Federal Budget Process Reform in the 111th
Congress: A Brief Overview
Robert Keith
Specialist in American National Government
May 20, 2010
Congressional Research Service
7-5700
www.crs.gov
R40113
CRS Report for Congress
P
repared for Members and Committees of Congress

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Federal Budget Process Reform in the 111th Congress: A Brief Overview

Summary
Procedural change is a recurrent feature of federal budgeting, although the scope and impact of
changes may vary from year to year. In order to advance their budgetary, economic, or political
objectives, both Congress and the President regularly propose and make changes to the federal
budget process. This report briefly discusses the context in which federal budget process changes
are made and identifies selected reform proposals by major category. The identification of reform
proposals in this report is not intended to be comprehensive.
A variety of sources give rise to the interest in budget process reform, including Congress, the
President, state and local government officials, and special commissions, among others. Congress
initiated a thorough overhaul of its internal budget process and ameliorated ongoing conflicts
with President Richard Nixon over the withholding of appropriated funds through enactment of
the Congressional Budget and Impoundment Control Act of 1974. President Bill Clinton, like
many Presidents before him, requested line-item veto authority, which Congress granted in 1996
in the Line Item Veto Act (but was invalidated by court action in 1998). State and local
government officials were instrumental in securing passage of the Unfunded Mandates Reform
Act of 1995. Finally, special commissions, such as the President’s National Commission on
Terrorist Attacks Upon the United States (the “9/11 Commission”), have recommended changes
in budget structure and procedure that have been adopted.
The federal budget process is rooted in constitutional mandates, statutory requirements, House
and Senate rules and practices, and administrative directives. Thus, there are several avenues
through which budget process changes can occur. Either chamber may focus on changes in its
rules, thereby minimizing the time needed to effect the change and the scale of potential conflict
needed to be resolved, but at the same time possibly minimizing the impact of the changes.
Broader and potentially more consequential changes, involving statutes or constitutional
amendments, may entail a larger set of participants in the decision-making (i.e., the other
chamber, the President, state legislatures), likely escalating the effort required to reach agreement
and lengthening the time period before the changes take effect.
Legislative changes in the budget process may take the form of freestanding bills or joint
resolutions (e.g., the Line Item Veto Act), or may be incorporated into other budgetary legislation,
such as acts raising the debt limit (e.g., the Balanced Budget and Emergency Deficit Control Act
of 1985, also referred to as the Gramm-Rudman-Hollings Act), implementing reconciliation
instructions (e.g., the Budget Enforcement Act of 1990), or providing annual appropriations (e.g.,
revisions in the Senate’s cap on discretionary appropriations). Budget process changes also may
be included in the annual budget resolution (a concurrent resolution), or in simple House or
Senate resolutions.
This report will be updated as developments warrant.

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Federal Budget Process Reform in the 111th Congress: A Brief Overview

Contents
The Context of Budget Process Reform....................................................................................... 1
Sources of Budget Process Reform Proposals ........................................................................ 1
Avenues of Reform ............................................................................................................... 3
Initial Budget Process Changes in the 111th Congress ............................................................ 4
Selected Budget Process Reform Proposals ................................................................................. 5
PAYGO Rules and Discretionary Spending Limits................................................................. 5
Statutory Enforcement Procedures................................................................................... 5
House and Senate PAYGO Rules..................................................................................... 7
Earmarking ........................................................................................................................... 8
Congressional Budget Resolution and Reconciliation ............................................................ 9
Annual Appropriations Process ........................................................................................... 10
Item Veto/Expanded Rescission Authority ........................................................................... 11
Commission/Task Force on Long-Term Budgetary Issues.................................................... 12
Capital Budgeting ............................................................................................................... 14
Biennial Budgeting ............................................................................................................. 14

Appendixes
Appendix. Citations to Selected Budget Process Laws............................................................... 15

Contacts
Author Contact Information ...................................................................................................... 16

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Federal Budget Process Reform in the 111th Congress: A Brief Overview

rocedural change is a recurrent feature of federal budgeting, although the scope and impact
of changes may vary from year to year. To advance their budgetary, economic, or political
P objectives, both Congress and the President regularly propose and make changes to the
federal budget process. This report briefly discusses the context in which federal budget process
changes are made and identifies selected reform proposals by major category. The identification
of reform proposals in this report is not intended to be comprehensive; other Congressional
Research Service reports discuss different aspects of budget process reform in more detail.1
The Context of Budget Process Reform
Sources of Budget Process Reform Proposals
A variety of sources give rise to the interest in budget process reform, including Congress, the
President, state and local government officials, and special commissions, among others. Congress
initiated a thorough overhaul of its internal budget process and ameliorated ongoing conflicts
with President Richard Nixon over the withholding of appropriated funds through enactment of
the Congressional Budget and Impoundment Control Act of 1974. President Bill Clinton, like
many Presidents before him, requested line-item veto authority, which Congress granted in 1996
in the Line Item Veto Act (but was invalidated by court action in 1998). State and local
government officials were instrumental in securing passage of the Unfunded Mandates Reform
Act of 1995. Finally, special commissions, such as the President’s National Commission on
Terrorist Attacks Upon the United States (the “9/11 Commission”), have recommended changes
in budget structure and procedure that have been adopted. (Citations to laws identified in this
report are provided in the Appendix.)
Outside of Congress itself, the President probably has been the most important source of budget
process reform proposals over the years. The President’s annual budget submission to Congress
typically includes at least several proposed changes in budget procedure.2 In his final budget
submission, for example, President George W. Bush advocated proposals involving such matters
as enhanced controls over mandatory and discretionary spending, stricter standards for emergency
spending designations, changes in how baseline calculations are made, earmark reform, line-item
veto, biennial budgeting, a joint budget resolution, and an automatic continuing resolution.3
In late November 2008, President-elect Barack Obama signaled his interest in pursing budget
process reform during the 111th Congress when he announced that he intended to nominate Peter
Orszag to the position of director of the Office of Management and Budget (OMB) and Rob
Nabors to the position of OMB deputy director. In making the announcement, President-elect

