Budget Process

What sort of country do you want to live in?

Exercise you lot want admission to education? Health intendance? Clean energy? Job opportunities? How much are those things worth?

Does it make sense that the richest country in the world still has rampant poverty?

How did nosotros end upwardly with policies that nurtured white supremacy, mass incarceration and police violence, and what can we do to end them?

Should we deport community members who don't accept immigration papers, or welcome them?

When is war justified?

Every i of today'due south hot button bug tin be constitute in the federal budget. How much we spend on instruction versus war, or health care versus incarceration, shows our values as a nation. Those values may exist very different from yours.

In that location have always been people who disagreed with our national budget priorities. History is full of examples of ordinary people working together to end wars, aggrandize health care, win civil rights, and so much more. That story continues today, and you are a part of it.

How It'due south Supposed to Piece of work (and How Information technology Does)

The U.Southward. Constitution promises the "power of the purse," or the ability to spend money, to Congress.ane This office of the Constitution doesn't fifty-fifty mention the president. The constitution as well grants Congress the potency to create and collect taxes, and to borrow money when needed. The Constitution does not, however, specify how Congress should exercise these powers, how to spend or raise coin, or where the money should get.

In 1974, in response to a dysfunctional upkeep process, Congress passed a law setting some guidelines for how to create the federal budget. Over the course of the twentieth century, Congress passed laws that take shaped the upkeep process into what it is today. Unfortunately, the upkeep process today is still rife with dysfunction – and yet, every year, Congress passes a budget. We'll tell yous how it works.

The Annual Upkeep Process – What'due south In and What'south Out

The federal budget is made upwardly of two major kinds of spending: mandatory and discretionary spending. A third category, involvement on the national debt, will come up after.

To fix the federal budget, Congress passes 2 kinds of laws that set the budget for our country. The first are called authorization. These are necessary for both mandatory and discretionary spending. There are also appropriations, which legislate what is known as discretionary spending. The manner issues finish up in i saucepan or the other has a lot to do with history.

Authorizations bills3 for mandatory spending oftentimes concluding several years. When a spending authorization finally expires, Congress can vote to continue it as is, or brand changes. Congress tin can likewise make changes along the way, but if they don't, this spending continues pretty much on auto-airplane pilot.

The biggest and most well-known examples of mandatory spending are Social Security, Medicare and Medicaid benefits. In these programs, how much is spent depends on how many people authorize. If lots of people retire and qualify for Social Security checks, more is spent. If fewer people retire, less is spent. Everyone who is eligible can get benefits.

Then there are appropriations bills, which focus on discretionary spending. Appropriations final only i yr, and do set a specific budget. If that coin runs out before the end of the year, the government can't spend more unless Congress votes on a new cribbing. So, Congress does it all over again next yr.

The biggest example of discretionary spending is the military budget, which accounts for half or more of the discretionary budget almost every twelvemonth (the COVID-19 pandemic is a recent exception). The other half is divide between things like public education, housing, public wellness, medical research, free energy, the environment, federal law enforcement, and even veterans' benefits, which aren't part of the military upkeep. Most federal programs, and possibly well-nigh issues yous care about, have to squeeze into this role of the federal budget.

The Annual Budget Process

The U.S. federal budget operates on fiscal years that run from October 1 to September 30. For example, FY 2021 ran from Oct 1, 2020 through September xxx, 2021. Each year, Congress sets discretionary spending levels through the appropriations process, with the President playing a supporting function.

This is how the appropriations procedure is supposed to go:

  1. The President submits a budget request to Congress for what he/she/they would similar to run into.
  2. The Firm and Senate pass budget resolutions, setting full spending levels for the year. They may or may not accept the President'due south recommendations.
  3. Firm and Senate Appropriations committees put together 12 detailed appropriations bills representing 12 separate areas of regime. This process takes a while.
  4. The House and Senate each vote on the 12 appropriations bills and atomic number 26 out their differences.
  5. The President signs each of the 12 appropriations bill. Now the budget is constabulary.

Pace i: The President Submits a Budget Request

According to federal law, the president should upkeep request to Congress each February for the coming fiscal year.v

To offset, each federal agency works with the Part of Management and Budget, which is part of the White Firm. The upkeep requests draw what the leaders of each government agency think they demand to run things for the current twelvemonth.

