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 on June 10, 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 a budget for the Federal Government in its entirety.

The notion of establishing a centralized process for federal budgeting was discussed and debated even prior to 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 with some Representatives and Senators expressing reservations about centralized control, or the idea of limitations to Congressional budget powers.

Congress reviewed carefully as World War I progressed and large governmental expenditures raised concerns about budget methodology. A bill was introduced during the Wilson administration to require 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 circumstances 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 Harding called 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. (See 31 U.S.C. §§ 11041105.) 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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OMB Circular A-11

15.2 Why is the Budget and Accounting Act important?

Before enactment of this law in 1921, there was no annual centralized budgeting in the Executive Branch. Federal Government agencies usually sent budget requests independently to congressional committees with no coordination of the various requests in formulating the Federal Government’s budget. The Budget and Accounting Act required the President to coordinate the budget requests for all Government agencies and to send a comprehensive budget to the Congress. It created the Bureau of the Budget, now the Office of Management and Budget (OMB), to help the President implement these requirements. It also required the President to include certain information in the budget. The Congress has amended the requirements many times and has codified them as Chapter 11, Title 31, U.S. Code. These are some of the requirements:

  •  “On or after the first Monday in January but not later than the first Monday in February of each year, the President shall submit a budget of the United States Government for the following fiscal year.”

  • “Each budget shall include a budget message and summary and supporting information. The President shall include in each budget the following….” The provision goes on to list about thirty items, such as expenditures and receipts for the past year through the fourth year following the budget year, information on debt, financial information, and information on employment levels.

  • “Under regulations prescribed by the President, each agency shall provide information required by the President in carrying out this chapter. The President has access to, and may inspect, records of an agency to obtain information.”

  • “Estimated expenditures and proposed appropriations for the legislative branch and the judicial branch…shall be submitted to the President before October 16 of each year and included in the budget by the President without change.”

OMB Circular No. A–11 (2016) Pages 1 and 2 of Section 15


Budget and Accounting Act of 1921 (Additional Information)


U.S. Congress, The Need for a National Budget: Message from the President of the United States, Submitted by President William Howard Taft, (H. Doc. 62-854) June 27, 1912


Budget Amendment


Budget Authority