Office of Management and Budget
In 1921, Congress passed the Budget and Accounting Act to create the Bureau of the Budget. President Warren G. Harding signed this legislation into law that same year. The new agency sat within the Department of the Treasury rather than the White House. Its initial purpose was to assist the president in developing a budget for House approval under Article One of the Constitution. Harold D. Smith later ran the bureau during World War II when government spending expanded rapidly. James L. Sundquist, a staffer at the Bureau of the Budget, described the relationship between the president and the bureau as extremely close. In 1939, the bureau moved from the Treasury Department to the Executive Office of the President. Richard Nixon led a reorganization plan in 1970 that transformed the bureau into the Office of Management and Budget. This change made the office report directly to the president instead of through another department.
The 1970 restructuring turned the OMB into one of the most powerful institutions under presidential control. Originally intended as a politically neutral analytical organization, it became an instrument for implementing specific agendas. Successive presidents have expanded the scope of duties and power held by the OMB. Roy Ash served as the first head of the newly formed OMB after the 1970 reorganization. Paul O'Neill worked as assistant director while Fred Malek served as deputy director. Frank Zarb took on the role of associate director alongside two dozen other staff members. The agency now evaluates effectiveness of agency programs and sets funding priorities across the executive branch. It ensures that all agency reports and proposed legislation align with administration policies. Without this coordination, federal employees could not be paid and government buildings might remain closed during shutdowns.
Congress enacted legislation in 1974 to form a counterpart to the OMB called the Congressional Budget Office. Public Law 93-344 also included laws limiting presidential impoundment powers. The Congressional Budget Office serves a purpose parallel to that of the OMB when estimating congressional spending. The Department of the Treasury estimates executive branch revenue while the Joint Committee on Taxation estimates congressional revenue. Russell Vought currently serves as the director of the OMB having been appointed by Donald Trump in February 2025. The Legislative Reference Division acts as the federal government's central clearing house for proposed legislation or testimony by federal officials. It distributes proposed legislation to all relevant federal reviewers and distills comments into a consensus opinion about the proposal. This division writes an Enrolled Bill Memorandum once a bill is presented by both chambers of Congress for signature.
The development of the budget within the executive branch takes nearly a year to complete through many steps. The first step involves the OMB informing the president of the country's economic situation. Spring Guidance follows where the OMB gives executive agencies instructions on policy guidance for their budget requests. Agencies must submit these requests by September after receiving Circular A-11 from the OMB in July. The fiscal year begins October 1 and staff meet with senior agency representatives until late November. They identify constraints within the budget proposal and determine whether proposals align with presidential priorities. The OMB director meets with the president and EOP advisors to discuss agency budget proposals before making recommendations. Agencies can appeal decisions to the OMB and the president during December if dissatisfied. By the first Monday in February, the president must review and submit the final budget to Congress for approval.
OMB consists mainly of career appointed staff who provide continuity across changes of party and administration. Six positions within OMB are presidentially appointed and Senate confirmed including the deputy director for management. Approximately half of all OMB staff work within five Resource Management Offices organized along functional lines mirroring the federal government. Program examiners monitor one or more federal agencies or deploy by topical areas like U.S. Navy warships. These staff have dual responsibility for both management and budgetary issues while giving expert advice on program aspects. Each year they review federal agency budget requests and help decide what resource requests will be sent to Congress. The Budget Review Division performs government-wide budget coordination and handles technical aspects relating to releasing the president's budget each February. Other components include the Office of General Counsel and the Legislative Reference Division which writes Enrolled Bill Memorandums.
The Interagency Suspension and Debarment Committee was created as an OMB committee by President Ronald Reagan's Executive Order 12549 in 1986. This order mandates executive departments participate in a government-wide suspension and debarment system with minimum due process procedures. Debarred participants' identifying information goes to the General Services Administration for inclusion on the System for Award Management list. Circulars serve as instructions issued by the OMB to federal agencies indexed by major categories like procurement or financial management. Circular A-119 instructs agencies to adopt voluntary consensus standards before relying upon industry standards. Environmental Protection Agency references ISO 14001 supporting public policy in environmental management while Department of Energy uses ISO 50001 for energy performance. Food and Drug Administration follows ISO 13485 for medical devices and ISO 22000 for food products. These circulars help improve administrative management and reduce unnecessary burdens on the public through standardized processes.
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Common questions
When was the Office of Management and Budget created by Congress?
Congress passed the Budget and Accounting Act in 1921 to create the Bureau of the Budget. President Warren G. Harding signed this legislation into law that same year.
Who transformed the Bureau of the Budget into the Office of Management and Budget?
Richard Nixon led a reorganization plan in 1970 that transformed the bureau into the Office of Management and Budget. This change made the office report directly to the president instead of through another department.
What is the current director of the Office of Management and Budget as of February 2025?
Russell Vought currently serves as the director of the OMB having been appointed by Donald Trump in February 2025. He leads an agency that evaluates effectiveness of agency programs and sets funding priorities across the executive branch.
How does the Office of Management and Budget prepare the federal budget each year?
The development of the budget within the executive branch takes nearly a year to complete through many steps. Agencies must submit requests by September after receiving Circular A-11 from the OMB in July, and the president submits the final budget to Congress for approval by the first Monday in February.
Which committee did Ronald Reagan create within the Office of Management and Budget in 1986?
The Interagency Suspension and Debarment Committee was created as an OMB committee by President Ronald Reagan's Executive Order 12549 in 1986. This order mandates executive departments participate in a government-wide suspension and debarment system with minimum due process procedures.