1 CRS reports on different budget process reforms are listed under the appropriate terms under “Current Legislative
Issues” on the CRS homepage; other pertinent CRS reports may be accessed in several ways, including by subject term
and author searches on the CRS homepage. Also, see CRS Report RL31478, Federal Budget Process Reform: Analysis
of Five Reform Issues, by James V. Saturno, for a discussion of selected reforms proposed in past years.
2 In recent years, the President’s budget process reform proposals have been included in a separate chapter of the
Analytical Perspectives volume.
3 See the Office of Management and Budget, Budget of the United States Government, Fiscal Year 2009, Analytical
Perspectives, February 4, 2008, Chapter 15 (Budget Reform Proposals), pp. 215-225.
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Federal Budget Process Reform in the 111th Congress: A Brief Overview

Obama stated: “In these challenging times, when we are facing both rising deficits and a sinking
economy, budget reform is not an option. It is an imperative.”4
Perhaps more than any other factor over the years, concern about the size and persistence of the
federal deficit has animated calls for budget process reform. The federal deficit, which amounted
to $162 billion for FY2007 and $455 billion for FY2008, jumped to $1.414 trillion (9.9% of
Gross Domestic Product) for FY2009 in the face of a significant economic downturn. In its
January 2010 report presenting baseline budget projections, the Congressional Budget Office
(CBO) estimated the baseline deficit at $1.3 trillion for FY2010 and $1.0 trillion for FY2011, and
continuing at historically high levels through FY2020.5
The dramatic increase in the deficit, its likely persistence at high levels in the short term, and its
unsustainable path in the long run, already has fueled strong interest in procedural reform. On
January 14, 2009, several private organizations, including the Peter G. Peterson Foundation, the
Pew Charitable Trusts, and the Committee for a Responsible Federal Budget, announced a joint
enterprise (the Peterson-Pew Commission on Budget Reform) to foster changes in the budget
process.6
The next day, President-elect Obama stated in an interview with the Washington Post that he
would convene a “fiscal responsibility summit” prior to submitting the FY2010 budget to
Congress, focusing on control of long-term obligations for entitlement programs.7 The summit
was held on February 23, 2009, and included a session on budget process reform in which, among
other issues, the notion of different types of commissions to formulate long-term budget solutions
was addressed.8 (The following year, President Obama created the National Commission on
Fiscal Responsibility and Reform by executive order, as discussed later in this report.)
In his budget submission for FY2010, President Obama pledged to cut the deficit in half by the
end of his first term and asked Congress to act on various changes in the budget process that
would, in part, contribute to this goal. The proposed changes included, among other things,
restoration of the statutory “pay-as-you-go” requirement (with significant modifications),
expedited legislative procedures for the consideration of certain presidential rescission proposals,
and a limit on advance appropriations; similar proposals were included in his FY2011 budget.9

4 The Office of the President-Elect, “President-elect Barack Obama announces Office of Management and Budget
Director and Deputy Director,” press release, November 25, 2008, available on the Obama transition website at
http://change.gov/newsroom.
5 Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2010 Through 2020, January 2010,
Summary Table 1 (CBO’s Baseline Budget Outlook), p. xii.
6 Information regarding the commission may be found on the websites of the organizations, at http://www.pgpf.org,
http://www.pewtrusts.org, and http://www.newamerica.net/programs/fiscal_policy#.
7 Michael D. Shear, “Obama Pledges Entitlement Reform,” Washington Post, January 16, 2009, p. A-1.
8 Activities during the summit are summarized in The White House, Fiscal Responsibility Summit, March 20, 2009; see
the discussion of budget process reform on pp. 28-33. The report is available on the White House website at
http://www.whitehouse.gov/assets/blog/Fiscal_Responsibility_Summit_Report.pdf.
9 See the Office of Management and Budget, Budget of the United States Government: (1) Fiscal Year 2010, Analytical
Perspectives, May 7, 2009, Chapter 15 (Budget Reform Proposals), pp. 215-220; and (2) Fiscal Year 2011, Analytical
Perspectives, February 1, 2010, Chapter 13 (Budget Process), pp. 143-155.
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Avenues of Reform
The federal budget process is rooted in constitutional mandates, statutory requirements, House
and Senate rules and practices, and administrative directives.10 Thus, there are several avenues
through which budget process changes can occur. Either chamber may focus on changes in its
rules, thereby minimizing the time needed to effect the change and the scale of potential conflict
needed to be resolved, but at the same time possibly minimizing the impact of the changes.
Broader and potentially more consequential changes, involving statutes or constitutional
amendments, may entail a larger set of participants in the decision-making (i.e., the other
chamber, the President, state legislatures), likely escalating the effort required to reach agreement
and lengthening the time period before the changes take effect.
Legislative changes in the budget process may take the form of freestanding bills or joint
resolutions (e.g., the Line Item Veto Act), or may be incorporated into other budgetary legislation,
such as acts raising the debt limit (e.g., the Balanced Budget and Emergency Deficit Control Act
of 1985, also referred to as the Gramm-Rudman-Hollings Act), implementing reconciliation
instructions (e.g., the Budget Enforcement Act of 1990), or providing annual appropriations (e.g.,
revisions in the Senate’s cap on discretionary appropriations).11 Budget process changes also may
be included in the annual budget resolution (a concurrent resolution), or in simple House or
Senate resolutions.
In some years, changes made in the budget process were comprehensive. The Budget and
Accounting Act of 1921 established the executive budget process, the Congressional Budget Act
of 1974 created the congressional budget process, and the Balanced Budget and Emergency
Deficit Control Act of 1985 and the Budget Enforcement Act of 1990 imposed additional budget
controls on a temporary basis. In other years, such as 1987, 1993, and 1997, existing budget
process statutes were modified in a less comprehensive fashion and extended for limited periods.
At other times, Congress and the President enacted statutes changing only selected aspects of the
budget process; the Line Item Veto Act (of 1996) is one example. Finally, in every Congress, the
House and Senate have modified existing rules and practices affecting the budget process and
sometimes instituted new ones.
Like other types of legislation, statutes making changes in the budget process are subject to
review by the judiciary. In several major instances, the Supreme Court has declared procedures
established by Congress and the President to be invalid on constitutional grounds. The one-House
legislative veto (found in many acts, including the Impoundment Control Act of 1974), for
example, was invalidated by I.N.S. v. Chadha in 1983, 103 S.Ct. 715 (1983); the triggering of a
sequester by the Comptroller General under the Gramm-Rudman-Hollings Act was invalidated by
Bowsher v. Synar in 1986, 478 U.S. 714 (1986); and the Line Item Veto Act was invalidated by
Clinton v. City of New York in 1998, 118 S.Ct. 2091 (1998). In the wake of court decisions,
Congress and the President may successfully modify legislation (e.g., 1987 legislation modifying
the Gramm-Rudman-Hollings Act, vesting the authority to trigger a sequester in the OMB

