Backdoor spending authority
Backdoor spending authority in the United States federal budget is authority to incur obligations that are outside the normal Congressional appropriations process because it is provided in legislation other than appropriation acts. Since 1976, any bill that creates spending authority for funds that are not appropriated is subject to a point of order. In effect, this procedural rule protect the House and Senate appropriations committee from being bypassed by the committees with substantive responsibility for various subjects.
Various types of backdoor spending authority include authority to enter into contracts; to incur indebtedness; to make payments (including loans, grants and entitlements) to persons, states and local governments and other entities that meet requirements established by law; to allow United States government executive departments and agencies to forgo collection of proprietary offsetting receipts; and to make any other payments (including loans, grants, and payments from revolving funds.
From the perspective of the appropriations committees, funding by these forms of spending authority slips away from their control through legislative back doors. The Congressional Budget Act of 1974 allowed older forms of backdoor spending to be grandfathered in but attempted to give the appropriations committees some control over new spending, or new borrowing and contract authority. (2 U.S.C. § 651}
There are many exceptions to this procedural rule. First, although this requirement is a law, the Speaker of the US House of Representatives has ruled that it can be waived if the House adopts a recommendation to do so from the House Rules Committee. Second, it applies only to consideration of new legislation after 1975. Third, broad categories involving gifts and trust funds were exempt.
Origins and issues
Originally created by a parliamentary ruling of the House of Representatives in 1949, "backdoor spending" devices have been held not to constitute appropriations. The ruling permitted legislative committees, which are specifically prohibited from handling appropriations matters, to authorize agencies to obtain funds via the "backdoor" method. In some cases these spending authorities do not come before the appropriations committees for review.
- One type of backdoor is contract authority which permits an agency to obligate funds in advance of appropriations. The matter comes before the appropriations committees only when money is needed to liquidate the obligation, too late for them to exercise any meaningful control.
- Another way to work with non-appropriated funds is to authorize agencies to borrow funds from the Treasury or from the public. Borrowing authority outside the appropriations process has been authorized since this backdoor was opened in 1932 with creation of the Reconstruction Finance Corporation.
- The third and most prevalent form of non-appropriated spending is a mandatory entitlement of specified payments to eligible beneficiaries. Most entitlements are open-ended: their cost depends on the varying number of claimants and amounts allowable to each, rather than on current legislative decisions. Most entitlements are also in the form of permanent appropriations that bypass the appropriations committees altogether. Even when the entitlements go through the regular appropriations process (as is the case with public assistance and veterans' benefits) the appropriations committees have no real say over the amounts that are to be spent. 
The Congressional Budget and Impoundment Control Act of 1974 originally was intended to limit and reform backdoor authority, by requiring new spending authorities or entitlements to go through the appropriations process.
- collection of some taxes, fees and debts justly due.
- 121 Cong. Rec. 7677, 94th Cong. 1st Sess., Mar. 20, 1975 (ruling by Speaker Carl Albert [Okla.]).
- 2 U.S.C. § 651(c)
- pp. 13-14 pdf.
- "Borrowing authority", also known as "authority to spend debt receipts", pg.46; Report to the House Committee on the Budget by the Comptroller General of the United States. Revolving Funds: Full Disclosure Needed For Better Congressional Control. August 30, 1978. http://www.gao.gov
- See Discretionary spending The political philosopher and journalist George Will contends all government spending is discretionary, with the exception of debt service. Econtalk, George Will, Feb-28-2011.
- The Battle of the Budget, Allen Schick, Proceedings of the Academy of Political Science, Vol. 32, No. 1, Congress against the President, (1975), pp. 51-70. Published by: The Academy of Political. JSTOR.