The 1974 Budget Act and Federal Grants: Exploring Unintended Consequences of the Status Quo

21 Pages Posted: 19 Jun 2018

See all articles by Massimiliano Ferraresi

Massimiliano Ferraresi

University of Ferrara

Gianluca Gucciardi

University of Ferrara

Leonzio Rizzo

University of Ferrara - Faculty of Economics

Date Written: May 29, 2018

Abstract

In passing the 1974 Budget Act, Congress fundamentally reshaped the federal budgeting and appropriations process for generations to come, but along with this change came several related, unintended consequences that continue to have an impact today. The Act asserted Congressional power and independence from the Executive after a history marked with piecemeal decision-making and overriding Presidential power.

Part I of this study suggested that the 1974 Budget Act decreased federal spending the years immediately following the passage – after which federal spending increased, but by less than it would have otherwise. In this paper, we consider another potential outcome: Whether the new power structure made federal grantmaking more partisan. In other words, was the Executive branch incentivized to use these grants to curry favor and encourage passage of Presidential budget priorities? We find evidence that having both Senators or the Governor in the same political party as the President has increased grants given to states after the 1974 Budget Act.

Keywords: 1974 Budget Act, President, Deficit, Public Spending, Governor, Congress, Debt, Grants, Partisanship

JEL Classification: H71, H72, C23

Suggested Citation

Ferraresi, Massimiliano and Gucciardi, Gianluca and Rizzo, Leonzio, The 1974 Budget Act and Federal Grants: Exploring Unintended Consequences of the Status Quo (May 29, 2018). Available at SSRN: https://ssrn.com/abstract=3195365 or http://dx.doi.org/10.2139/ssrn.3195365

Massimiliano Ferraresi

University of Ferrara ( email )

Via del Gregorio 13
Ferrara, 44100
Italy

Gianluca Gucciardi

University of Ferrara ( email )

Via del Gregorio 13
Ferrara, 44100
Italy

Leonzio Rizzo (Contact Author)

University of Ferrara - Faculty of Economics ( email )

C.so Ercole I° d'Este 37
Ferrara, 44100
Italy

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