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The United States budget and spending process is the framework used by Congress and the President of the United States to formulate and create the United States federal budget and the subsequent appropriations bills that will govern spending for the fiscal year. The process was established by the Budget and Accounting Act of 1921,[1] the Congressional Budget and Impoundment Control Act of 1974,[2] and by other budget legislation.[3]

The federal budget is a document or plan about the revenues, spending, borrowing, and debt of the federal government.[3]

The federal budget and spending process traditionally begins with the submission of the President's budget proposal to Congress, due on the first Monday in February. The House and the Senate also work on their own independent budget proposals at that time. During the spring, Congress is supposed



need a summary of all the events in the budget and spending process here

Formation of the federal budget and spending process

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The U.S. Constitution (Article I, section 9, clause 7) states that "No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of Receipts and Expenditures of all public Money shall be published from time to time." The power to decide and collect taxes, as well as the power to borrow money, both belong to Congress. Congress has the "power of the purse."[3]

The Constitution does not say how these things will be organized, nor does it give the President a role.[3] Federal budgeting and spending procedures were disorganized during the 19th and early part of the 20th centuries; this was not considered a problem, so long as the government and its spending remained small.[3] After World War I, under President Warren G. Harding, Congress passed the Budget and Accounting Act of 1921 to establish an executive branch budgeting process, in reaction to growing spending.[3] This law created the Bureau of the Budget (now the Office of Management and Budget (OMB)) and the General Accounting Office (now Government Accountability Office (GOA)) to assist in this process.

Congress established its own legislative budget process when it passed the Congressional Budget and Impoundment Control Act of 1974. This process is focused on a concurrent resolution containing the budget, scheduled for adoption prior to the consideration of revenue or spending bills.[3] The bill created the Congressional Budget Office (CBO) to assist in this process. Subsequent legislation has modified this process some, but this law remains the basis for the congressional budgeting process.

Laws governing the budget process

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The following laws created and govern the procedures of the federal budget process:

The budget process

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The President's budget request

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The United States budget process traditionally begins when the President of the United States submits a budget request to Congress. The Budget and Accounting Act of 1921 requires the President to submit the budget to Congress for each fiscal year which is the 12-month period beginning on October 1 and ending on September 30 of the next calendar year.[4] The current federal budget law (31 U.S.C. § 1105(a)) requires that the President submit his or her budget request between the first Monday in January and the first Monday in February. In recent times, the President's budget submission has been issued in the first week of February.[5] The budget submission has been delayed, however, in some new presidents' first year when the previous president belonged to a different party.

The President's budget is formulated over a period of months with the assistance of the Office of Management and Budget, the largest office within the Executive Office of the President. The budget request includes funding requests for all federal executive departments and independent agencies for the following year. Budget documents include supporting documents and historical budget data and contains detailed information on spending and revenue proposals, along with policy proposals and initiatives with significant budgetary implications. In addition, each federal executive department and independent agency provides additional detail and supporting documentation on its own funding requests. The documents are also posted on the OMB website.

The budget the President submits is a request only. However, some people consider "the power to formulate and submit the budget... a vital tool in the President’s direction of the executive branch and of national policy."[3] The President's budget request can influence the decisions made by Congress; the degree of influence changes based on political and fiscal factors.[3]

Budget resolutions

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The President's budget request is transmitted to Congress. There, the House and Senate Budget Committees consider it in crafting their own budget proposals, aided by the CBO. Other committees with budgetary responsibilities submit requests and estimates to the budget committees during this time.

In March, the CBO publishes an analysis of the President's budget proposals. The CBO budget report and other publications are also posted on the CBO website. CBO computes a current-law baseline budget projection that is intended to estimate what federal spending and revenues would be in the absence of new legislation for the current fiscal year and for the coming ten fiscal years. However, the CBO also computes a current-policy baseline, which makes assumptions about, for instance, votes on tax cut sunset provisions.

In March, the budget committees consider the President's budget proposals in the light of the CBO budget report, and each committee submits a budget resolution to its house by April 1. The House and Senate each consider these budget resolutions and are expected to pass them, possibly with amendments, by April 15.

There is no obligation for either or both houses of Congress to pass a budget resolution. There may not be a resolution every year; if none is established, the previous year's resolution remains in force. For example, the Senate has not passed a budget resolution for FY2011, FY2012, or FY2013, and passed the FY2014 budget resolution on March 23, 2013 -- 23 days before the deadline set by the No Budget, No Pay Act of 2013. This was the first budget resolution passed by the Senate since a FY2010 budget passed on April 29, 2009.

After both houses pass a budget resolution, selected Representatives and Senators negotiate a conference report to reconcile differences between the House and the Senate versions. The conference report, in order to become binding, must be approved by both the House and Senate. A budget resolution is a concurrent resolution that binds Congress, but is not a law, and so does not require the President's signature.

The budget resolution is not legally binding but serves as a blueprint for the actual appropriation process.


