congressional budget process
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Congressional Budget Process
Your tax dollars at work
Budget Process SimplifiedPresident submits a budget (1st Monday in
February)Congress considers Budget Resolution
(“target” spending limits)Congress seeks Reconciliation instructions to
Committees/Allocations of fundingReconciliation enactedAppropriations enacted
Congressional Budget ProcessEnacted to bring order to decision making of
how toEstablishes timetable for orderly decision
makingEstablishes rules and procedures for fiscal
legislationIntended to give Congress a level playing
field with the Executive BranchBudget and Accounting Act of 1974
Creates the Congressional Budget Office (CBO) to counter the OMB (Office of Management and Budget); but the GAO (General Accounting Office) is more trustworthy
Key PlayersInterest Groups-lobby agencies, the President and
subcommitteesBureaucratic Agencies-send requests to OMBOffice of Management and Budget-creates the President’s budgetTax committees in Congress-Ways and Means and Senate
Finance committees write tax codesBudget committees and CBO-set parameters of Congressional
budget process and bind Congress to spending limitsSubject matter Committees-write new laws which require new
spending and have oversight powersAppropriations Committees-decide in each chamber who gets
what through hearingsCongressGAO-audit, monitor and evaluate what agencies are doing with
their budget
Tools of the TradeCongress adopts a “Budget Resolution” or a
blueprint for spending and revenues for the year aheadNo force of law, only guidelines, also doesn’t
need President’s signatureAllocates budget authority to the
Appropriations Committee/ReconciliationCongress spends rest of the year (and
typically more) building the structure they laid out
Income vs. SpendingIncome side Spending sideRevenues (income taxes,
payroll taxes, etc.)
Receipts (fees, asset sales)
Discretionary appropriations (defense 40%, domestic, international, salaries, grants, contracts) can be changed without changing law (30%-40% of budget) comes in 13 appropriations bills
Entitlements (Social Security, Medicare, GSL, veterans benefits) are 60%-70% of budget, can only be changed by law or Reconciliation
Budget TermsThe Budget Resolution is the blueprint
Congress uses to make spending decisions. It is enforced through House and Senate rules and procedures.It is a concurrent resolution and does not need
the President’s signatureThe Resolution allocates funds to the
Appropriations Committees to appropriate discretionary funds and directs Authorizing Committees to recommend changes in laws to bring legislation into line with the plan through reconciliation Reconciliation makes changes in taxes, mandatory
and entitlements spending, and the debt ceiling; it also requires the President’s signature (supposed to be done by June 15th)
Budget TimetableFirst Monday in February President submits budget to Congress for the following fiscal year which starts October 1st.
Congressional committees hold hearings and submit views and estimates of budget , sometimes they don’t even consider the president’s budget (remember iron triangles)
April 15th Congress completes action on the
Congressional BUDGET RESOLUTION for the fiscal year they are working on 10 years ahead, which may include RECONCILIATION Bills to committees of jurisdiction. (Only in 1976, 1977, and 1994 did Congress meet this deadline.)
House ActionIn late May, the House considers appropriations even in
the absence of a Budget ResolutionHouse Appropriations Sub-Committees finish reporting
the 12 regular appropriations bills for the fiscal year on June 10th (chairmen referred as “College of Cardinals”) By June 15th Congress completes action on
RECONCILIATION legislation, in order to bring congressional action into line with the Budget Resolution blueprint (Congress never completes Reconciliation legislation by this date, earliest was July 31st, 1981)
June 30th, House completes action on all 12 appropriations bills for fiscal year
Senate action
July/August the Senate completes action on appropriations bills and conference committees meet to work out differences (2009 $10 B given to high speed rail in House, $2 B in Senate, compromise to $8 B)
On September 30th the House and Senate complete action on the conference report on appropriations for the fiscal year that starts October 1st (Bills sent to President for his [or her] signature)
Beginning the Fiscal yearOctober 1st is new fiscal year, and since this date is
rarely met, except for the defense budget, Congress has to pass continuing resolutions authorizing agencies to operate on last years appropriations
Many times Congress will pass omnibus bills, which combines several appropriations bills together because of deadlines missed or supplemental bills (flip-flop possible)In some cases if Congress and the President can’t agree,
some programs will be shutdown such as in 1995 when over 300,000 federal employees had to stay home through November and December
Decision making in Real Life (buying a car)
How much car can we afford? Budget Comm.
Do we need a second job or a loan? Ways and Means/Finance Comm.
What car should we buy? Authorizing Comm.
Signing the Contract Authorizing Comm.
Writing the monthly payment check Appropriations Comm.
Transmission busts Supplemental Appropriations
Other Influences on budgetSize of the debt-$12,036,667,750,791.28 Nov.
20th “Blessed are the young, for they shall inherit the
national debt.” Herbert Hoover (1874-1964)Cost of warNatural DisastersForeign AidTax cut politicsElection yearEconomic conditions
Some of these unexpected changes may require supplemental appropriations bills (Iraq War)
2007 Budget $2 + trillion
Budget Breakdown
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