540540 Chapter 15 | Economic PolicySome committees are more directly related than others to economic policy. Budget,
appropriations, and tax committees (Ways and Means in the House and Finance in
the Senate; see Chapter 11) direct fiscal policy, while the banking committees have a
hand in overseeing aspects of monetary policy. The commerce committees, especially
in the House, also have their hand in a range of economic policies. Because it is the
most important of Congress’s economic policy-making responsibilities, we focus our
discussion on the budget-making process.
Budget making in Congress was decentralized through much of its history, with
no real way to coordinate activity among the various committees and subcommittees
involved in the process. The appropriations committees had a difficult time keeping
spending requests from other committees in line with overall budgetary expectations
because of the two-step process Congress uses to approve any spending: the
authorizing committee writes the law that authorizes the spending, and then the
appropriations committee approves the level of spending.^13 As a result, budgetary
power shifted from Congress to the president, starting with the Budget and Accounting
Act of 1921. From that point on, presidents have played a central role in the budget
process by submitting their budgets to Congress. The president’s budget often serves as
the starting point for the congressional budget.
Congress revamped the budget process in 1974 with the Budget and Impoundment
Control Act. This law created the Budget Committees in the House and Senate, set up
the budget process (see the How It Works graphic), and established the Congressional
Budget Office (CBO). This office gave Congress independent expertise and advice on
budgetary matters so it did not have to rely on the president’s numbers. For the first
time, Congress had the institutional capacity on budgetary matters to deal with the
president on an equal footing.
However, the new process and institutions did not guarantee smooth sailing. In fact,
Congress has continued to have a difficult time meeting the various deadlines, and the
process has not helped to eliminate budget deficits. Budget reconciliation, a powerful
tool in the 1974 Budget Act, was first used in 1980 to bring spending levels into line with
the budget resolution. (This obviously requires that there be a budget resolution—11
times in the past 17 years Congress has failed to adopt the overall budget blueprint, most
recently with the 2019 fiscal year budget).^14 In fact, the budget committees decided to
not produce a budget resolution at all for the 2019 budget to protect Republicans from
having to vote for a budget with a trillion dollar deficit. As a Forbes headline put it, “GOP-
Led Budget Committees Have Just One Job... and Are Refusing to Do It.” A former
budget committee staffer observed, “[T]he budget rules that are supposed to guide what
the president and Congress do about the budget each year have died an ignominious
death because of a combination of abject abuse and atrocious neglect.”^15
Although the budget process is sometimes ignored, committees are supposed to
meet specific spending targets laid out in the budget resolution, and then any necessary
changes to individual committees’ budgets are supposed to be combined into one
omnibus reconciliation bill. In terms of adopting budget cuts—which are always difficult
to pass because most programs have strong advocates who oppose the cuts—this
procedure has two advantages. First, having everything in a single huge bill makes
it much more difficult for members to vote against it, because to do so would mean
turning down the entire package, including elements of the bill that individual members
of Congress like. Depending on the timing, failure to pass an omnibus spending bill
may mean shutting down the government. Second, the Senate treats reconciliation
bills differently from other bills or amendments. Most important, in the Senate these
bills cannot be filibustered—and anything unrelated to deficit reduction can be struck
down, which makes reconciliation an important tool in deficit reduction.^16 Overall,
reconciliation has been used in about two-thirds of the budgets since 1980 and has beenbudget making
The processes carried out in Congress
to determine how government money
will be spent and revenue will be
raised.budget reconciliation
The process by which congressional
committees are held to the spending
targets specified in the budget
resolution. During this process,
the House and Senate Budget
Committees combine the budgetary
changes from all the legislative
committees into an omnibus
reconciliation bill to be approved by
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