The attention to budget totals embodied in the 1974 Budget Act did not, nor was it intended to, result in achieving budgetary balance. By the mid-1980s deficits had reached alarming levels, and it was clear that the process created in 1974 could not be counted on to blot up this red ink. In 1985, with annual deficits continuing to mushroom, the Senate amended a debt limit measure by adding a requirement specifically designed to reduce the deficit through budget process actions. In particular, the need to raise the ceiling on the national debt to more than $2 trillion for the first time was a major trigger for this action. Sponsored by Senators Phil Gramm, R-TX, Warren Rudman, R-NH, and Ernest Hollings, D-SC, the amendment eventually emerged as the Balanced Budget and Emergency Deficit Control Act of 1985 (commonly known as the Gramm-Rudman-Hollings Act).13 DEFICIT-FOCUSED BUDGET REFORMS
This legislation had a simple goal -- to reduce the size of the deficit by specified amounts each year until expenditures were in balance with revenues. Target figures were set, and, if they were not met by enacting the appropriate amount of spending restraint or tax increases, automatic across-the-board spending cuts, or sequestration, took effect. According to the targets specified in the legislation, the budget was to be balanced by fiscal year 1991. After the original procedure for triggering such a presidential order was ruled unconstitutional by the Supreme Court in 1986 (in Bowsher v. Synar) Congress modified it (as well as the schedule of deficit targets) in the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987.14
Also embodied in the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 were revisions to the President's impoundment powers. Because the legislative veto had been found unconstitutional by the Supreme Court in 1983 (in INS v. Chadha), the Court of Appeals found in 1987 that the expansion of the President's deferral powers as contained in the Impoundment Control Act was similarly unconstitutional (in City of New Haven v. United States). A provision in the 1987 law served to codify this Appeals Court decision, stipulating that deferral authority could be used to withhold funds only for administrative, rather than policy, purposes.
GRH was a significant departure from previous budget reforms in that it attempted to guarantee a specific budget outcome -- at least in the aggregate -- rather than focusing on institutional relationships or on information provided for the budget process. The deficit, of course, did not come down as promised by the Gramm-Rudman-Hollings legislation. In fact, the fiscal year 1993 deficit (which would have been zero if the law, as revised in 1987, had met its goal) is currently projected by CBO to be $266 billion.15 The Act did put a premium on short-term budgeting; under GRH, all that mattered was the single year for which the projections were being made. These annual targets were complied with through short-term fixes and budget gimmickry.
The successor to Gramm-Rudman-Hollings, the Budget Enforcement Act (BEA), was passed in 1990 and was designed to enforce the 5-year deficit reduction agreement reached between the President and the Congress in that year. The BEA responded to the problems of GRH by making three important changes. First, annual deficit targets were essentially eliminated. Second, limits on the level of discretionary spending were established though fiscal year 1995. Third, a new enforcement process, called pay-as-you-go (PAYGO), was set up in order to ensure that any tax or mandatory spending changes were deficit neutral. The original Budget Enforcement Act would have expired in 1995; the Omnibus Budget Reconciliation Act of 1993 extends both the discretionary caps and PAYGO until 1998.
The BEA changes shifted the focus away from deficit targets to spending controls. By so doing, the changes focused attention on actions that the Congress and the President could control (spending and revenue actions), rather than those they could not (primarily, the performance of the economy). Thus, the Act represented a retreat from the GRH focus on the achievement of specific targets.
FOOTNOTES13 Public Law 99-177, 99 Stat. 1037.
14 Public Law 100-119, 101 Stat. 754.
15 Congressional Budget Office, The Economic and Budget Outlook: An Update, (September 1993).