Fifty years ago, Congress tried to rein in deficits and fix the budget process—or, perhaps, lawmakers were simply trying to claw back some spending power from the White House.
If the goal was fiscal responsibility, the results have been mixed at best. But if the goal was merely to get Congress to exercise its power over the budget, five decades of experience show: mission accomplished.
The Congressional Budget Control and Impoundment Act of 1974, signed by President Nixon while he was facing impeachment, created the House and Senate Budget Committees and the Congressional Budget Office to guide lawmakers in developing and implementing spending plans. It also created a process for Congress to create a budget each year and procedures for enacting the spending and revenue measures provided for in that budget.
While this seems simple today, it wasn't always so. Nixon had long fought with Congress over spending control and had been withholding money that Congress had authorized and appropriated.
In 1973 alone, Nixon withheld or “seized” $18 billion in authorized and appropriated spending, representing 34 percent of all domestic discretionary spending that year. If applied at the current level of domestic spending, that would represent more than $240 billion in sequestrations.
It would seem that controlling debt and deficits was not the primary goal of the 1974 law. For legislators, the main attraction was the part of the bill called “Impost Control,” intended to prevent the executive branch from subverting the legislature’s spending decisions.
Because Congress was not significantly constrained by irresponsible fiscal decisions, deficits and debt increased. In 1981, under President Reagan, policymakers focused more on the growing deficit and passed budget measures aimed at achieving a balanced budget.
Congress set annual deficit targets, imposed pay-as-you-go procedures for tax cuts and entitlement increases so that any law with a price tag also had to have a plan to pay for it, set caps on annually allocated spending, directed widespread spending cuts if those targets or caps were breached, and created other rules and processes to help balance the nation's revenues and spending.
So how well has Congress balanced the budget? And has it gotten deficits and debt under control? Not very well (except for four years beginning in 1998, when the government ran budget surpluses and one of us chaired the House Budget Committee).
To control sequestration, the 1974 law established an orderly process by which the president could withhold funds either by temporarily deferring them or by asking Congress for a rescission, which is a permanent reduction in spending.
From Ford to Trump, presidents requested a total of $91.9 billion in rescissions. Congress approved only $22.7 billion. Reagan requested half of all rescissions requested in the past 50 years, while Presidents George W. Bush and Obama requested none.
Congress itself initiated more than $380 billion in rescissions, but most of them occurred at a time when Congress had imposed caps on annual appropriations. As a result, those rescissions did not reduce spending; they simply forced lawmakers to reallocate spending to stay below the caps.
The assessment here, 50 years on, would have to be that while Congress has rebalanced power in its direction, it has not resulted in significant savings for taxpayers.
As for the Congressional Budget Act portion of the bill, the 50-year history is more nuanced. Over the past 50 years, Congress has failed to adopt an annual budget resolution 14 times, including this year. The failure occurred twice when Democrats controlled both chambers (2011, 2023) and four times when Republicans controlled both chambers (1999, 2005, 2007, and 2019). A modicum of bipartisanship is typically key to passage: With polarization growing, for eight years beginning in 2003, a divided Congress failed to enact a fiscal plan to inform spending and revenue decisions.
In recent years, two tax cuts have received broad support (the Tax Cuts and Jobs Act of 2017 and the Inflation Reduction Act of 2022), but neither of them resulted in deficit reduction. That problem has only gotten worse.
In 1974, federal revenues accounted for 17.8% of the economy. That share fell slightly to 17.5% this year and averaged 17.3% over the entire period. However, spending was 18.2% of the economy in 1974 and is more than 23.1% today.
Where has that spending increased? Not in funding our national security or in domestic discretionary accounts, which together fell from 9.3% to 6.7% of GDP between 1974 and 2024. Spending on “mandatory” programs (particularly Social Security, Medicare, and Medicaid) nearly doubled, rising from 8.5% to 15.3% of GDP over the same period. This has contributed to debt growing from 32% of the economy in 1974 to more than 101% today.
Judging by these figures, the law has failed miserably. But should that surprise anyone? Each year's national budget is a product of politics, of insatiable public demand for services and of the public's unwillingness to pay more taxes. No budget process we have yet tried can force legislators to ignore these realities and achieve a certain fiscal outcome.
The fiscal outlook for the next 50 years is grim unless presidents and Congresses, both now and in the future, address the need to raise more revenue and curb the growth of mandatory spending. This will require a larger and better bill than the Congressional Budget Control and Impoundment Act of 1974.
John R. Kasich, former chairman of the House Budget Committee, is a senior fellow at the Bipartisan Policy Center, where G. William Hoagland, former staff director of the Senate Budget Committee, is a senior vice president.
