Fifty years ago, Congress was trying to reduce the deficit and reform the budget process, or perhaps lawmakers were primarily trying to wrest spending power from the White House.
If the goal is fiscal responsibility, the results are mixed at best. But if the goal is simply to shift Congress’s power over the budget, the experience of five decades shows: mission accomplished.
The Congressional Appropriations and Budget Control Act of 1974, signed by President Nixon while he was under threat of impeachment, created the House and Senate Budget Committees and the Congressional Budget Office to guide lawmakers in developing and implementing spending plans. It also provided the process for Congress to create a budget each year and the procedures for implementing the spending and revenue measures provided for in that budget.
If that rings true today, it wasn’t always true. Nixon had long fought Congress over spending controls and kept money that Congress had authorized and appropriated.
In 1973 alone, Nixon withheld, or “retained,” $18 billion in authorized and appropriated spending. This represented 34 percent of all discretionary domestic spending that year. Applied to domestic spending levels, this amounts to more than $240 billion in incarceration.
Limiting debt and deficits appears not to have been the primary goal of the 1974 law. For lawmakers, the main attraction was the “control arrangement” portion of the bill, which is designed to prevent the executive branch from overturning spending decisions by the Legislature.
When Congress did not seriously refrain from making fiscally irresponsible decisions, the deficit and debt continued to grow. Under President Reagan in 1981, the authorities focused more on bureaucracy and adopted budgetary measures designed to achieve a balanced budget.
Congress set annual deficit targets, established payment arrangements for tax cuts and benefit increases so that every bill with a price tag must also have a plan to pay for it, set annual spending caps, reduce council spending if these targets or caps are breached, and create other rules and processes to balance the country’s revenues and spending.
So how well has Congress balanced power over finances? And over deficits and debt? Not very well (except for the four years beginning in 1998, when the government ran a budget surplus and when 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 by temporarily delaying them or asking Congress to cancel them, which are permanent spending cuts.
From Ford to Trump, presidents have requested a total of $91.9 billion in waivers. Congress approved a total of $22.7 billion. Reagan requested half of all waivers in the past 50 years, while Presidents George W. Bush and Obama requested none.
Congress itself has initiated more than $380 billion in repeals, but these have largely come at a time when Congress has imposed limits on annual funding. As a result, these shutdowns did not reduce costs; they simply forced lawmakers to reallocate spending to stay under the cap.
The assessment here over the past 50 years should be that while Congress has balanced power in its direction, it has not produced significant savings for taxpayers.
As for the Congressional portion of the Budget Act, the 50-year history is more nuanced. Over the past 50 years, Congress has failed to pass an annual budget 14 times, including this year. The failure came twice when Democrats controlled both chambers (2011, 2023) and four times when Republicans controlled both chambers (1999, 2005, 2007 and 2019). Bipartisanship is often the key to passage: With increasing polarization, for eight years since 2003, a divided Congress has failed to pass a fiscal plan to inform spending and revenue decisions.
Two tax cuts have garnered broad support in recent years (the Tax Cuts and Jobs Act of 2017 and the Inflation Reduction Act of 2022), but neither led to deficit reduction. This problem has only gotten worse.
In 1974, federal revenues accounted for 17.8 percent of the economy. That figure has fallen slightly to 17.5 percent this year and averaged 17.3 percent over the period. However, spending was 18.2 percent of the economy in 1974 and is 23.1 percent today.
Where has this cost increased? Neither in our national security funding nor in our domestic discretionary accounts, both of which have declined from 9.3 percent to 6.7 percent of GDP between 1974 and 2024. Spending on “mandatory” programs (notably Social Security, Medicare, and Medicaid) nearly doubled from 8.5 percent to 15.3 percent of GDP over the same period. This contributed to the increase in debt from 32 percent of the economy in 1974 to more than 101 percent.
Based on these figures, it is estimated that this action was unpleasant. But should anyone be surprised? The country’s budget is a product of politics, high demand for services and people’s low appetite for paying more taxes. No budget process we have tried can force lawmakers to ignore these realities and achieve a given fiscal outcome.
The nation’s fiscal outlook for the next 50 years is bleak unless presidents and Congress address today and in the future the need to raise more revenue and curb the growth of mandatory spending. It would take a bigger and better bill than the Congressional Budget and Incarceration Control Act of 1974.
John R. Kesich, 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 senior vice chairman.