Spending process

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Proposed sections

  • budget authorities - defined and discussed
  • mandatory and discretionary spending distinguished
  • authorizations of appropriations - defined and discussed
  • appropriations - defined and discussed
  • outlays - defined and discussed

Budget authorities

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A budget authority is permission that allows federal agencies to incur obligations, such as entering into contracts, employing personnel, and submitting purchase orders.[4] In other words, it’s the authority to make deals, employ people, and buy stuff. Congress provides budget authority when it appropriates money.[3] It can also be provided in direct spending legislation.[3]

"The provision of budget authority is the key point at which Congress exercises control over federal spending"[3]

(Obligations occur when agencies enter into contracts, submit purchase orders, employ personnel, and so forth; outlays occur when obligations are liquidated, primarily through the issuance of checks, electronic fund transfers, or the disbursement of cash.)[3]

Mandatory v. discretionary spending

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Federal spending can be divided into three categories: discretionary spending, direct/mandatory spending, and net interest on the public debt.[6]

Discretionary spending

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The United States Senate glossary defines discretionary spending as "spending (budget authority and outlays) controlled in annual appropriations acts."[7]


The Senate glossary defines mandatory spending as "spending (budget authority and outlays) controlled by laws other than annual appropriations acts."[8] Mandatory spending is also called "direct spending."[9] As of November 2012, direct spending accounted for 55% of all all federal spending.[9]

"Some direct spending, mostly entitlement programs, is funded by permanent appropriations in the authorizing law. Other direct spending (referred to as appropriated entitlements), such as Medicaid, is funded in appropriations acts, but the amount appropriated is controlled by the existing authorizing statute."[9]

"Direct Spending Also referred to as mandatory or entitlement spending, Direct Spending is directly controlled through eligibility requirements and benefit payments mandated in laws other than appropriations bills. Unlike discretionary spending, direct spending can occur without the annual approval of Congress and the White House. Examples include Social Security and the food stamp program."[10]



Mandatory spending

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Direct spending, also known as mandatory spending, refers to spending enacted by law, but not dependent on an annual or periodic appropriation bill. Most mandatory spending consists of transfer payments and welfare benefits such as Social Security benefits, Medicare, and Medicaid. Many other expenses, such as salaries of federal judges, are mandatory, but account for a relatively small share of federal spending. The Congressional Budget Office (CBO) estimates costs of mandatory spending programs on a regular basis.

Congress can affect spending on entitlement programs by changing eligibility requirements or the structure of programs. Certain programs, because the language authorizing them are included in appropriation bills, are termed "appropriated entitlements." This is a convention rather than a substantive distinction, since the programs, such as Food Stamps, would continue to be funded even were the appropriation bill to be vetoed or otherwise not enacted.

The authorization-appropriations process

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House and Senate rules have created a two-step authorization-appropriations process to govern the decisions about what to authorize money to be spent on and how much money to appropriate to spend on it.[9] The first step in this process is for an authorization bill to be enacted. Authorization bills "may create or continue an agency, program, or activity as well as authorize the subsequent enactment of appropriations."[9] The second step is for an appropriations bill to be enacted. The appropriations bill provides the funding needed for the agency, program, or activity that was just authorized by the enacted authorization bill.[9] Agencies and programs must have been authorized before they can have funds appropriated to them according to the rules of the House and (to a lesser extent) the Senate.[11] The rules are meant "to ensure that substantive and financial issues are subjected to separate and independent analysis."[12] However, these rules are often not followed.[12]

The two types of bills - authorization bills and appropriations bills - are separated into the jurisdiction of different committees. Appropriations bills are handled by the United States House Committee on Appropriations and the United States Senate Committee on Appropriations and their twelve subcommittees.[13] Authorizing bills fall under the jurisdiction of most of the other standing committees of the House and Senate. Almost all of the standing House committees and Senate committees have authorizing responsibilities.[9] The topics, agencies, or programs that a bill deals with determines to which committee or committees it is referred.

Authorizations bills can recommend funding levels for the agencies and programs they authorize, but their recommendations are non-binding.[14] It is the appropriations bills that determine how much funding those agencies and programs will get.

Authorization of appropriations

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Main article: Authorization bill

An authorization bill is a type of legislation used by Congress to authorize various agencies and programs that are usually part of the federal government of the United States, giving them the legal power to operate and exist.[15] The Senate's glossary defines an authorization act as "a law that establishes or continues one or more Federal agencies or programs, establishes the terms and conditions under which they operate, authorizes the enactment of appropriations, and specifies how appropriated funds are to be used. Authorizations acts sometimes provide permanent appropriations."[16] Authorization bills create, modify, and/or extend agencies, programs, and/or programs for a limited amount of time (by including an expiration date) or make them perpetual (without expiration date).[9][15] The bill may be specific about who the leaders of the program will be, what their specific responsibilities are, what reports must be filed with Congress, and so forth. Congress can place recommended funding levels for the agencies and programs they authorize in an authorization bill, but their recommendations are non-binding.[14] The recommendations can be for specific amounts in specific years for specific purposes, or it can be an unlimited amount ("such sums as may be necessary") in a particular time period or indefinitely.[9] It is the appropriations bills that determine how much funding those agencies and programs will get.