10 For an overview of the federal budget process, see CRS Report 98-721, Introduction to the Federal Budget Process,
by Robert Keith.
11 A comprehensive listing and description of major budget process laws enacted over the past century (and full legal
citations to them) is provided in CRS Report RL30795, General Management Laws: A Compendium, by Clinton T.
Brass et al.
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Federal Budget Process Reform in the 111th Congress: A Brief Overview

director), but sometimes persistent efforts to enact corrective legislation do not succeed (e.g.,
line-item veto proposals).
Given that nearly every committee of the House and Senate has jurisdiction over legislation with
a budgetary impact, interest in the budget process and proposals to change it radiate throughout
both chambers. Although jurisdiction over executive and congressional budget procedures
generally resides with the Budget, Oversight and Government Reform, and Rules Committees in
the House, and with the Budget, Homeland Security and Governmental Affairs, and Rules and
Administration Committees in the Senate, other House and Senate committees, particularly the
appropriations and tax committees, may exert influence over budget process changes affecting
their legislative interests.
Initial Budget Process Changes in the 111th Congress
The first opportunity in a new Congress to change budget procedures usually occurs on the first
or second day of session. The House, which unlike the Senate is not a continuous body, must
adopt its rules anew at the beginning of each Congress. Traditionally, the House adopts its rules
from the previous Congress, with modifications (that may include changes in the budget process),
in the form of a simple resolution.
On January 6, 2009, the House adopted the opening-day rules package for the 111th Congress,
H.Res. 5, by a vote of 242-181. The measure included several changes in the budget process,
including modifications to the “pay-as-you-go” rule and earmarking rules that had been adopted
at the beginning of the 110th Congress.12 Some of the specific changes made by H.Res. 5 are
discussed below under the applicable areas of reform.
A second opportunity for budget process changes typically comes in March and April, when the
two chambers consider the annual budget resolution for the fiscal year beginning on October 1.
Under authority referred to as the “elastic clause” (in Section 301 of the 1974 Congressional
Budget Act), either chamber may include procedural provisions in the annual budget resolution
that are consistent with the purposes of the 1974 act.
Various procedural provisions were incorporated into the FY2010 budget resolution (S.Con.Res.
13), on which the House and Senate reached final agreement on April 29, 2009, principally in a
separate title (Title IV—Budget Process). These provisions included House and Senate
restrictions on the use of advance appropriations and emergency designations, procedures to
adjust budget levels to accommodate program integrity initiatives, and a Senate point of order
pertaining to short-term deficits.13
Congress also may express its interest in the budget process in venues that do not involve
legislative activity. In the past, consideration in the Senate of nominations to the position of OMB
director and deputy director often has afforded the opportunity to discuss budget process
reforms.14 Nominations to the position of OMB director and deputy director are considered,

12 For a detailed discussion of these changes in the budget process, see CRS Report RL34149, House Rules Changes
Affecting the Congressional Budget Process Made at the Beginning of the 110th Congress, by Bill Heniff Jr.
13 The House and Senate reached final agreement on the FY2010 budget resolution by agreeing to the conference report
on S.Con.Res. 13 (H.Rept. 111-89; April 27, 2009), by a vote of 233-193 in the House and 53-43 in the Senate.
14 During the 110th Congress, for example, the Senate considered the nomination of Jim Nussle to be OMB director,
(continued...)
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pursuant to S.Res. 445 (108th Congress), by both the Senate Budget Committee and the Senate
Homeland Security and Governmental Affairs Committee.
The Senate Budget Committee and the Senate Homeland Security and Governmental Affairs
Committee held hearings on January 13 and January 14, 2009, respectively, regarding President-
elect Obama’s choices for director (Peter Orszag) and deputy director (Rob Nabors) of OMB. The
prospective nominees discussed the need to review a variety of budget process reform proposals,
addressing such concerns as the growth of entitlement spending over the long run and the need to
better integrate budgeting and performance evaluation activities in OMB.15
Both President Obama and Congress continued to address budget process reform in 2010, during
the second session of the 111th Congress. As previously mentioned (and discussed below),
President Obama created the National Commission on Fiscal Responsibility and Reform by
executive order and enacted a major procedural reform into law, the Statutory Pay-As-You-Go
Act of 2010 (also discussed below). The consideration of other budget process reforms is
pending.
Selected Budget Process Reform Proposals
Among the various budget process reform proposals that have been or may be considered during
the 111th Congress, many pertain to categories such as internal “pay-as-you-go” (PAYGO) rules in
the House and Senate; restoration of the statutory discretionary spending limits and PAYGO
process; earmarking; and modifications to budget resolution, reconciliation, and appropriations
processes. To illustrate the diversity of proposals, these and other categories of reform are
discussed briefly below.
PAYGO Rules and Discretionary Spending Limits
Statutory Enforcement Procedures
From 1991 through 2002, federal budget legislation was constrained by statutory limits on
discretionary spending and a PAYGO requirement for direct spending (sometimes referred to as
mandatory spending) and revenue legislation.16 Both of these budget constraints were established
by the Budget Enforcement Act of 1990, which amended the Balanced Budget and Emergency
Deficit Control Act of 1985. The discretionary spending limits and the PAYGO requirement were
enforced by sequestration, a process by which violations were remedied by automatic, across-the-
board spending cuts. These statutory budget constraints were extended in 1993 and 1997 (and

