The Politics of the Enactment and Implementation of Gramm-Rudman-Hollings: Why Congress Cannont Address the Deficit Dilemma
![handle is hein.journals/hjl25 and id is 559 raw text is: THE POLITICS OF THE ENACTMENT AND
IMPLEMENTATION OF GRAMM-RUDMAN-
HOLLINGS: WHY CONGRESS CANNOT
ADDRESS THE DEFICIT DILEMMA
JOHN W. ELLWOOD*
In the fall of 1985, Congress passed and President Reagan
signed the Gramm-Rudman-Hollings Balanced Budget and
Emergency Deficit Control Act.' This law was passed after
Congress and President Reagan failed for five years to reduce
meaningfully the largest peacetime federal budget deficits since
the Great Depression.2 As originally enacted, Gramm-Rudman-
Hollings encompassed two classes of changes in the budget
process. The first set of changes created a doomsday machine
* Associate Professor of Public Policy and Management, The Amos Tuck School of
Business Administration, Dartmouth College. A.B., 1964, Franklin & Marshall College;
M.Poli. Sci., 1967, The Johns Hopkins University; Ph.D., 1972, The Johns Hopkins
University.
A previous version of this Essay was presented at the 1987 annual meeting of The
American Economics Association on December 28, 1987 in Chicago, Illinois. Research
for this Essay was supported by a Tuck Associates Research Grant.
This Essay would not have been possible without the kind assistance of Professors
Joseph White and Aaron Wildavsky. Much of the historical material has been drawn
from their book-length manuscript, The Battles of the Budget: From the Last Year of
Carter Through Gramm-Rudman-Hollings and Tax Reform. They also were kind enough
to make available their interviews of many of the participants who affected the passage
and implementation of the first version of Gramm-Rudman-Hollings. I re-interviewed
many of the same individuals to gain their views on the passage and implementation of
the second version of Gramm-Rudman-Hollings. Although one can not help but be
affected by the White-Wildavsky analysis, the views expressed in this Essay are mine.
You are urged to read the full White-Wildavsky budgetary history once it is published.
I The Balanced Budget and Emergency Deficit Control Act of 1986, Pub. L. No. 99-
177, 99 Stat. 1037 [hereinafter Gramm-Rudman-Hollings].
2 From fiscal year 1934 through fiscal year 1940 the federal budget deficit equalled
3.47% of the Gross National Product (GNP). During the 1950's the average deficit
equalled .42% of GNP. This statistic rose to .8% of GNP during the 1960's and to 2.43%
of GNP during the 1970's. From fiscal year 1980 through fiscal year 1986, the federal
deficit equalled 4.5% of GNP. OFFICE OF MANAGEMENT AND BUDGET, BUDGET OF
THE UNITED STATES: HISTORICAL TABLES: FISCAL YEAR 1988 table 1.2 (1987).
A similar pattern occurs for the standardized-employment deficit as a percentage of
potential GNP. From fiscal year 1956 through fiscal year 1959 this ratio equalled 0.1%.
During the 1960's it rose to an average of 1.0%. It further increased to an annual average
of 1.7% during the 1970's. From fiscal year 1980 through fiscal year 1986 it rose to a
yearly average of 2.8% of potential GNP. CONGRESSIONAL BUDGET OFFICE, THE Eco-
NOMIC AND BUDGET OUTLOOK: AN UPDATE 102, table Cl (1987).
Although some economists have argued that these standard measures of the federal
deficit overstate the magnitude of the deficits of recent years, their corrections have
had little impact on the public and congressional perceptions of the size of the deficit
problem. See, e.g., R. EISNER, How REAL Is THE FEDERAL DEFICIT? (1986).](ViewImageLocal?handle=hein.journals/hjl25&div=19&collection=&method=preview&ext=.png&size=3)
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The Politics of the Enactment and Implementation of Gramm-Rudman-Hollings: Why Congress Cannont Address the Deficit Dilemma
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