Appropriations

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Main article: Appropriations bill (United States)

An appropriations bill is a bill that appropriates (gives to, sets aside for) money to specific federal government departments, agencies, and programs. The money provides funding for operations, personnel, equipment, and activities.[13] Appropriations bills are under the jurisdiction of the United States House Committee on Appropriations and the United States Senate Committee on Appropriations.[13] Both Committees have twelve matching subcommittees, each tasked with working on one of the twelve annual regular appropriations bills.

There are three types of appropriations bills: regular appropriations bills, continuing resolutions, and supplemental appropriations bills.[13] In any given fiscal year, all three may be used. Traditionally, regular appropriations bills have provided most of the federal government's annual funding.[17] The text of the bill is divided into "accounts" with some larger agencies having several separate accounts (for things like salaries or research/development) and some smaller agencies just having one.[17] The appropriations bill provides a specified amount of money for each individual account, and can also include conditions or restrictions on the use of the money.[17]

When a new fiscal year starts on October 1 and Congress has not passed some or all of the regular appropriations bills, Congress extends their funding and budget authority from the previous year, with possible minor modifications, using a continuing resolution.[13] If all twelve regular appropriations bills have been passed, a continuing resolution will not be necessary. Supplemental appropriations bills increase funding for activities that were already funded in previous appropriations bills or the provide new funding for unexpected expenses.[18] For example, both the War in Afghanistan and the Iraq War were funded with a variety of supplemental appropriations.[19][20] Supplemental appropriations bills also provide funding for recovering from unexpected natural disasters like Hurricane Sandy (the Disaster Relief Appropriations Act, 2013).

Outlays

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Other

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See also

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References

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  1. ^ "GAO: Working for Good Government Since 1921". Government Accountability Office. Retrieved 10 January 2014.
  2. ^ Budget and Impoundment Control Act of 1974 on GPO access
  3. ^ a b c d e f g h i j k l m n o p q r s Bill Heniff Jr. (3 December 2012). "Introduction to the Federal Budget Process" (PDF). Congressional Research Service. Retrieved 10 January 2014. {{cite web}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  4. ^ a b Heniff Jr., Bill (26 November 2012). "Basic Federal Budgeting Terminology" (PDF). Congressional Research Service. Retrieved 9 January 2014.
  5. ^ 31 U.S.C. 1105(a) on Cornell Legal Information Institute
  6. ^ Tollestrup, Jessica (23 February 2012). "The Congressional Appropriations Process: An Introduction" (PDF). Congressional Research Service. p. Summary. Retrieved 12 February 2014.
  7. ^ "Senate Glossary - Discretionary Spending". United States Senate. Retrieved 12 February 2014.
  8. ^ "Senate Glossary - Mandatory Spending". United States Senate. Retrieved 12 February 2014.
  9. ^ a b c d e f g h i Heniff Jr., Bill (26 November 2012). "Overview of the Authorization-Appropriations Process" (PDF). Congressional Research Service. Retrieved 12 February 2014.
  10. ^ "Federal Budget Glossary". National Priorities Project. Retrieved 12 February 2014.
  11. ^ Cite error: The named reference CRSintoFedBudProcess was invoked but never defined (see the help page).
  12. ^ a b Oleszek, Walter J. (2008). Congressional procedures and the policy process (7. ed., [Nachdr.]. ed.). Washington, D.C.: CQ Press. p. 49. ISBN 9780872893030.
  13. ^ a b c d e Tollestrup, Jessica (23 February 2012). "The Congressional Appropriations Process: An Introduction" (PDF). Congressional Research Service. Retrieved 23 January 2014.
  14. ^ a b "C-SPAN Congressional Dictionary". C-SPAN. Retrieved 12 February 2014.
  15. ^ a b Oleszek, Walter J. (2008). Congressional procedures and the policy process (7. ed., [Nachdr.]. ed.). Washington, D.C.: CQ Press. p. 42. ISBN 9780872893030.
  16. ^ "Authorization Act". United States Senate. Retrieved 12 February 2014.
  17. ^ a b c Tollestrup, Jessica (23 February 2012). "The Congressional Appropriations Process: An Introduction" (PDF). Congressional Research Service. pp. 10–11. Retrieved 24 January 2014.
  18. ^ Tollestrup, Jessica (23 February 2012). "The Congressional Appropriations Process: An Introduction" (PDF). Congressional Research Service. p. 13. Retrieved 24 January 2014.
  19. ^ National Priorities Project | Bringing the Federal Budget Home from the Cost of War website
  20. ^ "Congressional Reports: Cost of Iraq, Afghanistan since 9/11". zFacts.org. 2006-04-24. Retrieved 2006-08-15.
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Process

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