(...continued)
confirming his appointment on September 4, 2007 (by a vote of 69-24). Although budget process changes were not a
prominent part of the debate in committee and on the floor, a PAYGO requirement and other procedural matters were
discussed briefly.
15 Kerry Young, “Orszag to Suggest Program Cuts in February Budget Outline,” CQ Today, January 14, 2009; and
Jonathan Nicholson, “OMB Chief-Designate Orszag Plans February Budget Outline Submission,” Bureau of National
Affairs, Daily Report for Executives, January 14, 2009.
16 The statutory PAYGO process in effect during that period is explained in CRS Report R41005, The Statutory
PAYGO Process for Budget Enforcement: 1991-2002, by Robert Keith.
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further modified by other legislation), but the discretionary spending limits expired at the end of
FY2002 and the PAYGO requirement effectively was terminated in December 2002.
In recent years, there has been considerable interest in restoring, and possibly making significant
modifications to, the statutory enforcement procedures. Some observers have argued that the
budget enforcement mechanisms associated with the Budget Enforcement Act promoted fiscal
discipline throughout the 1990s, and contributed to the federal government achieving a total
budget surplus in FY1998—the first in almost 30 years—and the following three fiscal years.
With the return of sizeable deficits in the short term due to economic decline and in the long term
due principally to the growth of Medicare, Medicaid, and Social Security, some have argued for
restoring such statutory mechanisms to strengthen fiscal discipline. A principal point of
contention with regard to the PAYGO requirement has been whether it should apply to revenue
legislation. While some maintain that revenue reductions should not face the hurdle of a statutory
PAYGO requirement because they are needed to fuel growing revenues, others assert that
accommodating further revenue reductions in a PAYGO requirement (i.e., by applying it only to
direct spending) likely would undermine efforts to achieve significant deficit reduction, in part by
encouraging some spending initiatives to be reformulated as revenue-losing provisions.
The FY2008 and FY2009 budget resolutions included sense-of-the-Congress statements that a
statutory PAYGO requirement should be reinstated to help control the deficit (Section 508 of
S.Con.Res. 21 and Section 515 of S.Con.Res. 70, respectively), but the 110th Congress did not
take any action in this regard.
On June 9, 2009, President Obama announced that he would submit a PAYGO proposal to
Congress, the Statutory Pay-As-You-Go Act of 2009, that would restore a process applying to
both direct spending and revenue legislation.17 The House responded to the President’s proposal
first, passing a bill (H.R. 2920) the following month and incorporating it into several other
measures toward the end of the session. In January 2010, the Senate added a statutory PAYGO
proposal to a measure increasing the debt limit (H.J.Res. 45); the House concluded action on the
measure in early February, and President Obama signed it into law on February 12, 2010, as P.L.
111-139, the Statutory Pay-As-You-Go Act of 2010 (Statutory PAYGO Act).18
The Statutory PAYGO Act establishes a process intended, as Section 2 of the act states, “to
enforce a rule of budget neutrality on new revenue and direct spending legislation.” The
budgetary effects of revenue and direct spending provisions enacted into law, including both costs
and savings, are recorded by the OMB director on two PAYGO scorecards covering rolling 5-year
and 10-year periods (i.e., in each new session, the periods covered by the scorecards roll forward
one fiscal year). The budgetary effects of PAYGO measures are determined by statements inserted
into the Congressional Record by the chairmen of the House and Senate Budget Committees and
referenced in the measures. As a general matter, the statements are expected to reflect cost
estimates prepared by CBO. If this procedure is not followed for a PAYGO measure, then the
budgetary effects of the measure are determined by OMB.

17 The legislative text of the proposal, along with a section-by-section summary and related documentation, is provided
on the OMB website at http://www.whitehouse.gov/omb/news_060909_paygo/.
18 For a summary and legislative history of the act, see CRS Report R41157, The Statutory Pay-As-You-Go Act of
2010: Summary and Legislative History, by Robert Keith.
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Shortly after a congressional session ends, OMB finalizes the two PAYGO scorecards and
determines whether a violation of the PAYGO requirement has occurred (i.e., if a debit has been
recorded for the budget year on either scorecard). If so, the President issues a sequestration order
that implements largely across-the-board cuts in nonexempt direct spending programs sufficient
to remedy the violation by eliminating the debit. Many direct spending programs and activities
are exempt from sequestration. If no PAYGO violation is found, no further action occurs and the
process is repeated during the next session.
In the case of the statutory limits on discretionary spending, one issue has been the period of time
for which they should be established. Advocates of two- or three-year limits argue that the five-
year framework employed earlier leads to limits that are too unrealistic in the later years (due to
changing circumstances). Limits that are unrealistically high fail to impose discipline, while
limits that are unrealistically low encourage evasions through gimmickry and other means.
Shorter term limits, they argue, are more apt to be realistic and effective constraints on spending.
During the 111th Congress, the Senate has considered, but rejected, several amendments (offered
by Senators Jeff Sessions and Claire McCaskill) that would have established discretionary
spending limits as part of the Congressional Budget Act of 1974.
House and Senate PAYGO Rules
As a supplement to the statutory PAYGO requirement, the Senate established its own PAYGO
rule in 1993 as a provision in the FY1994 budget resolution.19 The rule, which operates
differently than the statutory requirement, has been modified several times.
Over the years, several unsuccessful efforts were made to establish a PAYGO rule in the House. A
PAYGO rule was contained in the House’s rules package for the 110th Congress, in Section 405 of
H.Res. 6. Title IV was considered separately and adopted by the House on January 5, 2007, by a
vote of 280-152 (all five titles of H.Res. 6 were adopted by the House and took effect on that
day). The House’s PAYGO rule imposes a bar against revenue and direct spending legislation that
increases a deficit (or reduces a surplus) over different time periods (i.e., the 6-year and 11-year
periods beginning with the current fiscal year) and makes no exception for revenue or direct
spending proposals assumed in the budget resolution.
In May 2007, the Senate revised its PAYGO rule as part of the FY2008 budget resolution (Section
201 of S.Con.Res. 21). The revised Senate rule conforms closely to the House rule, applying to
the same two time periods and eliminating any exception for revenue or direct spending proposals
assumed in the budget resolution; it expires on September 30, 2017. In addition, the revised
Senate PAYGO rule is buttressed by other Senate rules designed to discourage legislation that
increases the deficit in both the short and long terms; these rules can be waived only by the
affirmative vote of three-fifths of the membership (60 Senators, if no seats are vacant).
The implementation of the House and Senate PAYGO rules in the 110th Congress was associated
with considerable controversy regarding issues of compliance and the need to effectively waive
the rules for the consideration of some major legislation, especially bills dealing with the housing
crisis and economic downturn in a manner that substantially increases the deficit in the short

