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Budget and Accounting Act

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Acts, Bills, and Laws, June 10, 1921

The idea of creating a regular process for federal budgeting dates to the Taft administration. In 1911, the Commission on Economy and Efficiency studied the matter and recommended the adoption of a national budget system. However, Congress was slow to warm to the proposal; individual legislators liked the idea of budgetary restraints on others, but wanted free rein for their own pet projects.

Congress began to view the issue more seriously during World War I, when vast governmental expenditures raised concerns about efficiency. A bill was introduced during the Wilson administration that would require the president to prepare annual budgets for final disposition by the House and Senate. Wilson, a leading proponent of government reform, vetoed the measure. He objected to a provision that prevented the president from removing the comptroller, the chief government auditor, from office.

In the postwar period, Republicans regained control of the White House and Congress, and pursued their goal of reducing the cost of government and increasing its efficiency. Warren Harding called a special session of congress and urged, among other things, the passage of the budget bill. The measure gained approval in June, retaining the provision opposed by Wilson, and provided for the following:

• Created the Bureau of the Budget; its director was to be a presidential appointee. The bureau was originally part of the Treasury Department, but in 1939 it was transferred to the Executive Department.

• Required that the Director of the Budget examine all budget requests from Congress, seek economies, and remove duplicates.

• Required the president to submit a budget proposal and a statement of the government’s financial condition to Congress annually. The federal fiscal year was to run from July 1 through June 30 of the following year.

• Established the General Accounting Office under the control of the Comptroller General. The GAO's function was to conduct audits of government accounts.

The overall aim of this legislation was to centralize the budget process. In the past, budget matters had been assigned to a variety of Congressional committees and no central control existed.

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See other domestic legislation during the Harding administration.