§015b. (CB) Budget and Accounting Act of 1921 (2024)

Cyclopedia of Congressional Budget Law

Budget and Accounting Act of 1921

The Budget and Accounting Act of 1921 (Pub. L. 67–13) was signed into law onJune10, 1921 by President Warren G. Harding, after having been vetoed by President Calvin Coolidge in the 66th Congress.The Act required, for the first time, the President submit to Congress abudget for the Federal Government in its entirety.

The notion of establishing a centralizedprocess for federal budgeting was discussed and debated even priorto the administration of President William H. Taft. In 1911, the Commission on Economy and Efficiency studied the matter and recommended the adoption of a national budget system. Congress did not immediately act on the to recommendations withsome Representatives and Senatorsexpressing reservations about centralized control, or the idea of limitations to Congressional budget powers.

Congress reviewed carefully asWorld War I progressed and large governmental expenditures raised concerns about budget methodology. A bill was introduced during theWilson administration torequire 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 newly established Comptroller position, the chief government auditor. He objected to the Congress having too much power over the circ*mstances whoever held that position could be fired.

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 Hardingcalled 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 duplication.

• 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.

GAO Glossary of Terms and Definition (September 2005)

Budget and Accounting Act of 1921

Enhanced budgetary efficiency and aided in the performance of constitutional checks and balances through the budget process. It required the President to submit a national budget each year and restricted the authority of the agencies to present their own proposals. (See31 U.S.C. §§ 1104,1105.) With this centralization of authority for the formulation of the executive branch budget in the President and the newly established Bureau of the Budget (now the Office of Management and Budget (OMB)), Congress also took steps to strengthen its oversight of fiscal matters by establishing the General Accounting Office, renamed the Government Accountability Office (GAO) in 2004.

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