Revision of the Federal Budget System

Report Outline
Proposals for Change in Budget System
Adoption of Federal Budget System
Formulation of the Executive Budget
Extraordinary and Supplementary Budgeting
Action by Congress on Executive Budget

Proposals for Change in Budget System

Influential members of both parties in Congress have announced that they will seek action at the 1940 session on plans to overhaul the federal budget system. Projected changes would require submission by the President of a “balanced budget,” restrict executive discretion in formulating the government's financial program, and alter legislative procedure for review of the budget.

Senator Tydings (D., Md.), a member of the Senate Appropriations Committee, gave notice December 22 that he would offer an “automatic budget-balancing law” for adoption at the next session of Congress. It would prohibit Congress from appropriating more money in any one year than the government expects to receive from all sources in that year, unless concurrent legislation is enacted to raise additional revenue and liquidate the deficit within 15 years.

The present budget system is a farce [Tydings said].…The country needs a new budget law badly. … One administration can spend billions of dollars it does not have, and artificially create the mirage of prosperity. However, the next administration not only has to pay the cost of government during its tenure of office but for the preceding administration as well when the time comes to balance the budget. Congress should not be permitted to appropriate more money than it takes in, in peacetime, without providing at once, or over a period of years, the means of raising revenue necessary to liquidate the new debt.