The Office of Management and Budget (OMB) is at the heart of the institutional presidency, the single largest component of the Executive Office of the President (EOP). The agency is so frequently dubbed “the most important agency you’ve never heard of” that the phrase has become cliché. By now, though, you might have heard of it—it has been central to both the managerial agenda and the culture war politics of the second Trump administration.

An agency veteran calls OMB “the president’s Swiss army knife,” indispensable to all sorts of executive branch problem solving.¹ Its 500 or so employees, overwhelmingly civil servants, are responsible for producing the president’s budget proposal each year; for ensuring the funds approved by Congress are spent according to the law; for providing fiscal and policy advice; for the “central clearance” of legislation, statements of administration policy, enrolled bills, executive orders, and regulations proposed by the executive branch; for the efficient management of federal programs; and, more generally, for being “the implementation and enforcement arm of Presidential policy government-wide.”²

But OMB began life in 1921 as the Bureau of the Budget, a tiny organization best known as a “green eyeshade manipulator of the figures in the budget book.”³ Its creation was prompted by worrisome deficit spending after World War I and the desire to give the chief executive the then-modern tools of executive management—as one influential magazine complained, the president, administering “the biggest business in the world . . . hasn’t the instruments with which to work.”⁴ Franklin D. Roosevelt returned to the theme in 1939: “Only after this has been accomplished will the President have adequate machinery for the business-like handling of his job.”⁵

Its creation was prompted by worrisome deficit spending after World War I and the desire to give the chief executive the then-modern tools of executive management—as one influential magazine complained, the president, administering “the biggest business in the world . . . hasn’t the instruments with which to work.”

The task to be accomplished in 1939 was shifting the Bureau of the Budget into the new EOP. For its first two decades, the bureau resided in the Treasury Department, focused on producing an annual, unified executive budget. Its priority was proactive parsimony. The bureau’s staff, bragged its first director, was wholly apolitical, “workers in the stoke-hole who had nothing to do with the steering of the ship.”⁶

Still, the new budget served as the financial expression of the administration’s preferred program and allowed for centralized exploration of executive branch operations. Roosevelt made the bureau a truly presidential agency, enhancing its ability to coordinate the executive branch beyond the budgetary sphere by directing it to review legislation under consideration by the administration and to approve executive orders before they were issued. The bureau also gained new divisions dealing with fiscal policy, statistical standards, legislative reference, and administrative management.⁷ In the mid-1930s, the bureau had barely 40 professional staff members; after a decade in the EOP, it had closer to 600, including in four field offices.

Crucially, FDR ensured the bureau was dominated by careerists, not political appointees. This underwrote an ethos of “neutral competence” grounded in institutional memory and policy expertise. The idea was to support not just the incumbent president and a relatively tiny White House staff but the office of the presidency. While the bureau remained nonpartisan, midcentury presidents recognized that power over administration was in fact political power. The bureau may have been neutral—Roosevelt’s budget director Harold Smith was a registered Republican—but it was not neutered.

The idea was to support not just the incumbent president and a relatively tiny White House staff but the office of the presidency.

As the federal establishment grew, the bureau found it hard to keep up. Presidents were dissatisfied with its management capacity and the tendency of the annual budget cycle to drive out other functions. Discussions in the 1950s and 1960s about reorganization, given new life by the difficulties in implementing Lyndon Johnson’s Great Society programs, finally led to action: In 1970, Richard Nixon transformed the Bureau of the Budget into the Office of Management and Budget.

The new emphasis was in the name: OMB was bolstered with additional staff focused on programmatic management and evaluation while the lines dividing it from the White House further softened. As Nixon aide John Ehrlichman wrote, “I’m for more management of the bureaucracy, not less”—so long as it was “management in the get-the-Secretary-to-do-what-the-President-needs-and-wants-him-to-do-whether-he-likes-it-or-not sense.”⁸ New OMB director George Shultz got a new office down the hall from Nixon himself. And over the next few years, politically appointed program associate directors were put in charge of the budgetary program divisions, layered above the careerists.

As other power centers in the administration succumbed to Watergate, OMB stepped into the policy vacuum. Still, Watergate blew back on OMB too, sparked especially by Nixon’s aggressive impoundment tactics. In 1974, Congress made it illegal not to spend congressionally appropriated funds. Fears that OMB had become too partisan also sparked the creation of the Congressional Budget Office, to provide an alternative source of budget expertise, and a new requirement for Senate confirmation of OMB’s top leadership.

As Nixon aide John Ehrlichman wrote, “I’m for more management of the bureaucracy, not less”—so long as it was “management in the get-the-Secretary-to-do-what-the-President-needs-and-wants-him-to-do-whether-he-likes-it-or-not sense.”

Although OMB directors did not long retain their West Wing office, they remained important advisers to successive presidents. Their role was particularly salient as budgets—and deficits—became ever more prominent in American politics starting in the 1980s. Those years featured a variety of fiscal tactics—spending caps, sequestrations, “pay as you go” requirements—and arguments about everything from economic forecasting to how spending should be “scored.” OMB became increasingly engaged on Capitol Hill, lobbying for budget outcomes and issuing formal veto threats (through new “statements of administration policy”).

