that would expand in the future.14 Roosevelt and Truman distinguished between their personal staffs concerned with their partisan interests and the duties of BOB to the institution of the presidency.15 Truman distinguished his policy needs from BOB’s functions; as he said, “Give me your best professional analysis. I’ll make the political judgment.”16
After World War II, President Eisenhower, in contrast to President Truman, did not have an active policy agenda, and subordinated BOB’s management functions to budget control. He was determined to use BOB as his instrument of spending control, and BOB delivered. The huge deficits of WWII, amounting to 20 to 30 percent of GDP, were brought down and the budget ran surpluses or small deficits through the 1950s.17 In this era, the federal budget process became more predictable and the “regular order” of the mid-twentieth-century budgetary process was established.
Aaron Wildavsky characterized the regular budgetary process of the 1950s as “classical budgeting.” Budgetary outcomes were marked by incrementalism, with agencies protecting their base budgets and focusing their efforts on the annual increments they hoped to gain from appropriations committees in Congress. Budgeting in this era was an iterative, bottom-up process conducted within an annual budget cycle. The BOB sent out budget guidance in the spring; agencies made their budget requests to departments in the summer, which forwarded them to BOB in the fall, which were then subjected to the director’s review (with possible appeals to the president). The BOB then consolidated the president’s budget proposal for the following fiscal year and submitted it to Congress early the next year.18
This program-driven executive branch budgeting fit well with the congressional budget process, and BOB staff coordinated with appropriations committee staffs on the Hill. The president’s budget request was disaggregated and considered by appropriations committees in both Houses, then subjected to conference committee compromises. Richard Fenno, in The Power of the Purse, documented the appropriations committees’ decisionmaking in the regular order from the late 1940s to the early 1960s, the classical era in the budgetary process.19 During this era, most of the budget was “controllable” and went through the appropriations committees, and BOB’s influence on the overall budget was considerable. Expenditures that were not controlled through appropriations consisted of “borrowing authority” or expenditures from trust funds, such as Social Security. These “entitlements” and “uncontrollables” were called “backdoor spending” and were a relatively minor portion of total spending, but they would overwhelm budget making in the second half of the twentieth century.
Presidents Kennedy and Johnson saw BOB as too hidebound by its traditional role of cutting budgets and did not consider it well suited to their activist policies of the New Frontier and Great Society.20 They pushed BOB to more effectively support their creative agendas and began to centralize policymaking in the White House staff. This began the transition from bottom-up budgeting to an era of top-down budgeting, beginning as policy centralization in the White House and leading to the decline of the regular budgetary process and the domination of budgeting by deficits. Kennedy and Johnson also began to use Keynesian-inspired fiscal policy more consciously.
Presidents needed BOB because it had a monopoly on the technical information necessary to make informed budgetary decisions. The BOB’s influence was based on the budget examiners’ intimate familiarity with the programs and agencies they oversaw. The institutional staff of BOB grew from thirty in the 1930s to 156 in 1940; World War II pushed its numbers to 567 in 1945. At this time, BOB constituted 80 percent of the total EOP staff, but in 2019 it was 28 percent.21 BOB directors became top-level advisors to presidents. As the size of the White House staff grew after 1970 and control of policymaking was centralized, they would be more closely integrated with presidents’ political advisers. The role of political appointees became more important, and their numbers grew after the creation of OMB.
THE SECOND FIFTY YEARS: DEFICITS, POLARIZATION, AND BREAKDOWN OF THE REGULAR ORDER
When President Nixon created the Office of Management and Budget in 1970, he intended to make it more responsive to presidential priorities through an overlay of more political appointees. Nixon was successful, and in the 1980s David Stockman took OMB power to a new level by effectively harnessing OMB to implement President Reagan’s budget priorities. Presidents George H. W. Bush and Bill Clinton both increased taxes and cut spending, leading to a string of four balanced budgets at the turn of the century. After that, deficit spending spurred by the Great Recession led to deficits of more than $1 trillion and a national debt approaching 80 percent of GDP.
1970s: Creation of OMB and the 1974 Budget Act
As a conservative (for that era) chief executive facing a Democratic Congress, President Nixon wanted tighter control of the executive branch, and he saw the budget bureau as a key to that control. Nixon’s approach was to centralize policymaking in the White House at the expense of Cabinet secretaries, and to reorganize the budget bureau. Consequently, on July 1, 1970, Reorganization Plan No. 2 transformed BOB into the Office of Management and Budget. Nixon distinguished policymaking, a White House function, from administration: “The Domestic Council will be primarily concerned with what we do; the Office of Management and Budget will be primarily concerned with how we do it and how well we do it.”22 The reality, however, was that OMB would play an even more important role in presidential policymaking after 1970.
In previous years, the director and deputy directors had always been appointed by the president, though the deputy was most often elevated from the career ranks. To emphasize presidential control of policy, the new OMB director, George Shultz, was given an office in the West Wing of the White House. In addition, political control was pushed deeper into the budget bureau. Whereas in BOB, eight career program division heads reported directly to the director, in OMB the division heads reported to four new, politically appointed program associate directors (PADs).23
Members of Congress felt that, under Nixon, OMB was becoming too powerful, particularly because of Nixon’s aggressive impoundment of funds.24 A bipartisan committee report said OMB had become a “super department with enormous authority over all of the activities of the Federal Government. Its Director has become, in effect, a Deputy President who exercises vital Presidential powers.”25 Consequently, in 1974, Congress passed a law requiring the director and deputy director of OMB be confirmed by the Senate.
As part of its reaction to the “imperial presidencies” of Johnson and Nixon, Congress enacted a number of laws to constrain presidential power. The budgetary dimension of this reassertion of congressional prerogatives was the Congressional Budget and Impoundment Control Act of 1974. The act created a new congressional budget process that was intended to return the power of the purse to Congress. Deficits had been increasing, and there was no single place in Congress where the budget as a whole was considered in order to balance spending, taxing, and borrowing.
To remedy the lack of coherence, the 1974 Budget Act created budget committees in both Houses and a new budgetary process that would allow Congress to set national priorities and produce coherent fiscal policies. The new process called for the budget committees to report in the spring a concurrent resolution that would set totals for budget authority, outlays, and revenues, as well as the resulting surplus/deficit. After Congress agreed to these broad outlines, the authorizing and appropriating committees would make specific spending decisions.