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Research Publication No. 32
Foreword In 1951 the late Roswell Magill, then president of the Tax Foundation, reported to a joint committee of the Congress upon an analysis by the Committee on Federal TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Policy which revealed that only about one-third of the President’s $71.6 billion budget for fiscal year 1952 was “clearly and definitely under annual congressional review and control.” Mr. Magill was referring to control of expenditures through the regular annual appropriation process.
In the quarter of a century since Mr. Magill’s report, the spending control problem has become much more complex. Today about three-fourths of all Federal government spending — primarily domestic assistance outlays — are classified as “relatively uncontrollable” by either Congress or the Executive Branch under existing laws.
Some of the consequences of this condition are apparent. Fiscal policy flexibility, in times when such flexibility is desirable, is severely limited. Presidential and congressional options on new program initiatives are restricted. Efforts toward spending restraint must be concentrated in the declining proportion of budget outlays which are controllable. These and other effects increase the difficulties of avoiding large budget deficits, even though revenues are increased significantly.
In enacting the Congressional Budget and Impoundment Control Act of 1974, Congress provided for major reforms in its budgetary procedures designed to increase its control over Federal outlay and receipt totals. At the same time, by placing strict limitations upon his authority to impound or reserve appropriated funds, Congress has reduced the discretionary powers of the President, even with respect to the controllable portion of budget outlays. These reforms are still to be tested; but unless Congress, working with the Executive Branch, exerts a determined effort to regain effective annual control wherever possible over presently uncontrollable spending, and/or resist enacting new uncontrollable programs, the intended reforms may prove to be more shadow than substance.
To accept the proposition that three fourths of Federal government outlay s are actually and totally beyond control would, of course, bestow upon the programs involved a “sacred cow” status, and further erode public confidence in government. Fortunately, though the technicalities involved are imposing, most of these outlays are subject to varying degrees of annual control through the legislative process. A greater public awareness of this fact, and of the dimensions of the problem, can help in generating official actions looking to its solution.
Maynard H. Waterfield, Manager of the Foundation’s Washington office, had primary responsibility for research and preparation of this report.
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