Congressional Budget and Impoundment Control Act of 1974

By the early 1970s Congress had no way to consider the budget as a whole, while the President had a professional budget office and a growing habit of impounding funds, refusing to spend money Congress had appropriated. Richard Nixon impounded billions of dollars for programs he opposed. Congress responded with a single law, signed by Nixon on July 12, 1974, weeks before his resignation.

The first part created the congressional budget process. It established Budget Committees in each chamber, the Congressional Budget Office to give Congress independent estimates, the annual budget resolution setting overall spending and revenue targets, and the reconciliation procedure that now carries major tax and spending legislation. It also moved the start of the fiscal year from July 1 to October 1, beginning in 1976, to give Congress more time.

The second part, the Impoundment Control Act, limits the President's power not to spend. A President who wants to cancel funds must propose a rescission to Congress, and the money must be released if Congress does not approve the cancellation within 45 days of continuous session. Temporary deferrals are allowed only for limited reasons. The Government Accountability Office enforces the act and has found violations by administrations of both parties, including the 2019 hold on aid to Ukraine. In 2025 Congress enacted a rescission package of about nine billion dollars, and the administration's use of a pocket rescission near the end of the fiscal year drew a GAO finding that it was illegal.