Budget and Accounting Act of 1921
Legislation that delineated the responsibility and authority
for the annual federal budget between the executive and legislative branches of the federal government.
Before the passage of the Budget and Accounting Act of
1921, the president and Congress each had sought to exercise
increased control over the budget process. The Budget and
Accounting Act of 1921 eliminated that recurring struggle by
establishing specific mechanisms and procedures to be used.
It calls for the Bureau of the Budget (now the Office of
Management and Budget) to accept requests from government departments for funds. This information is reviewed
before it goes to the president, who then formulates the
annual budget ultimately submitted to Congress. Because
Congress receives the proposed budget from the president,
legislators may adjust it, but the budget’s overall structure
remains shaped by the executive branch. Between 1921 and
1974, Congress had to contend with the power of the president to appropriate funds at whatever rate he deemed appropriate—a power that has often led to a delay or termination
of funded programs. Congress finally corrected this flaw with
the passage of the Budget and Impoundment Control Act of
32 Bretton Woods Agreement1974. Another issue that has arisen as a result of this budget
process involves the inconsistency between the spending
budget and revenue budget. Because the two budgets are
arrived at separately, the spending budget often exceeds
annual revenue projections—a trend that contributes to
deficit spending.
The Budget and Accounting Act also established the
General Accounting Office (GAO—an agency that conducts
independent audits of government expenditures), which
reports to Congress.