Congress also added functions to OMB through a series of “statutory offices” tackling broad federal management issues such as procurement (1974), financial management (1990), and e-government and information technology (2002). The 1990 law also added a second deputy director for management, integral to a series of later presidential and legislative initiatives such as the Program Assessment Rating Tool developed under George W. Bush.

Another key development repurposed a congressional creation. In 1981, Ronald Reagan directed the new Office of Information and Regulatory Affairs within OMB to extend the central clearance already applied to legislation and executive orders to rulemaking, building on less systematic effort to analyze the impact of new federal regulations. Reagan sought to prevent the issuance of rules whose costs outweighed their benefits—and while defining and measuring those remains fiercely contested, Bill Clinton bestowed a bipartisan blessing on regulatory review in 1993. All subsequent presidents have followed suit.

OMB became increasingly engaged on Capitol Hill, lobbying for budget outcomes and issuing formal veto threats (through new “statements of administration policy”).

The last significant reorganization of OMB took place in 1994 as part of the “OMB 2000” initiative, which concluded that the structural separation of management and budget made it hard for the former to benefit from the leverage of the latter. Thus, budget and management staff outside the statutory offices were reintegrated within the policy-oriented divisions, now known as resource management offices (RMOs). As of 2024, these RMOs were organized around five areas: general government programs; health; climate, energy, environment and science; education, income maintenance, and labor; and national security. Each RMO is led by a program associate director overseeing career employees down to the level of agency-specific “examiner.”

Indeed, uniquely for a presidential staff office, even now only about 10 percent of OMB personnel are political appointees of some sort; just seven are Senate-confirmed.⁹ To be sure, “politicals” have moved into roles that used to be filled by careerists, and new roles have been added within the director’s orbit. Still, the agency would be structurally recognizable to those who worked there in the late 1970s. As Donald Trump retook office in January 2025, OMB had a $146 million budget and 520 full-time equivalents—a staffing level that has remained largely stable for decades.¹⁰ The agency is surely more politically attuned than in its Bureau of the Budget days—but, at least so far, in a way that still honors neutral competence. 

Even so, OMB now operates in turbulent waters churned by partisan polarization and deep distrust toward both neutrality and expertise. Issues raised throughout the history of the agency are back with new urgency. Those include at least four topics worth exploring further: (1) OMB’s role in the budget process and in overseeing how congressional appropriations are spent (or not), (2) whether the long-standing clearance process of proposed policies and regulations will continue, (3) the role of “M” in OMB and the agency’s ability to both improve managerial practices and enforce presidential preferences across a sometimes-hostile administrative state, and (4) how the office responds to presidential direction that runs counter to objective cost-benefit analysis and the implied potential for politicization.

OMB now operates in turbulent waters churned by partisan polarization and deep distrust toward both neutrality and expertise. Issues raised throughout the history of the agency are back with new urgency.

OMB has long been responsive to presidential preferences—but how presidents define responsiveness has changed over time. Broad changes in the political environment mean that the ability to exercise top-down control has become more appealing. Pushing the point, current OMB leadership hopes to add additional program associate directors and to oversee the conversion of most OMB personnel to a new “policy/career” civil service designation that would make them de facto political appointees. That would mark a truly dramatic shift in OMB’s organizational identity. 

Several “forks in the road” thus beckon. What kind of “instruments” do presidents want and need as OMB embarks upon its second century?

Endnotes

Rudalevige is Thomas Brackett Reed Professor of Government, Bowdoin College, and nonresident faculty senior fellow, Miller Center.

1.

Rob Fairweather, The Inside Story of OMB (Arlington, VA: RSF Publications, 2024). 

2.

From OMB, “The Mission and Structure of the Office of Management and Budget,” during the Obama administration, https://obamawhitehouse.archives.gov/omb/organization_mission/.

3.

Longtime Budget Bureau official Roger W. Jones, quoted in Andrew Rudalevige, “Inventing the Institutional Presidency,” in Formative Acts, ed. Matthew Glassman and Stephen Skowronek (Philadelphia: University of Pennsylvania Press, 2005), 316.

4.

Donald Wilhelm, “The Presidential Handicap,” The Independent, March 26, 1921, 307.

5.

White House press release of September 10, 1939.

6.

Charles Dawes, The First Year of the Budget of the United States (New York: Harper & Brothers, 1923), 63.

7.

Larry Berman, The Office of Management and Budget and the Presidency (Princeton, NJ: Princeton University Press, 1979), 16–30.

8.

John Ehrlichman to Caspar Weinberger, memo of June 26, 1972, Richard Nixon Presidential Library.

9.

The confirmed positions are the director, two deputy directors, and the four heads of the “statutory offices.” According to the 2024 Plum Book, that year there were 28 Schedule C (at levels ranging from GS-7 to GS-15) and 20 noncareer Senior Executive Service appointees in OMB. For a useful overview of contemporary agency operations, see Steve Redburn, Dan Chenok, and Barry Clendenin, eds., The Office of Management and Budget: An Insider’s Guide, Report 2021-21, (White House Transition Project, 2021), https://www.whitehousetransitionproject.org/wp-content/uploads/2020/07/WHTP2021-21-OMB-an-Insiders-Guide-1.pdf. 

10.

Note, though, that the One Big Beautiful Bill Act of 2025 provided OMB with an additional $100 million over fiscal years 2025–29 for the “purposes of finding budget and accounting efficiencies in the executive branch.”