fundamentally of a political nature, and, in an era demanding administrative speed and efficiency, presidential discretion over funds is imperative. Hence, an author tells us:

The struggle between the President and Congress over impounded funds is essentially political. The decisive appeal is not to legal principles and Court decisions but to constituencies and agency support

. . . Since the President lacks an item veto, he must impound the unwanted funds to preserve his budgetary objectives and maintain control over his own executive officials."

Another constitutional authority suggests: "The answer is not to be deduced from the Constitution itself but is to be decided on the grounds of policy. This, in turn, means that the President can and may withhold expenditure of funds to the extent that the political milieu in which he operates permits him to do so.""" We are told that impoundment is "en essential instrument for protecting budgetary policy and avoiding unnecessary and costly programs" and that "Presidents exercise this power with considerable restraint and circumspection.""" But who is to determine what programs are unnecessary, or when the President has used circumspection in freezing funds? Surely the President alone, or, worse still, some lower-echelon official within one of the executive agencies should not.

9958

Proponents of this point of view seem to confuse the nature of the budgetary process with the impounding issue. The distinction is that legislative determination of appropriations is a process of bargaining and persuasion; once the appropriations are passed, however, it becomes the constitutional obligation of Congress "to compel the funds to be expended." Politics and bargaining, yes, when it comes to deciding the merits among competing requests for scarce resources; politics and bargaining, no, when the laws of the land are to be carried out. Given the President's veto and his obvious influence over the whole budgetary process, there is no need for him to obstruct the intent of the Constitution or subvert the tradition of balanced government by challenging Congress' most important instrument for monitoring the executive branch."

III. CONCLUSION

Naturally, an evaluation of the impoundment question will reflect to some extent the value structure of the investigator. However, the empirical

58. S. HUNTINGTON, supra note 52, at 15.

59. Professor Reagan writes: "[I]f the legislature doesn't legislate vigorously, why should it bother to meet at all? So runs a commonly accepted standard for evaluating Congress' performance. A more sensible criterion for deciding how effectively Congress has acted is this: how well has Congress monitored the bureaucracy? How active has it been in criticizing, prodding and pushing the

60-337 - 71 - 25

evidence analyzed here indicates that Congress should assume its larger responsibility. The powers of the President are now vast and growing; congressional power over the purse is one of Congress' few real means for controlling the federal bureaucracy. Still, the executive branch continues to impound funds, increasingly invading the domestic realm to deprive Congress of its constitutionally imposed duty to control public policy. The President has the higher responsibility, in the long run, of maintaining the Congress as the strongest legislature in the world. He will fail in this responsibility if he treats with disdain the appropriations bills passed by Congress.

To prevent such an occurrence, the Congress has recourse, in the last extremity, to the process of impeachment, though this reprisal is clearly too harsh to be practical. More realistically, Congress can deny funds requested by the President for programs he may strongly favor, and, in this manner, bring pressure on the Chief Executive to implement congressional intent in other areas. This political leverage is frequently utilized by Congress, though not often in the public view. It amounts to individuals or groups of legislators reaching private understandings with the executive, often without alluding to a specific bargain. If Congress is to maintain its status as a separate and equal branch of our government in the face of increasing presidential usurpation in the appropriations area, this technique may have to be studied, refined, and employed more often and more effectively in the future. As judicial review is unlikely, and impeachment is unworkable, it is suggested that congressional and scholarly thought be directed toward finding more effective ways to implement withholding procedures, and toward discovering and implementing other feasible remedies.