19 An overview of statutory and rules-based PAYGO procedures is provided in CRS Report RL34300, Pay-As-You-Go
Procedures for Budget Enforcement, by Robert Keith.
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term. In response to some of these concerns, modifications to the House PAYGO rule were
included in Section 2(j) of H.Res. 5, which was adopted on January 6, 2009. The changes include
(1) an alignment with the Senate PAYGO rule so that both Houses use the same CBO baseline for
enforcement; (2) a procedure to allow one House-passed measure to pay for spending in a
separate House-passed measure, if the two are linked at the engrossment stage; and (3) a
procedure for designating in legislation emergency exceptions to the rule.20
Earmarking
Reform of congressional earmarking practices in appropriations, direct spending, and tax
legislation (and accompanying reports) was addressed by the House and Senate with the adoption
of new rules in the 110th Congress. In late 2008, House Republicans rejected a proposed
moratorium with respect to earmark requests through mid-February 2009; a special 10-member
panel of House Republicans was expected to report on further earmark reforms sometime in
2009.21 Some changes in earmark rules and practices occurred at the beginning of the 111th
Congress, as discussed below, but additional reforms in this area may be addressed as the session
unfolds.
Although definitions of earmarking vary, an earmark generally is considered to be an allocation
of resources to specifically targeted beneficiaries, either through earmarks of discretionary or
direct spending, limited tax benefits, or limited tariff benefits. Earmarks may be proposed by the
President or may be originated by Congress. Concern about recent earmarking practices arose
because some of them were inserted into legislation or accompanying reports without any
identification of the sponsor, and the belief that many earmarks were not subject to proper
scrutiny and diverted resources to lesser-priority items or items without sufficient justification,
thereby contributing to wasteful spending or revenue loss.
The essential feature of earmark reform proposals is a bar against the consideration of legislation
that does not identify individual earmarks and the Members who sponsored them, the distribution
of such information in a way that makes it readily available before the legislation is considered,
and certification by earmark sponsors that neither they nor their spouses have a financial interest
in the earmark.
Earmark reform provisions, requiring the identification of earmarks and their sponsors before
legislation may be considered and imposing other restrictions on the use of earmarks, were
contained in Title IV (Section 404) of the House’s rules package for the 110th Congress, H.Res. 6,
adopted on January 5, 2007. The earmark reform provisions were added to the rules of the House
as Clause 9 of Rule XXI and Clauses 16 and 17 of Rule XXIII. The earmark identification
requirement applies to all legislation; if no earmarks are included, then a statement to that effect
must be supplied.

20 The changes are explained in “Section-by-Section of Rule Changes – 111th Congress,” undated, available on the
Democratic website of the House Rules Committee at http://www.rules.house.gov/111/LegText/
111_hres_ruleschnge_smmry.pdf.
21 See (1) David Clarke and Alan K. Ota, “House GOP Backs Away from Earmark Moratorium,” CQ Today,
November 20, 2008; and (2) Catharine Richert, “House Republicans Create Anti-Earmark Panel,” CQ Today,
December 19, 2008.
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Later in the session, on June 18, 2007, the House adopted H.Res. 491, a measure dealing (for the
remainder of the 110th Congress) with the consideration of conference reports on regular
appropriations acts containing earmarks that were not submitted to the conference by either
chamber. The measure established a point of order intended to curtail the practice of “air-
dropping” earmark provisions, not first passed by either chamber, into appropriations acts at the
conference stage. The point of order is disposed of by the question of consideration.
On January 18, 2007, the Senate adopted S. 1, ethics reform legislation. Title I of the act, referred
to separately as the Legislative Transparency and Accountability Act of 2007, included earmark
reform provisions requiring the prior identification of earmarks, and their sponsors, in all
spending and revenue legislation, and various other constraints on earmarking practices. Senator
Robert C. Byrd, the chairman of the Senate Appropriations Committee, announced on April 17
that the committee would follow a policy of requiring earmark disclosure for the FY2008
appropriations cycle, similar to the requirements set forth in S. 1, pending further action on the
measure.
On July 31, 2007, the House passed S. 1 with an amendment under the suspension of the rules
procedure, by a vote of 411-8. The Senate agreed to the House amendment, by a vote of 83-14, on
August 2, thus clearing the measure. President George W. Bush signed the bill into law on
September 14, 2007, as P.L. 110-81 (121 Stat. 735-776), the Honest Leadership and Open
Government Act of 2007. In its final form, P.L. 110-81 included earmark reform provisions in
Section 521 (Congressionally Directed Spending), which were added to the Standing Rules of the
Senate as a new Rule XLIV.
At the beginning of the 111th Congress, on January 6, 2009, the chairmen of the House and Senate
Appropriations Committees, Representative David Obey and Senator Daniel Inouye, jointly
announced further changes in earmark practices. The changes, which are effective for FY2010
appropriations acts, include (1) a requirement that Members post information on their earmark
requests at the time they are made; (2) the dissemination of earmark disclosure tables at the time
of subcommittee action; and (3) a reduction of earmarks to 50% of the FY2006 level for non-
project-based accounts and a cap at 1% of discretionary spending in subsequent years.22
In addition, on January 6, the House also adopted changes in its earmark rules as part of its action
on H.Res. 5. Section 2(i) of the resolution incorporated the prohibitions of H.Res. 491 of the prior
Congress (restricting the use of “air-dropped” earmarks) into Clause 9 of House Rule XXI.
Congressional Budget Resolution and Reconciliation
The Congressional Budget Act of 1974 requires the House and Senate to adopt a budget
resolution each year, setting forth aggregate spending and revenue levels, and spending levels by
major functional categories, for at least five fiscal years. The budget resolution, which is a
concurrent resolution and therefore does not become law, provides an overall budget plan that
guides congressional action on individual spending, revenue, and debt-limit measures. The 1974
act includes an optional reconciliation procedure that provides for the development and
consideration of revenue, spending, and debt-limit legislation to carry out budget resolution

