OFFICE OF MANAGEMENT AND BUDGET

The rapid growth of the federal government in the twentieth century has created the need for an institution to coordinate both fiscal and substantive policy. In 1921, Congress empowered the President to prepare and submit a BUDGET for the government. Previously, the government had had no central budgeting function: the various agencies had made funding requests directly to the appropriations committees in Congress. The President exercises the budgeting function through the Office of Management and Budget (OMB). Although OMB controls the requests that Congress receives, Congress is free to appropriate any amount that it considers appropriate.

The budgeting function accords the President an important opportunity to set the agenda for congressional deliberations over appropriations. Notwithstanding the modern presence of a budget process within Congress itself, Congress finds itself responding initially to the President's views of the best resource allocation for the government. And, of course, Congress is aware that its departure from the President's recommended budget may result in the presidential veto of an appropriations bill. In consequence, through OMB the President exercises great influence on actual appropriations. Moreover, appropriations usually confer discretion concerning the amounts to be spent and the precise uses to be made of the funds. The President supervises the agencies' actual spending through OMB.

OMB also exercises limited control over the substantive policies that the agencies follow. The Supreme Court, in MYERS V. UNITED STATES (1926), recognized presidential power to "supervise and guide" the executive agencies in their exercise of power that Congress has delegated to them. This does not extend to the independent regulatory commissions because, in HUMPHREY ' S EXECUTOR V. UNITED STATES (1935), the Supreme Court declared those commissions to be independent of the President except for the constitutional power to appoint their members, and except for powers over them that Congress explicitly grants the President, such as budget review.

Policy supervision therefore concentrates on the executive agencies. In part because of doubts about the extent of the President's power to dictate policy even when it is formed in the executive agencies, OMB has usually limited its supervision to requiring agencies to comply with procedural directives imposed by Presidential EXECUTIVE ORDERS. These directives are thought to be less intrusive than outright commands setting substantive policy. Several Presidents have directed the agencies to prepare analyses of the costs and benefits of their regulations, and to submit them to OMB for review and comment. In view of the size of the executive establishment and the complexity of the issues it considers, this kind of procedural supervision and occasional ad hoc consultation on major policy decisions is the most that the relatively small bureaucracy that serves the President in OMB can hope to accomplish.