If any remedy is to assure that programs, once funded, are carried out as mandated, Congress must strengthen and regularize its review of executive compliance with congressional appropriations. At present, once an appropriation is passed, Congress usually loses sight of it. There is no regularized process for following an appropriation to see that it is spent in the legislatively prescribed manner. Moreover, the Budget Bureau, an executive agency, is unwilling to release to the Congress information on “reserved" funds. It is therefore apparent that for any remedy to be effective Congress must provide some means for obtaining the data necessary to determine whether to invoke that remedy. Legislation might be enacted requiring the Budget Bureau to inform Congress whenever funds are redepartments and agencies? This function, I maintain, is the essential task of Congress today. If it is performed well, then Congress has earned its keep, no matter what its legislative output in a given session." M. Reagan, Monitoring the Bureaucracy: Congress' Most Important Task, December, 1969, at 1-2 (unpublished manuscript) (emphasis in original).

60

60. See notes 21-22 supra.

served. The duties of the General Accounting Office, an arm of the legislative branch, might be augmented to include supervision of expenditures in order to identify when impoundment has occurred. The appropriations committees of Congress-indeed, all the committees-might be encouraged, or required, to follow appropriations through the executive branch to ensure that they have been allocated and spent as directed. Again, this is an area in which further study is necessary, and the suggestions put forth here should in no way be taken as all-encompassing.

The most desirable general resolution of the problem would be for the executive branch to discipline itself, recognizing that today's dominant presidential initiative in the legislative process must be matched by meaningful congressional control. For a President, or the agents who act in his name, to impound funds at their own discretion places both initiative and control of legislative policymaking in the hands of the executive branch, and forecasts a decline of constitutional government in this country. Absent such unilateral action by the executive, the problem of impoundment deserves far more congressional attention than it has received in the recent past.

THE INTER-UNIVERSITY CASE PROGRAM

CASES IN PUBLIC ADMINISTRATION AND POLICY FORMATION

ICP CASE SERIES: NUMBER 28

THE IMPOUNDING OF FUNDS BY THE BUREAU OF THE BUDGET

By J. D. Williams

(Published and distributed for the ICP by University of Alabama Press, University, Ala. (Nov. 1955).)

ACKNOWLEDGEMENT

Professor Williams' study was financed in part by the Research Fund of the University of Utah to which he expresses his appreciation.

This is the story of the efforts of the Budget Bureau to impound funds appropriated by Congress for public works projects during World War II in an effort to lessen inflationary pressures and to check the diversion of scarce materials from defense production. It is also a brief life history of a policy and it political and administrative repercussions.

If the makers of the Constitution had given the President an item veto over appropriation acts, the policy on which this case focuses would never have been initiated. Under the Constitution, Congress is empowered to pass laws and to appropriate money. But the public usually holds the President responsible— particularly at election time-for the nation's economic health as well as for its security. As the federal government's role in economic affairs increased during the 1930's, it was inevitable that a President would some day have to find a means to avoid spending money appropriated by Congress for projects which, in his view, were not in the national interest.

President Roosevelt was confronted with such a situation following his re-election to a third term in 1940. As the nation's economy shifted to defense production and as the price index began to rise, it became apparent that nonessential expenditures would have to be curtailed to prevent inflation and to check the diversion of scarce materials from defense production. For this reason the Budget Bureau drafted the following policy statement which the President included in his budget message of January 3, 1941:

"During this period of national emergency, it seems appropriate to defer construction projects that interfere with the defense program by diverting manpower and materials. Further, it is very wise for us to establish a reservoir of post-defense projects to help absorb labor that later will be released by defense industry."

However, the President's message did not stop congressmen from pressing for appropriations for public works projects in their own districts, just as it did not convince the constituents of these congressmen that their local public works projects, along with hundreds of others, constituted a threat to the defense effort or to the economic stability of the nation.

What, then, was the President to do when wartime appropriation acts, containing funds for local public works projects, came to him for signature? He could not veto the unwanted items without vetoing the entire appropriation. The Budget Bureau proposed a solution: put the funds for objectionable projects in a reserve, "frozen" so that the spending agency cannot touch them.

