§068. Pub. L. 067–13 – Budget and Accounting Act of 1921

Public Laws

Budget and Accounting Act of 1921
Public Law 67–13

Budget and Accounting Act of 1921; Pub. L. 67-13; 42 Stat. 20; June 10, 1921; S. 1084 (67th Congress)

The Budget and Accounting Act of 1921 (BAA 1921) was signed into law by President Warren G. Harding on June 10, 1921. The law was the first legislative attempt at giving the United States a unified method of collecting and distributing resources for the functioning of the government. The BAA 1921 mandated the president annually submit a unified request for budgetary resources to the Congress. It created the “Bureau of the Budget”, which later became the Office of Management and Budget (OMB). The Bureau gave the President the information necessary to prepare the budget proposal. The law also established the General Accounting Office (later renamed the “Government Accountability Office) to assist Congress in overseeing the President and the Executive Branch. By giving the President a more significant role in determining budgetary priorities, the BAA 1921 set the stage for later efforts by Congress to increase it’s formal role in the budget process.

The movement toward a budget system in which the executive branch had greater control over federal spending had been building for years. It had its roots in the progressivism of the early 20th century. Progressive reformers sought to rationalize government through the elimination of corruptible interests and political machines. To stem the power of the political machines and challenge government corruption, especially on the municipal level, reformers placed more trust and authority in executive and administrative institutions. In doing so, they promoted the accumulation of power at the executive level.

Reforming the budget process was given great attention, including the Commission on Economy and Efficiency under President William Howard Taft, during 1910-12. Both parties called for a reform of the budget and the establishment of a more unified system, and included in both the Republican presidential campaign in 1916 and 1920 and the Democratic campaign in 1920. In 1919, hearings were held in both the House and Senate on the issues, and legislation was approved by Congress. The initial legislation, though, was vetoed by President Woodrow Wilson. He believed giving Congress the authority to fire the presidentially appointed Comptroller General of the U.S., head of the newly created GAO, was unconstitutional. When Warren G. Harding became President, he signed the BAA 1921, and appointed Charles Gates Dawes as the first budget director. Dawes instituted several reforms in how government agencies kept records and accounted for revenue and expenditures.