22 House Appropriations Committee, “House and Senate Appropriations Committees Announce Additional Reforms in
Committee Earmark Policy,” press release, January 6, 2009, available on the committee’s website at
http://appropriations.house.gov/pdf/Obey-InouyeRelease01-06-09.pdf.
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policies; enforcement of budget resolution policies also occurs by means of various points of
order that may be raised on the floor. Budget resolutions and reconciliation measures are
considered under expedited procedures in both chambers.
Some Members of Congress, as well as the President, have argued that the budget resolution
would be more effective in enforcing budget policy by making it a joint resolution requiring the
President’s approval. A joint budget resolution would directly involve the President in
congressional actions on the budget early in the process. If the President and Congress reach an
impasse on a joint budget resolution, however, some are concerned that action on spending and
revenue bills might be significantly delayed.
In the Senate, a 50-hour limit on the consideration of a budget resolution applies under the
expedited procedures. When the time limit expires, many amendments may still be pending; they
are brought up for disposition by vote but without any time left to debate them, a situation
referred to as “vote-arama.” The Senate typically ameliorates the consequences of a “vote-arama”
by allowing a minimal amount of debate time (e.g., two minutes per side) for each amendment
under unanimous consent, but proposals have been offered in past Congresses in an effort to
eliminate “vote-aramas” altogether. The Senate Budget Committee examined the phenomenon of
“vote-arama” and other issues relating to the consideration of budget resolutions in a hearing on
February 12, 2009.23
During the 1980s and much of the 1990s, reconciliation was used principally as a means of
reducing the deficit. While some reconciliation measures included spending increases or revenue
reductions, the net impact of the legislation was to reduce the deficit. In recent years, the
reconciliation process has been used mainly to expedite the passage of legislation that increases
the deficit, primarily through revenue reduction.
Some Members in the House and Senate have argued that the reconciliation process should be
altered so that it may be used only to reduce the deficit. As part of the changes in the budget
process included in the rules package for the 110th Congress, H.Res. 6, the House included a ban
(in Section 402) against the consideration of a budget resolution containing reconciliation
directives that would increase the deficit or reduce the surplus over the six-year or 11-year
periods beginning with the current fiscal year. The Senate included a similar ban for the same two
time periods in the FY2008 budget resolution (Section 202 of S.Con.Res. 21).
Because reconciliation legislation is considered in the Senate under expedited procedures, with a
20-hour time limit for debate, the issue of “vote-arama” applies as well. The proposals offered in
the past to deal with this situation with respect to the consideration of budget resolutions also
have applied to the consideration of reconciliation bills.
Annual Appropriations Process
Discretionary spending, which amounts to more than one-third of federal spending, is provided
each year in regular, supplemental, and continuing appropriations acts. Discretionary spending
funds most of the routine operations of federal agencies.

