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

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