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The Bureau of the Budget: Its Evolution and Present Rôle, I

Published online by Cambridge University Press:  02 September 2013

Fritz Morstein Marx
Fritz Morstein Marx
Affiliation:
Queens College
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Extract

As we are moving into the terminal phase of World War II, it is inevitable—and entirely proper—that we allow our thoughts to wander ahead in an initial exploration of the matters on our national postwar agenda. Many of these matters relate to ends and center on policy alternatives. Others focus primarily on means and involve questions of approach. The latter include problems of governmental structure and machinery within the framework of our political system. Such problems present themselves in both the legislative and executive departments. With respect to the executive branch, we must seek to evolve an appropriate organizational form that will enable the federal government to sustain effectively an economy of high-level production and employment. In this effort we are confronted in part with a task of constructive innovation, in part with the need for reëxamination of prewar working hypotheses and wartime experience. It would be a promising venture to return to the work of the President's Committee on Administrative Management and appraise its proposals in the light of later developments. In any such enterprise, attention must doubtless be given to one conception closely associated with the recommendations of the President's Committee: that of the Executive Office of the President.

Type
Research Article
Information
American Political Science Review , Volume 39 , Issue 4 , August 1945 , pp. 653 - 684
Copyright
Copyright © American Political Science Association 1945

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References

1 The border-line between ends and means should not be over-stressed. A discussion of ends usually entails consideration of available means. As illustrations, see the symposia on “Emerging Problems in the Conduct of American Foreign Relations” and “The American Road from War to Peace,” in this Review, Vol. 38 (1944), pp. 913 ff. and 1114 ff.

2 On the legislative department, see Committee on Congress, American Political Science Association, The Reorganization of Congress (Washington, 1945).Google Scholar

3 See Arthur W. Macmahon, “The Future Organizational Pattern of the Executive Branch,” loc. cit. in note 1 above, pp. 1179 ff.; Pendleton Herring, “Executive-Legislative Responsibilities,” ibid., pp. 1153 ff. On the best method of effecting reorganization, see Brownlow, Louis, “Reconversion of the Federal Administrative Machinery from War to Peace,” Public Administration Review, Vol. 4 (1944), pp. 309 ff.CrossRefGoogle Scholar

4 For a review of wartime administrative experience, see Luther Guliek, “War Organization of the Federal Government,” loc. cit. in note 1 above, pp. 1166 ff.

5 A suggestion to this effect has been made by Latham, Earl, “Executive Management and the Federal Field Service,” Public Administration Review, Vol. 5 (1945), p. 16CrossRefGoogle Scholar, note.

6 The original structure of the Executive Office of the President has been described in a symposium by Brownlow, Louis and others published in Public Administration Review, Vol. 1 (1941), pp. 101 ff.Google Scholar Two elements of the Executive Office have subsequently disappeared. The Office of Government Reports was consolidated into the Office of War Information by Executive Order No. 9182 of June 13, 1942. The National Resources Planning Board was abolished by act of June 26, 1943 (57 Stat. 169; 5 U. S. C. 133, note). On the latter, see Merriam, Charles E., “The National Resources Planning Board: A Chapter in American Planning Experience,” in this Review, Vol. 38 (1944), pp. 1075 ff.Google Scholar On the present structure of the Executive Office, see Macmahon, loc. cit, in note 1 above, pp. 1182 ff.

7 Executive Order No. 8248 of Sept. 8, 1939, defines the original structure of the Executive Office of the President and the chief duties and activities of each of its constituent divisions.

8 For these transformations, see the references cited in note 6 above.

9 The Budget and Accounting Act was approved June 10, 1921 (42 Stat. 20; 31 U. S. C. 11–16).

10 In recent years, the Bureau of the Budget has been the subject of an increasing number of studies. Mention may be made of the following: Smith, Harold D., “The Bureau of the Budget,” Public Administration Review, Vol. 1 (1941), pp. 106 ff.CrossRefGoogle Scholar (part of the symposium cited in note 6); Moe, Gustave A., “The Bureau of the Budget and Governmental Budgeting in Wartime,” National Association of Cost Accountants Bulletin, Vol. 25 (1943), pp. 43 ff.Google Scholar; Pearson, Norman M., “The Budget Bureau: From Routine Business to General Staff,” Public Administration Review, Vol. 3 (1943), pp. 126 ff.CrossRefGoogle Scholar and “A General Administrative Staff to Aid the President,” ibid., Vol. 4 (1944), pp. 127 ff.; Wilkie, Horace W., “Legal Basis for Increased Activities of the Federal Budget Bureau,” George Washington Law Review, Vol. 11 (1943), pp. 266 ff.Google Scholar; Macmahon, loc. cit. in note 1 above, pp. 1182 ff.; Latham, loc. cit. in note 5 above, pp. 16 ff.

