Gramm–Rudman–Hollings Balanced Budget Act

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Balanced Budget and Emergency Deficit Control Act of 1985

Other short titles	Gramm–Rudman–Hollings Deficit Reduction Act of 1985
Long title	A joint resolution increasing the statutory limit on the public debt.
Acronyms (colloquial)	BBEDCA
Nicknames	Deficit Control Act
Enacted by	the 99th United States Congress
Effective	December 12, 1985
Citations
Public law	99-177
Statutes at Large	99 Stat. 1037
Codification
Acts amended	Congressional Budget and Impoundment Control Act of 1974
Titles amended	2 U.S.C.: Congress
U.S.C. sections amended	2 U.S.C. ch. 20 § 901
Legislative history
Introduced in the House as H.J.Res. 372 by Phil Gramm (R–TX), Warren Rudman (R–NH), Fritz Hollings (D–SC) on August 1, 1985 Committee consideration by Senate Finance Passed the House on August 1, 1985 (passed) Passed the Senate on October 10, 1985 (51-37) Reported by the joint conference committee on December 10, 1985; agreed to by the House on December 11, 1985 (271-154) and by the Senate on December 11, 1985 (61-31) Signed into law by President Ronald Reagan on December 12, 1985
Major amendments
Deficit Reduction Act of 2005 Budget Control Act of 2011 Fiscal Responsibility Act of 2023

The Gramm–Rudman–Hollings Balanced Budget and Emergency Deficit Control Act of 1985^[1] and the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987^[2] (both often known as Gramm–Rudman) were the first binding spending constraints on the federal budget.^[3]

After enactment, these Acts were often referred to as "Gramm-Rudman-Hollings I" and Gramm-Rudman-Hollings II) after U.S. Senators Phil Gramm (R-Texas), Warren Rudman (R-New Hampshire), and Fritz Hollings (D-South Carolina), who were credited as their chief authors.

The term "budget sequestration" was first used to describe a section of the Gramm–Rudman–Hollings Deficit Reduction Act of 1985.

The Acts aimed to cut the United States federal budget deficit. This deficit is the amount by which expenditures by the federal government exceed its revenues each year and was at the time the largest in history in dollar terms. The Acts provided for automatic spending cuts ("cancellation of budgetary resources", called "sequestration") if the total discretionary appropriations in various categories exceed in a fiscal year the budget spending thresholds.^[4] That is, if Congress enacts appropriation bills providing for discretionary outlays in each fiscal year that exceed the budget totals, unless Congress passes another budget resolution increasing the budget amount, an across-the-board spending cut in discretionary expenditure is automatically triggered in these categories, affecting all departments and programs by an equal percentage. The amount exceeding the limit is held back by the Treasury and not transferred to the agencies specified in the appropriation bills.^[5]

Under the 1985 Act, allowable deficit levels were calculated in consideration of the eventual elimination of the federal deficit. If the budget exceeded the allowable deficit, across-the-board cuts were required. Directors of the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) were required to report to the Comptroller General regarding their recommendations for how much must be cut. The Comptroller General then evaluated these reports, made his own conclusion, and gave a recommendation to the President, who was then required to issue an order effecting the reductions recommended by the Comptroller General unless Congress made the cuts in other ways within a specified amount of time.

The Comptroller General is nominated by the President from a list of three people recommended by the presiding officers of the House and Senate. He is removable only by impeachment or a joint resolution of Congress, which requires majority votes in both houses and is subject to a Presidential veto. Congress can give a number of reasons for this removal, including "inefficiency," "neglect of duty," or "malfeasance".

The House passed the 1985 bill by a vote of 271–154 and the Senate by 61–31, and President Ronald Reagan signed the bill on December 12, 1985.^[6]

On August 12, 1986, Representative Dan Rostenkowski introduced the Balanced Budget and Emergency Deficit Control Reaffirmation Act. The Senate passed the bill with two amendments by a vote of 36–35, and the House approved the Senate's first amendment by voice vote but rejected the second amendment. The Senate rescinded that amendment by voice vote and President Reagan signed the bill on August 21.^[7]

The process for determining the amount of the automatic cuts was found unconstitutional in the case of Bowsher v. Synar, (478 U.S. 714 (1986)) as an unconstitutional usurpation of executive power by Congress because the Comptroller General's function under the Act is the "very essence" of execution of the laws, which is beyond the power of a legislative body. It was noted: "Once Congress passes legislation, it can influence only its execution by passing new laws or through impeachment."

Congress enacted a reworked version of the law in the 1987 Act.^[8] Gramm–Rudman failed, however, to prevent large budget deficits.

The Budget Enforcement Act of 1990 supplanted the fixed deficit targets, which replaced sequestration with a PAYGO system, which was in effect until 2002.

Balanced budgets did not actually emerge until the late 1990s when budget surpluses (not accounting for liabilities to the Social Security Trust Fund) emerged. The budgets quickly fell out of balance after 2000 and have run consistent and substantial deficits since then.

• Budget deficit

• "S.1702 – Balanced Budget and Emergency Deficit Control Act of 1985". THOMAS. Library of Congress. September 25, 1985.^{[permanent dead link]}
• William G. Dauster, Budget Process Law Annotated: 1993 Edition. Washington, D.C.: Government Printing Office, 1993. ISBN 0-16-041726-0; "(BPLA (1993) Online)". 22 November 2016.
• Margaret H. McDermott and Bernard D. Reams, Deficit Control and the Gramm–Rudman–Hollings Act: The Legislative History of the Balanced Budget and Emergency Deficit Control Act of 1985 (P.L. 99-177) (W. S. Hein, 1986).
• "H.J.RES.372 – CRS Summary of Balanced Budget and Emergency Deficit Control Act of 1985". THOMAS. Library of Congress. December 10, 1985.^{[permanent dead link]}
• "Compliance Report For FY 1986: Balanced Budget and Emergency Deficit Control Act of 1985" (PDF). gao.gov/products/GAO/OCG-86-2. U.S. Government Accountability Office. March 31, 1986. OCLC 13492627.

• Balanced Budget and Emergency Deficit Control Act of 1985 part C as amended (PDF/details) in the GPO Statute Compilations collection