Congress’ Power of the Purse

Congress holds the power of the purse. That is, they decide where to spend federal money. The Constitution expressly provides that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” The process is convoluted, opaque, and subject to exceptions and personalities. The purpose of this article is to provide the big picture, show the immense importance of these decisions, and the impact on the Legislative Branch.

Congress controls a massive amount of money. For Fiscal Year 2020 (October 1, 2019 to September 30, 2020), the budget is about $4.7 Trillion. $2.8 Trillion is mandatory spending (legally required, like Social Security payments). $1.4 Trillion is discretionary spending (Congress can spend the money on anything). About $500 Billion is interest on the national debt. And, of course, there’s emergency spending, like the recently enacted Coronavirus legislation totaling trillions of dollars (with more to come). 

The president has no role in the budget constitutionally, but Congress gave the president a statutory duty in 1921. The president must submit a budget to Congress no later than the second Monday in February. The president often misses this deadline (see Budget and Appropriations Timeline) and, at times, fails to submit a proposed budget at all. The Budget is often ignored by Congress. After the president submits a budget to Congress, it coincides with or is followed by agencies submitting Congressional Budget Justifications and Executive Branch leaders testifying before Congress

While the president’s budget indicates the president’s policy priorities, Congress often disregards the presidential request. Congress passes its own Budget Resolution, which provides Congress’ vision for federal spending and the topline numbers for appropriations, but is not signed by the president and therefore not binding law. The appropriations legislation then starts in the House and must eventually pass both the House and Senate and be signed by the President. When this doesn’t happen by the start of the fiscal year (again, October 1), the government will shut down or be funded temporarily through continuing resolutions, which generally speaking keep current funding levels steady on an interim basis (although they can change funding levels). The use of CRs is happening with increasing frequency

Historically, the role of Congress in setting the federal budget has varied as power has shifted between the executive and legislative branches. In 1973-74, President Nixon refused to disburse $12 Billion of congressionally-appropriated funds. In the context of this overreach, Watergate, and concerns over the deficit, Congress made an effort to reclaim its power of the purse and passed the Congressional Budget and Impoundment Control Act in 1974 to take power over the federal budget back from the president. 

The 1974 Act strengthened and centralized Congress’ budget authority. It created standing budget committees in the House and Senate, established the Congressional Budget Office (so Congress had their own advisor rather than relying on the executive for budgetary information), and moved the beginning of the fiscal year from July 1 to October 1 (giving Congress more time to act since their session starts in January).

In theory, the House and Senate pass a concurrent Budget Resolution that “lays out Congress’ budgetary priorities and goals and the changes in revenues and spending necessary to achieve these goals” for the next 10 years. That resolution allocates spending across Congressional committees and sets the topline number for discretionary spending — the 302(a) allocation (so named because it is from section 302(a) of the 1974 Act). This topline number is conceptually divided into two parts — 302(a) allocations for Defense and Nondefense spending. It is also divided into twelve unequal parts, for each of the appropriations subcommittees. In practice, the appropriations committees receive their allocations, which can be split between defense and nondefense spending. 

In practice, senior Congressional leadership and the President likely decide the 302(a) allocations. The decision on these numbers is not transparent or subject to public debate. At a recent House Budget hearing on protecting Congress’ power of the purse, Ranking Member Womack noted, “it is grossly antithetical” to kick the decision on 302(a) allocations to four people (the leaders of the House and Senate) instead of passing a budget resolution. 

Once Appropriations has the topline number, it divides that number up to 12 subcommittees, as mentioned above. Those numbers – the 302(b) allocation (so named because it is from section 302(b) of the 1974 Act) – are then divided up within each subcommittee. 

10 of those subcommittees roughly correlate to the federal agencies or cabinet positions (e.g., Homeland Security, Interior, Transportation). The Legislative Branch has its own subcommittee (and therefore 302(b) allocation). The Judiciary Branch is subsumed in the Financial Services and General Government subcommittee.

The single Defense subcommittee gets nearly half of all federal discretionary spending — (approximately $700 Billion for its 302(b) allocation). 10 subcommittees (again, that roughly correlate with executive branch agencies) get as a group over 49%. Then the Legislative Branch (Congress and its support agencies) gets about 1/2 of 1 percent. 

The labels for each subcommittee may be misleading. “Defense” spending may go to other federal agencies (the Department of Energy receives substantial funding from DOD), and other subcommittees may spend money on defense. These categories can be an arbitrary political distinction. Likewise, it is important to remember that the Legislative Branch is more than Congress. That 1/2 of 1 percent funds (among other things) $464 Million for the US Capitol Police, $696 Million for the Architect of the Capitol, and $716 Million for the Library of Congress ($504 Million for the Library, $92 Million for the Copyright Office, and $120 Million for the Congressional Research Service). 

Yet Congress is responsible for making all of the laws and providing oversight for the entire federal government, including the gargantuan DOD (again, nearly $700 Billion in actual dollars). 

On April 10, the House Appropriations Chair Nita Lowey (D-NY) assigned subcommittee leaders the topline 302(b) allocations (that is, she divided up the $1.4 Trillion of discretionary funds to the 12 subcommittees). Setting these numbers is incredibly important. It decides policy, yet the process to determine these allocations is opaque at best and very few Members of the House have actual power to influence the outcome. In addition, Congress historically underfunds its own operations, undermining the branch that is most representative and accessible to the people. 

This year is even more complicated as Congress has already approved trillions of dollars in coronavirus relief with more to come. While the House has changed its rules to allow for proxy voting and limited remote deliberations, the Senate has not. Public access to the Capitol is severely limited and not all hearings are online, so these important decisions are hidden from view and take place without public participation. 

The appropriations process is convoluted and controlled by very few people behind closed doors. These decisions impact policy and set the very foundation of our government. As Congress continues to underfund its own operations, it undermines its ability to serve the people, address complex modern issues, and provide oversight of the immense federal bureaucracy. 

This year, we have seen an effort in the House to increase the Legislative Branch’s funding by 5%. While the House passed 10 of its 12 appropriations bills, it did not pass the Legislative Branch Appropriations bill. The Senate hasn’t passed any appropriations bills. With the days running out until the end of the fiscal year, the likely budget crunch will mean that a handful of people ultimately end up, yet again, making the big decisions.