11 Needless to say, the Bureau of the Budget has no monopoly in this vast field. It shares its responsibilities, not only with all of the operating agencies, but also with control agencies such as the General Accounting Office and the Civil Service Commission. The latter especially has taken initiative in management improvement by fostering better manpower utilization in the executive branch.

12 As one example, executive reorganization in state and local governments during the twenties and thirties preceded the Reorganization Act of 1939. Civil service legislation is perhaps the best illustration of the opposite development; here the federal government took the lead in the Pendleton Act of 1883, with New York and Massachusetts the first to follow suit.

13 65th Cong., 2d Sess., House Doc. No. 1006 (1918). In the same year, Willoughby, William F. published his influential book entitled The Problem of a National Budget (New York, 1918).Google Scholar For the earlier background, especially the proposals of the Taft Commission on Economy and Efficiency (1912), see Wilkie, loc. cit. in note 10 above, pp. 266–267.

14 For a statement of the views of Representative McCormick's collaborator, see Collins, Charles W., The National Budget System (New York, 1917).Google Scholar Ironically, partly because of this association, partly because of McCormick's interest in devising a sharp brake on the exercise of the spending power of Congress, his “plan” had a strong British flavor. Opposition in Congress to its restrictive features made pursuit of the “plan” in its original form impracticable.

15 It should be recalled that the first budget and accounting legislation was vetoed by President Wilson June 4, 1920, because of constitutional objections concerning the status of the Comptroller General; for the veto message, see Cong. Rec., Vol. 59 (1920), p. 8509. Although the law as finally approved had undergone some slight rephrasing on this issue, it hardly met the objections raised id the veto. However, President Harding was willing to accept it on its general merits.

16 See 7 Comp. St. 6732 and subsequent provisions incorporated into appropriation legislation passed in 1907 and 1909 (34 Stat. at L. 949; 35 Stat. at L. 1027).

17 In the hearings held in 1919 before the House Select Committee on the establishment of a national budget system (66th Cong., 1st Sess.), then Representative Garner of Texas referred to “this wonderful revelation to me … that a great many gentlemen who … have written books and magazine articles, and newspaper articles, some of them in a very critical way, … do not know a thing about what is on the statute books or what is required, or anything about it” (p. 560). However, better knowledge on the part of some of the committee members did not guard them from errors about both content and dating in citing the statutory sources in the hearings (see p. 118).

18 See President's Committee on Administrative Management, Report with Special Studies (Washington, 1937).Google Scholar The report of the Brookings Institution submitted in 1937 to the Byrd Committee on Organization of the Executive Branch of the National Government (Senate Rep. No. 1275, 75th Cong., 1st Sess.) crossed the path of this major theme at various points, but did not make it its main approach.

19 66th Cong., 1st Sess., House Rep. No. 362 (1919), p. 4.

20 Instances of vigorous departmental self-control were few and far between. For one such instance, see the testimony of former Congressman Fitzgerald of New York, for many years chairman of the House Appropriations Committee, in the hearings before the Senate committee set up for consideration of a national budget, 66th Cong., 2d Sess. (1920), p. 57.

21 See note 13 above.

22 Loc. cit. in note 13 above, p. 6.

23 Ibid., p. 24.

24 This revolt did not arise from organizational issues but from clashes over protective tariff agitation.

25 Loc. cit. in note 17 above (hereafter cited as House Hearings), pp. 487–488.

26 Ibid., p. 507.

27 Ibid., p. 490.

28 Loc. cit. in note 19 above, p. 6.

29 House Hearings, p. 490.

30 Cong. Rec., Vol. 61 (1921), p. 980.

31 House Hearings, p. 279.

32 Quite similar was the picture which Mr. Francis Oakey, speaking for the American Institute of Accountants, developed before the Senate Committee. Mr. Oakey pictured a “department under the President,” headed by a “secretary of administration” who “should be charged with the duty, first, of investigating the work requirements of the various departments, bureaus, offices, commissions, boards, etc., that come under the executive branch of the Government, looking into their needs and their plans, and their means and facilities for carrying out those plans; consulting with these departments, bureaus, or commission heads, after they have submitted their estimates, to determine whether the estimates are justified, and if not, to try to come to some agreement with the various departments as to how they should be changed before submitted.” Loc. cit. in note 20 above (hereafter cited as Senate Hearings), p. 172.

33 Dr. William F. Willoughby, director of the Brookings Institute for Government Research, suggested this rôle when he told the House Select Committee that the Budget Bureau “should know all about the Government, its organization, activities, and methods…. This means that the bureau should make of itself a general bureau of administration and of information in regard to the Government as a whole. When I say a ‘general bureau of administration,’ I mean that it should be a central bureau that will keep fully informed as to how the Government is organized, what are its activities, what are the methods that are employed in performing those activities, what are the laws and regulations governing the various services in the performance of their duties, and information of that kind” (House Hearings, p. 81).