23 Access to a video of the hearing and the prepared statements of witnesses is available on the Senate Budget
Committee (Majority) website at http://budget.senate.gov/democratic/hearingstate.html.
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Considerable attention was focused during the past two Congresses on Appropriations Committee
structure. At the beginning of the 109th Congress, the House and Senate Appropriations
Committees consolidated and realigned their subcommittees in order to streamline the
appropriations process, facilitate the timely enactment of appropriations bills, and minimize the
likelihood of using consolidated appropriations acts. Both committees disbanded their VA-HUD
Subcommittee, and the House Appropriations Committee disbanded two others (District of
Columbia and Legislative Branch), leaving 12 Senate and 10 House appropriations
subcommittees.
At the start of the 110th Congress, further adjustments in subcommittee alignments of the House
and Senate Appropriations Committees were made, leaving each committee with 12
subcommittees. Among the changes made, each committee established a Financial Services and
General Government Subcommittee and the House Appropriations Committee reestablished a
Legislative Branch Subcommittee.
Later during the 110th Congress, the House adopted H.Res. 35, a measure establishing a Select
Intelligence Oversight Panel of the House Appropriations Committee. The panel is charged with
studying and reviewing intelligence activities and the intelligence budget and making
recommendations in this area; it does not exercise jurisdiction over appropriations legislation for
these purposes. The panel includes Members of the House Appropriations Committee and the
House Permanent Select Committee on Intelligence. This action represented the House’s response
to one of the recommendations of the 9/11 Commission. Although the Senate may address the
commission’s recommendation with respect to intelligence activities in the 111th Congress, no
further major realignments in subcommittee structure of either committee are expected at this
time.
When a regular appropriations act or a continuing resolution is not in place after the start of the
fiscal year on October 1, an agency does not have the legal authority to incur obligations in order
to function and must shut down, resulting in the furlough of federal employees and disruptions in
service. To prevent a government shutdown (or the threat of one) due to the expiration of funding,
some Members have proposed establishing an automatic continuing resolution. An automatic
continuing resolution would provide an uninterrupted source of funding for discretionary
activities in the event one or more regular appropriations acts are not enacted by the start of a new
fiscal year. Although such a device could eliminate or reduce employee furloughs and service
disruptions, some view an automatic continuing resolution as substituting a formulaic response
for deliberate and informed decision making.
Item Veto/Expanded Rescission Authority
When a spending or revenue act is sent to the President for his consideration, he must approve or
veto the measure in its entirety. After a spending measure has become law, the President may
impound funds through rescission, which cancels the funding, or deferral, which delays the
expenditure of funds. Congress exercises its responsibilities in this area through procedures
established under the Congressional Budget and Impoundment Control Act of 1974 and the
regular legislative process.
Advocates of greater budget discipline proposed the Line Item Veto Act, which became law in
1996 (P.L. 104-130) but was struck down by the Supreme Court on June 25, 1998, in Clinton v.
City of New York, 118 S.Ct. 2091 (1998). Under this act, the President was authorized to strike
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individual items of discretionary spending, direct spending, and certain limited tax benefits in any
law.
In the years following the Supreme Court decision, various proposals have been made in
Congress to grant item veto authority to the President in a manner that passes constitutional
muster or to otherwise expand his rescission powers. President George W. Bush, in 2006,
proposed a “legislative line-item veto,” under which Congress would have to consider proposed
rescissions in an expedited manner. The House passed H.R. 4890, the Legislative Line Item Veto
Act of 2006, on June 22, 2006, by a vote of 247-172; the Senate did not act on the measure. The
Senate considered a legislative line-item veto proposal in the 110th Congress, in the form of an
amendment offered by Senator Judd Gregg, first to S. 1 and then to minimum wage legislation,
H.R. 2; in both instances, the Gregg amendment ultimately was withdrawn.
As part of the budget process proposals included in his FY2010 and FY2011 budget submissions,
President Obama asked Congress to establish expedited legislative procedures for the
consideration of certain rescission proposals offered by the President.
Although advocates of the item veto or expanded rescission powers for the President contend that
such tools will enhance budgetary discipline, critics suggest that their usefulness for budgetary
discipline is overstated and that they may adversely affect the balance of power between
Congress and the President over budget decisions.
Commission/Task Force on Long-Term Budgetary Issues
Considerable attention has been focused recently on the large imbalances projected in the federal
budget over the long term, particularly with respect to the Social Security, Medicare, and
Medicaid programs. One device advocated by some as a means of compelling action on long-
term budgetary issues is a bipartisan commission or task force empowered to recommend
legislative changes that would correct or mitigate the imbalances.24
Advocates of the commission or task force approach argue that it would be an effective means of
surmounting political opposition and achieving an end result because of the bipartisan nature of
the group, the avoidance of preconditions with respect to policy options (i.e., all options would be
“on the table”), and the action-forcing nature of expedited legislative procedures. Adherents to the
use of regular legislative procedures to deal with these issues maintain that while they may entail
a more time-consuming and difficult route, they afford more openness and participation in the
decision-making process and are more likely to lead to widespread acceptance of the results.
During the 110th Congress, a leading example of such a proposal was the Bipartisan Task Force
for Responsible Fiscal Action Act of 2007 (S. 2063, introduced by Senators Kent Conrad and
Judd Gregg, and H.R. 3655, introduced by Representatives Jim Cooper and Frank Wolf). The bill
would have established a bipartisan, 16-member task force (including the Treasury Secretary and
another member from the executive branch, and seven members each from the House and
Senate). The task force would have been charged with developing legislative recommendations
(by December 9, 2008) to significantly improve the long-term balances in the federal budget,

24 For background on this issue, see CRS Report R40986, Proposals for a Commission to Address the Federal
Government’s Long-Term Fiscal Situation, coordinated by Clinton T. Brass, Matthew Eric Glassman, and Jacob R.
Straus.
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including the balances in Social Security and Medicare; the recommendations would have needed
to be approved by at least 12 of the task force members. Under the proposal, the
recommendations would have been considered by the House and Senate during the 2009
congressional session (during the first year of the new presidential administration), under
expedited legislative procedures that would limit consideration to 100 hours in each chamber and
bar amendments.25
In the 111th Congress, Representatives Cooper and Wolf introduced a measure recommending a
similar approach—H.R. 1557, the Securing America’s Future Economy Commission Act, also
referred to as the SAFE Commission Act; the bill was introduced in the Senate by Senator George
Voinovich as S. 1056. Senators Conrad and Gregg did not immediately introduce their Bipartisan
Task Force bill, but advocated its approach in the media.26
On November 10, 2009, the Senate Budget Committee held a hearing on the matter, “Bipartisan
Process Proposals for Long-Term Fiscal Stability.”27 Senators Conrad and Gregg introduced S.
2853, the Bipartisan Task Force for Responsible Fiscal Action Act of 2009, on December 9, 2009.
On January 26, 2010, during consideration of the debt-limit measure (H.J.Res. 45) that became
the vehicle for the Statutory PAYGO Act of 2010, competing amendments to establish a
Bipartisan Task Force for Responsible Fiscal Act, offered by Senator Kent Conrad and Judd
Gregg (S.Amdt. 3302) and Senator Max Baucus (S.Amdt. 3306), were considered. The vote on
the Conrad-Gregg amendment was 53-46, and having failed to secure the minimum 60 votes
required by a unanimous consent agreement, it was withdrawn; the second amendment, offered
by Senator Baucus, was withdrawn by unanimous consent without a vote.
Following the Senate’s rejection of the Conrad and Baucus amendments, President Obama
elected to create a commission by executive order. On February 18, 2010, the President signed
Executive Order 13531, creating the National Commission on Fiscal Responsibility and
Reform.28 Under the executive order, the commission “is charged with identifying policies to
improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long
run.” The commission must vote no later than December 1, 2010 on a final report regarding
recommendations to achieve its mission, and at least 14 affirmative votes are required for the
final report to be issued. With a membership composed of 18 members—10 Democrats and 8
Republicans—the 14-vote threshold ensures that any recommendations issued by the Commission
would be supported by at least half the members from each party.