This case describes the formulation and adoption of the policy of impounding; it then depicts the efforts of the Bureau to impound funds for two projects and to deal with the strong congressional criticism which resulted; and it recounts how Congress and the Bureau ultimately sought to settle the matter. Development of Impounding Practices

Long before the establishment of the Bureau of the Budget, Congress had provided for an apportionment procedure in the Anti-Deficiency Acts of 1905 and 1906. Agencies were required by those laws to divide their annual appropriations into quarterly allotments or three-month expenditure ceilings which were not to be exceeded. In those quarterly allotments lay the rudiments of appropriation reserves, the sine qua non of the impounding process.

The original purpose of the allotment procedure was to prevent agencies from spending their entire appropriations before the end of the fiscal year; in other words, to prevent deficiencies. A second purpose to effect savings-was added in 1921 in Budget circular #4, issued by the first Director of the Budget, Charles G. Dawes. Since 1921 the reserve device has been used extensively by the Bureau of the Budget to adjust spending to actual needs in achieving the program objectives of the Congress. (For example, where Congress appropriated a million dollars to control the Mediterranean fruit fly, and the Department of Agriculture accomplished the task for half a million dollars, impounding the balance prevented waste of public funds.)

An important issue since the twenties has been the nature of a congressional appropriation act: is it simply authority to spend a certain sum of money for a specified purpose, or is it a directive to spend? Willoughby, writing in 1927, seemed to prophesy the struggle that was to ensue fifteen years later. A few appropriations, he thought, were mandatory: e.g., "appropriations for the payment of claims, pensions, interest on the public debt, and the like." Others, he said, for political reasons, must be regarded as mandatory:

"There are other appropriations such, for example, as those for the erection of a particular public building or the improvement of rivers and harbors, which if not put into effect would undoubtedly cause resentment on the part of Congress and action by it that would make the expenditure obligatory."

The hand of the Bureau of the Budget in post-appropriation control was strengthened on June 10, 1933, when authority to make, waive, and modify the quarterly apportionments was transferred from the agency heads to the Bureau by Executive Order 6166. With the transfer of the Bureau itself to the Executive Office of the President six years later, the stage was set for a systematic effort by the President and his budget staff to achieve improved central control over expenditures. That effort was to be marked in part by putting the impounding process, employed during the '30s to effect savings by controlling the level of programs, to a new use: viz., impounding funds for entire public works projects which lacked Presidential approval. (The two types are referred to as program control and project control.) President Roosevelt's 1941 budget message, which emphasized the need "to defer construction projects that interfere with the defense program," seemed to require more stringent impounding than merely establishing reserves to effect savings.

II THE POLICY IS ADOPTED

Four days before he declared an unlimited national emergency late in May, 1941, President Roosevelt was faced with the first test of his announced budget policy. Congress had just forwarded for his approval the War Department Civil Appropriation Act for 1942 (Public Law 71), containing funds for flood control and some $1.6 million for certain river and harbor projects which had not received Executive approval as important to national defense. Lacking the item veto, the President had to sign the Act. During the two months that elapsed before the War Department could submit to the Bureau of the Budget its request for apportionment of the newly-appropriated funds, the Bureau sought a tool that would halt the objectionable projects.

In the meantime a flood control authorization bill (H.R. 4911) was moving toward final passage in the Congress. The House version of the bill provided that projects contained in the measure "shall be prosecuted as speedily as may be consistent with budgetary requirements . . ." On July 3, the President wrote the President of the Senate that the House had ignored the fact "that initiation of new construction projects without defense values should be deferred until the end of the present international emergency." Mr. Roosevelt suggested an amendment to section 3 of the bill to read: "That during the unlimited emergency . . . no construction work shall be initiated on any project hereby authorized unless the President should find that the proposed work is of important value to the national defense."

The President was turned down. Congressman Whittington explained early in August, 1941, that the proposed amendment was killed because Congress did not want to surrender absolutely to the Executive the right to determine which projects had defense value. Anyway, he said, "if the President . . . is not satisfied. . . he can veto the bill."