GRAMM-RUDMAN-HOLLINGS ACT 99 Stat. 1037 (1985)

The Balanced Budget and Emergency Deficit Control Act of 1985 is better known by the names of its three principal Senate sponsors, Phil Gramm (Republican, Texas), Warren B. Rudman (Republican, New Hampshire), and Ernest Hollings (Democrat, South Carolina). Attached as a rider to the bill that raised the national debt ceiling to $2 trillion, theact amended the congressional budget and impoundment control act of 1974. Under the Gramm-Rudman-Hollings Act the maximum budget deficit for fiscal year 1986 was set at $180 billion, and maximum deficits were set for the next four fiscal years, with deficits to be completely eliminated beginning in fiscal year 1991. To enforce the deficit limitation, the act established an automatic mechanism according to which the office of management and budget (an executive agency) and the Congressional Budget Office (a congressional agency) were required annually to report their estimates of the deficit to the comptroller general (the head of the General Accounting Office, another congressional agency), who was to average the two estimates and report the result to the President. The President would be required to issue an executive order "sequestering" appropriated funds to the extent that the estimated deficit exceeded the deficit authorized by the act. Other provisions of the act divided the sequestration equally between defense appropriations and nondefense domestic programs and exempted from sequestration funds appropriated for Social Security, interest payments on the national debt (the total of previous deficits), and certain other programs.

The constitutionality of some aspects of the act was questioned even before the act was passed by Congress; and President ronald reagan alluded to outstanding constitutional questions even as he signed the act into law. Indeed, the act contained provisions facilitating judicial review. It authorized members of Congress to file suit challenging the constitutionality of the act, it provided for challenges to be heard by a special three-judge federal court with direct appeal to the Supreme Court, and it set up an expedited process at each level of the judiciary.

Within hours of President Reagan's signing the act, Representative Michael Synar (Democrat, Oklahoma) filed suit charging that Congress, in the act, unconstitutionally delegated its power to control federal spending and that, even if the delegation of power were constitutional, delegation to the comptroller general, who serves at the pleasure of Congress, was unconstitutional. The latter argument was based on the modern understanding of separation of powers, exemplified by the Supreme Court's decision in immigration and naturalization service v. chadha (1983). Should Synar's suit prevail, the deficit limits would be left intact, but the automatic enforcement provisions would be eliminated and imposition of spending controls to meet the limits would depend on the ability of members of Congress to agree to a joint resolution reducing spending. In early 1986, a three-judge federal court in the District of Columbia heard Synar's suit and held that the automatic provisions of the act, insofar as they delegated authority other than to executive branch officials, were unconstitutional.

Dennis J. Mahoney
(1986)