Federal Budgeting and Federal Spending

Until early in the twentieth century, taxing and spending procedures were relatively simple. Each executive department negotiated directly and separately with Congress for its funds. Revenue-raising and spending bills were passed as needed. All these activities took place without a formal budget process. Concerns over deficits and debt arising out of World War I brought about a change to more structured procedures. From the 1920s to the 1970s, budget making was in the hands of the president, who was assisted by the Budget Bureau (now part of the Office of Management and Budget [OMB] in the Executive Office). Under this process, Congress (in partnership with the president) exercised its constitutional responsibility for passing the taxing and spending laws needed to implement the

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posed massive spending reductions in such programs as school lunches, student loans, job training, and urban mass transit. Congress went along to some extent, slashing billions of dollars from domestic spending albeit less than Reagan had requested. Conservative Democrats joined Republicans in voting these cuts. Many economists warned that the tax cuts, even with reduced spending, would produce huge federal deficits. But Reagan continued to insist that his program of lower tax rates would stimulate business growth and thereby push up total tax revenues: "In the 1980s we went on a national bender, cutting taxes and raising defense spending, without making provision for the long-term fiscal soundness of government" (Bentsen, 1996, p. 44). By the middle of the Reagan administration, there was a realization that the time had come for crisis legislation to resolve the federal budget problem. The response was the Balanced Budget and Emergency Deficit Control Act of 1985, commonly known as the Gramm-Rudman-Hollings (G-R-H) Act: "G-R-H was a recognition of certain real problems and an attempt to deal with them" (Stein, 1989, p. 41) The Act called for specific deficit ceilings for the years 1986-1990; in 1991 the budget was to b
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Approximate Word count = 2820
Approximate Pages = 11 (250 words per page)

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