending which caused House Appropriations Committee Chairman James A. Tawney to conclude in 1910 that ``the division of jurisdiction and responsibility in the matter of initiating appropriations has contributed more than any single cause to the enormous increase in appropriations during recent years.''4 This increase, as well as the rising incidence of deficits, inevitably resulted in a renewed call for reforms to impose better spending control.



FOOTNOTES

1 Congressional Globe, v. 3. 24th Congress, 1st Session, December 10, 1835. p. 20.
2 Ibid, p. 20.
3 Collins, Charles Wallace, The National Budget System, New York, MacMillan and Co., 1917. p. 3.
4 Tawney, James A, ``Federal Appropriations: Their Rapid Increase,'' Review of Reviews, v. 42. 1910. p. 343.


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