34 Senate Hearings, p. 73.

35 House Hearings, pp. 595–596.Google Scholar

36 Cong. Rec., Vol. 61 (1921), p. 1857.

37 Observed Representative Good during the closing debate in Congress (Cong. Rec., Vol. 61, 1921, p. 1855): “It would have been better not to have put in the words ‘in the Treasury Department,’ but I agree with the gentleman from Wisconsin that it is an idle phrase. It does not mean anything, because the real meat in the section is the power granted by the section, and the only power conferred is the power we give to the President. The President is given power to appoint the director and the assistant director, and he is not required even to get the confirmation of the Senate, because it was thought that for these offices that would be so peculiarly the President's staff, the President's force, the President, withoutbeing questioned with regard to his appointments, should appoint the men whom he believed he could trust to do his will in the preparation of the budget, so that when the budget came before him it would be a budget that reflected his sentiment and his determination with regard to economy and with regard to expenditure.”

38 Cong. Rec., Vol. 61 (1921), p. 997.

39 Senate Hearings, p. 74.

40 Cong. Rec., Vol. 61 (1921), p. 1858. Representative Byrns of Tennessee, who later helped to launch the civil service classification law, spoke of the budget system in the same vein (ibid., p. 1857): “The law, I firmly believe, provides the machinery for true economy as well as efficiency in government, if the Executive and the Congress will avail themselves of it.”

41 As Senator King of Utah expressed it at the conclusion of the Senate debate (Cong. Rec., Vol. 61, 1921, p. 662), “I voted for the budget bill at the last session of Congress; I shall vote for the pending budget bill. I state now, as I stated then, that I do not look for any great reform to eventuate from the bill. We may have all the budget bills the wit of man can devise, but under our theory of government and under the course of legislation which we have adopted we cannot restrain extravagant appropriations until the American people and their representatives here earnestly desire economy and efficiency in the administration of the affairs of the Government. We cannot have economy so long as the American people demand that Congress shall undertake the duties of individuals and assume the responsibilities of the States. We cannot have economy in the Federal Government so long as the people believe that the Federal Government is the guardian of their lives and the author of their fortunes and misfortunes, and by the creation of boards and departments and bureaus and commissions must take control of the business and lives and activities of the people.”

42 Senate Hearings, pp. 74–75.Google Scholar Dr. Butler also stressed the need for “a more complete understanding and coöperation” between the legislative and the executive branches; ibid., p. 72.

43 House Hearings, p. 654.

44 Ibid., p. 670.

45 Ibid., p. 665.

46 See note 9 above.

47 Sec. 207.

48 Sec. 206.

49 Sec. 213.

50 Sec. 214.

51 Sec. 209.

52 Sec. 212.

53 As he wrote later, “As Chief of Supply Procurement in the American Expeditionary Forces, under a general plan whose principles were established by General Pershing, I superimposed in France, under his direction, a system of business coördination over the decentralized services of the army. It was because of this experience that I felt justified in assuming an analogous task under President Harding to inaugurate a system of coördinating business control over the various departments and independent establishments of government which, for one hundred and thirty-two years, have been almost completely decentralized”. Dawes, Charles G., The First Year of the Budget of the United States (New York, 1923), p. ix.Google Scholar

54 Ibid., p. 46.

55 Ibid., p. 2.

56 Ibid., p. 55.

57 Message of Dec. 5, 1921, p. 36.

58 Op. cit. in note 53 above (hereafter cited as First Year), p. 63.

59 As Dawes put it in his book, “No cabinet officer on the bridge with the President, advising as to what direction the ship of state should sail—concerned with matters of policy of highest importance, but at the same time under our Constitution charged with responsibility for a limited portion of the common machinery of the ship—will properly serve the captain of the ship or its passengers, the public, if he resents the call of the Director of the Budget from the stokehole, put there by the captain to see that coal is not wasted” (First Year, p. xi).

60 Ibid., pp. 9–10.

61 Ibid., p. 29.

62 Ibid., p. 50.

63 Ibid., p. 51.

64 (1919), p. 1. The theory behind this coördinating structure is presented in Dawes' interim report of Dec. 5, 1921 (see note 57 above), pp. 33 ff.

65 First Year, p. 39.

66 Ibid.

67 Dawes' interim report (see note 57 above), p. 35. Eventually, the chief coördinator combined under him a large number of agencies extending far and wide: Federal Purchasing Board, Federal Specifications Board, Interdepartmental Board of Contracts and Adjustments, Federal Real Estate Board, Federal Board of Hospitalization, Federal Traffic Board, Coördinator for Motor Transport in the District of Columbia, Forest Protection Board, Interdepartmental Patents Board, Permanent Conference on Printing, Federal Statistics Board, Federal Standard Stock Catalog Board, Interdepartmental Board on Simplified Office Procedure. None of these agencies was to arrogate to itself departmental responsibility and initiative for better management. All of them were to stimulate and encourage improvements in the planning and conduct of administrative business without attempting to monopolize this sphere.