25 The proposal was explained by Senators Conrad and Gregg in the Congressional Record (daily ed.), September 18,
2007, pp. S11662-S11665.
26 See Kent Conrad and Judd Gregg, “A Fiscal Battle on Two Fronts,” Washington Post, January 5, 2009, available on
the Senate Budget Committee website at http://budget.senate.gov/democratic/documents/2009/
Wash%20Post_A%20Fiscal%20Battle.pdf.
27 A video presentation of the hearing is available on the website of the Senate Budget Committee at
http://www.senate.gov/fplayers/CommPlayer/commFlashPlayer.cfm?fn=budget111009&st=870.
28 Federal Register, vol. 75, no. 35, Tuesday, February 23, 2010, “National Commission on Fiscal Responsibility and
Reform,” pp. 7927-7928. The commission’s website is http://www.fiscalcommission.gov/.
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Capital Budgeting
Unlike many states, the federal government does not employ separate capital and operating
budgets; instead, all revenue and spending is merged together into a “unified” budget.
Information on capital budgeting, however, has been provided for many years as a separate
chapter in one of the volumes of the President’s budget. Interest in adopting a capital budget for
the federal government has been examined from time to time. In 1999, a commission established
by President Bill Clinton pursuant to Executive Order 13037 (March 3, 1997), the President’s
Commission to Study Capital Budgeting, recommended several changes in budgetary practice but
did not recommend the adoption of a formal capital budget.
Advocates of capital budgeting generally regard it as a means of boosting resources for
infrastructure needs (e.g., surface transportation and aviation systems struggling to meet capacity
and deteriorating water infrastructure), overcoming an alleged bias against capital spending in the
current budget process, and rationalizing decision-making in this area. Critics of capital budgeting
assert that shifting a significant portion of the budget to an accrual basis (in which costs are
apportioned over the lifetime of an asset rather than accounted for up front) would unduly
complicate the budget process and undermine the task of setting priorities over the full range of
governmental activities.
As a first step toward improved budgeting for infrastructure needs, some have advocated more
information gathering and analysis in this area. One proposal introduced in the 110th Congress,
for example, would have created a bipartisan National Commission on the Infrastructure of the
United States charged with studying, among other things, “the methods used to finance the
construction, acquisition, rehabilitation, and maintenance of public works improvements
(including general obligation bonds, tax-credit bonds, revenue bonds, user fees, excise taxes,
direct governmental assistance, and private investment).”
Biennial Budgeting
While many authorizations are enacted on a multiyear cycle, Congress acts on budget resolutions
and appropriations acts annually. Biennial budgeting proposals would change the cycle under
which Congress acts on budget resolutions and appropriations acts (and annual authorization acts)
to two years.
Biennial budgeting proposals are intended to reduce the amount of time Congress spends on
budgetary legislation, to allow more time for congressional oversight of federal agencies and
programs, and generally to provide for more efficient budget decision-making. In the view of
some, however, a biennial approach could impair Congress’s ability to respond quickly to
changing economic and budgetary circumstances.
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Appendix. Citations to Selected Budget
Process Laws
Budget and Accounting Act of 1921
P.L. 67-13; June 10, 1921; 42 Stat. 20-27.
Budget and Accounting Procedures Act of 1950
P.L. 81-784; September 12, 1950; 64 Stat. 832-845.
Congressional Budget and Impoundment Control Act of 1974
P.L. 93-344; July 12, 1974; 88 Stat. 297-339.
Balanced Budget and Emergency Deficit Control Act of 1985
Title II of P.L. 99-177 (Increasing the Statutory Limit on the Public Debt); December 12, 1985;
99 Stat. 1038-1101.
Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987
Title I of P.L. 100-119 (Increasing the Statutory Limit on the Public Debt); September 29, 1987;
101 Stat. 754-784.
Budget Enforcement Act of 1990
Title XIII of P.L. 101-508 (Omnibus Budget Reconciliation Act of 1990); November 5, 1990; 104
Stat. 1388-573 through 630.
Omnibus Budget Reconciliation Act of 1993
P.L. 103-66; August 10, 1993; 107 Stat. 683-685 (Title XIV).
Unfunded Mandates Reform Act of 1995
P.L. 104-4; March 22, 1995; 109 Stat. 48-71.
Line Item Veto Act
P.L. 104-130; April 9, 1996; 110 Stat. 1200-1212.
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Budget Enforcement Act of 1997
Title X of P.L. 105-33 (Balanced Budget Act of 1997); August 5, 1997; 111 Stat. 677-712.
Statutory Pay-As-You-Go Act of 2010
Title I of P.L. 111-139; February 12, 2010; 124 Stat. 8-30.

Notes: Major portions of selected budget process laws are codified as follows:
2 U.S.C. 621, et seq. (Congressional Budget and Impoundment Control Act of 1974, as amended);
2 U.S.C. 900, et seq. (Balanced Budget and Emergency Deficit Control Act of 1985, as amended); and
31 U.S.C. 1101, et seq. (Budget and Accounting Act of 1921, as amended).

For additional information on these and other budget process laws, see CRS Report RL30795, General Management
Laws: A Compendium, by Clinton T. Brass et al..

Author Contact Information

Robert Keith

Specialist in American National Government
rkeith@crs.loc.gov, 7-8659


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