Changes

Section 401 of the Congressional Budget Act of 1974 both defines and limits the use of spending authority.  The term "spending authority" is used to describe legislation which authorizes the obligation of funds outside of, or prior to the appropriations process—such as by contract or borrowing authority. This type of financing mechanism is also referred to as backdoor authority.

Section 401 of the Congressional Budget Act of 1974 both defines and limits the use of spending authority.  The term "spending authority" is used to describe legislation which authorizes the obligation of funds outside of, or prior to the appropriations process—such as by contract or borrowing authority. This type of financing mechanism is also referred to as backdoor authority.

The intent of section 401 was to control the use of backdoor authority by treating both contract and borrowing authority the same as regular authorizations for which made funds available only to the extent provided in appropriations acts.  A grandfather clause exists that distinguishes between '''new spending authority''', which became law after the effective date of the Congressional Budget Act of 1974 (July 12, 1974) and subject to this provision, and '''old spending authority''' which is not subject to this provision.

The intent of section 401 was to control the use of backdoor authority by treating both contract and borrowing authority the same as regular authorizations which made funds available only to the extent provided in appropriations acts.  A grandfather clause exists that distinguishes between '''new spending authority''', which became law after the effective date of the Congressional Budget Act of 1974 (July 12, 1974) and subject to this provision, and '''old spending authority''' which is not subject to this provision.

When this section was enacted, it was assumed that old spending authority would be used up at some time in the future. Thus, the use of contract and borrowing authority as backdoor financing mechanisms would be eliminated.

When this section was enacted, it was assumed that old spending authority would be used up at some time in the future. Thus, the use of contract and borrowing authority as backdoor financing mechanisms would be eliminated.