Congressional Budget and Impoundment Control Act of 1974 - The Congressional Budget Process

The Congressional Budget Process

Titles I through IX of the law are also known as the Congressional Budget Act of 1974. Title II created the Congressional Budget Office. Title III governs the procedures by which Congress annually adopts a budget resolution, a concurrent resolution setting forth fiscal policy that is not signed by the President. The budget resolution, in turn, sets limits on revenues and spending that govern Congress through procedural objections called points of order. The budget resolution also can generate a budget reconciliation bill, which the Congress considers under expedited procedures unusual for the Senate.

The act has been amended several times, especially through provisions in the Balanced Budget and Emergency Deficit Control Act of 1985, the Budget Enforcement Act of 1990, and the Balanced Budget Act of 1997. The original 1974 legislation, however, remains the basic blueprint for budget procedures today.

The limitation on debate that prevents a budget reconciliation bill from being filibustered in the Senate (that is requiring a three-fifths vote to end debate) led to frequent attempts to attach amendments unrelated to the budget to the reconciliation bills. In response, budget reconciliation acts of 1985, 1986, and 1990 adopted what is known as the Byrd Rule (Section 313 of the Budget Act). The Byrd Rule allows Senators to raise points of order (which can be waived only by a three-fifths majority of Senators, provisions that fail are colloquially referred to as "Byrd droppings") against provisions in the reconciliation bills that are "extraneous," where extraneous is defined in the rule according to one of six provisions. Provisions are considered extraneous if they:

1. do not produce a change in outlays or revenues;
2. produce changes in outlays or revenue which are merely incidental to the non-budgetary components of the provision;
3. are outside the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure;
4. increase outlays or decrease revenue if the provision's title, as a whole, fails to achieve the Senate reporting committee's reconciliation instructions;
5. increase net outlays or decrease revenue during a fiscal year after the years covered by the reconciliation bill unless the provision's title, as a whole, remains budget neutral; or
6. contain recommendations regarding the OASDI (social security) trust funds

Since the reconciliation bill has covered as many as ten years, the fifth provision can have the effect of requiring that any tax cut or spending increase be approved by a three-fifths majority, or else the law must return to its previous state after ten years. This is responsible for the use of sunset clauses in several recent budget acts, when proposed tax cuts commanded majority support but not the necessary three-fifths majority to suspend the Byrd Rule. For example, many of the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 would have expired as soon as fiscal year 2010 if not extended. The provisions that were to expire included the $1000 per child tax credit, the 10% income tax bracket for low-income workers, and the deduction for state and local sales taxes paid. The expiration dates in those Acts were inserted in order to avoid Byrd Rule points of order.