68 The meeting pattern which Dawes evolved provided for introductory remarks by the President, followed by an extensive discussion of fiscal and managerial matters by the budget director. The eighth meeting, convening in Memorial Hall January 26, 1925, was the first to be broadcast, an “appropriate program of music” being rendered by the United States Marine Band, as one reads in the fourth annual report of the budget director (1925, p. 13).

69 The fervor of this crusade is reflected in the form in which the budget director closed the first meeting of the Government Business Organization. To quote from the record (First Year, pp. 18–19):

“Fellow Bureau Chiefs, are you willing, after hearing what I have said, that I should now represent you in addressing myself directly to the President of the United States with an assurance of your coöperation in his request for a reduction of governmental expenditures? If you so agree, if you are willing, will you indicate it by standing? [The entire audience arose. The President of the United States arose, followed by applause. The Cabinet and other officers on the platform also arose.]

General Dawes [continuing]. I wish to say to you, sir, that the men before you realize the cares and perplexities of your great position. They realize that at this time the business of our country is prostrated, that men are out of employment, that want and desperation stalk abroad, and that you ask us to do our part in helping you to lift the burden of taxation from the backs of the people by a reduction in the cost of government. We all promise you, sir, to do our best—to do our best. [Applause.]

The President of the United States. I thank you all so much for your presence and your commitment to this great enterprise. [Loud applause.]”

70 Ibid., p. 178.

71 In his report of December 5, 1921 (see note 57 above), Dawes insisted upon the priority of managerial tasks: “There is a tendency on the part of many to assume that the Bureau of the Budget is established primarily for the sake of reducing expenses. The Bureau of the Budget is designed, through its facilities for securing information, to be in a position to give impartial advice to the President and to Congress in all matters regarding the proper business functioning of Government” (p. 19).

72 Second Annual Report of the Bureau of the Budget (1923), p. 32.

73 Fifth Annual Report of the Bureau of the Budget (1926), p. 19.

74 In his diary, he observed: “Apart from the surplus stocks reform, the monetary saving in more economical administration will apply to a comparatively small amount of government expenditures. Such a large proportion of our public receipts is absorbed by interest on the public debt, pensions, mandatory programs, etc., that my savings, applied as a percentage on total expenditures, will seem small in public estimation” (First Year, p. 30).

75 Loc. cit. in note 57 above, p. 9.

76 First Year, p. 3.

77 Dawes' interim report (see note 57 above), p. 44.

78 First Annual Report of the Bureau of the Budget (1922), p. 9.

79 First Year, p. 34.

80 67th Cong., 4th Sess., Senate Doc. No. 302 (1923).

81 As he put it, “I regret deeply the delay in placing our suggestions in your hands. It has been caused solely by the difficulty which has been encountered in reconciling the views of the various persons charged with the responsibility of administering the executive branch of the Government.”

82 68th Cong., 1st Sess., House Rep. No. 937 (1924).

83 First Year, p. 31.

84 Loc. cit. in note 57 above, p. 15.

85 In addition, the Bureau of Efficiency was utilized by the Budget Bureau for the purpose of determining conceivable duplication with respect to proposed new governmental activities. Several hundred of such activities were cleared in the course of the years. Only in a relatively small number of cases was any duplication disclosed.

86 The difficulty of recruiting high-grade investigators at the available salary rate was noted in the annual report of the Bureau of Efficiency for 1926 (p. 1).

87 68th Cong., 1st Sess., Hearings, pp. 349–350.

88 Ibid., p. 349.

89 Ibid., p. 353.

90 The Bureau's annual reports of the post-Dawes period distinctly reflect the spirit of conservation.

91 Executive Order No. 6166 of June 10, 1933.

92 See note 18 above.

93 The Federal Board of Hospitalization eventually became a body advisory to the Budget Bureau.

94 Executive Order No. 6166 of June 10, 1933.

95 Executive Order No. 7709a of Sept. 16, 1937.

96 Reorganization Plan II of May 9, 1939, pt. 3, sec. 301, together with Executive Order No. 8248 of Sept. 8, 1939 (see note 7 above).

97 See the references cited in note 10 above.

98 This division concerns itself also with improved agency reporting of financial information under Executive Order No. 8512 of Aug. 13, 1940.

99 For its background, see the Central Statistical Board's first annual report (1935).

100 Reorganization Plan I of April 25, 1939, pt. 1, sec. 2.

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