The Office of Management and Budgets works with agencies to combine these budgets into the president's budget request. The president'southward request also includes the president's preferred tax policies and how the authorities volition bring in money.

Only the president's budget request is but a suggestion. Congress and so writes its ain appropriations bills, which may take little in common with the president's request. The president'south ability over the budget comes largely from the ability to veto appropriations bills passed by Congress. Merely later on the president signs these bills (in step five) does the country accept a budget for the new fiscal year.6

Step 2: The Business firm and Senate Pass Budget Resolutions

After the president submits his or her budget request, the House Committee on the Budget and the Senate Committee on the Budget each write and vote on their ain budget resolutions.7

The upkeep resolution sets the year'south spending limits for the 12 main areas of federal discretionary spending. It likewise includes estimates for how much coin will be brought in through taxes and other means. The budget resolutions from the Business firm and Senate don't get into much particular or set funding for private programs. That happens after.

The Business firm and Senate each pass their own budget resolutions. And then, members from each come together in a joint conference to iron out differences between the two versions – sometimes a very difficult and contentious process. If they can agree on a compromise version, the resulting "reconciled" version is then voted on again and must laissez passer in each sleeping room.

Sometimes, Congress fails to laissez passer a upkeep resolution setting spending limits – either because the Senate or House (or both) fail to pass 1, or considering the Senate and Firm can't agree on a "reconciled" version. When that happens, information technology can make the rest of the process longer and more than difficult.

Step 3: House and Senate Create Appropriation Bills

The House and Senate both accept Appropriations Committees that are made up of members of Congress. These committees are responsible for determining the precise levels of upkeep authority, or allowed discretionary spending, for all discretionary programs in the federal budget.8

The Appropriations Committees in both the House and Senate are broken down into 12 smaller appropriations subcommittees. Each of these are responsible for creating an appropriations pecker. Subcommittees cover different areas of the federal government: for instance, in that location is a subcommittee for armed forces spending, and another one for energy and water. Each subcommittee conducts hearings in which they seek boosted information about how they should fund authorities agencies and programs.ix

Based on all of this information, the chair of each subcommittee writes a first draft of the subcommittee's appropriations bill, constant by the spending limits set up out in the upkeep resolution, if in that location was one. All subcommittee members then get chances to change the bill and vote on it. In one case they pass in their subcommittees, each of the 12 bills goes to the total Appropriations Committee. The larger commission can and so change it even more, and vote to send it to the full House or Senate for a final vote. In recent years, the House and Senate accept not followed this process. Instead of working on 12 distinct appropriations bills, they have put all federal discretionary spending into 1 big appropriations pecker known as an omnibus. This can outcome in rushed passage of a bill besides big and complicated for anyone to even read – both concerned citizens, and fifty-fifty members of Congress themselves.

Step 4: The Business firm and Senate Vote on Appropriations Bills

Afterwards the committee votes, all 435 members of the House of Representatives and 100 members of the Senate get a chance to vote on the 12 appropriations bills.

Later on the House and Senate pass their versions of each appropriations bill, a conference committee meets to iron out whatsoever differences between the House and Senate versions – only like they did for the budget resolutions. After the briefing committee produces a single "reconciled" version of the pecker, the Firm and Senate vote again, simply this time on a beak that is identical. After passing both the House and Senate, each appropriations bill goes to the president for his or her signature.x

In reality, the budget process can (and often does) get stuck at any of the points along the way then far.

Step 5: The President Signs Each Appropriations Nib and the Upkeep Becomes Law

The president must sign each appropriations bill after it has passed Congress for the bill to become law. When the president has signed all 12 appropriations bills, the budget process is complete. Rarely, nevertheless, is work finished on all 12 bills past Oct. 1, the kickoff of the new fiscal year.

This chart shows how all of these pieces fit together to brand the almanac federal budget process.

Continuing Resolutions and Omnibus Bills

When the budget procedure is not complete by October. 1, Congress may pass a continuing resolution and then that agencies go along to receive funding until the full budget is in place.11.

If Congress does not pass appropriations or a continuing resolution by Oct 1, the government won't take coin to function. That results in a shutdown of the federal government, in which many parts of the government end operating. This has happened many times over the years.

Supplemental Appropriations

From time to fourth dimension the authorities has to reply to emergencies, such as the COVID-19 pandemic, natural disasters, or overseas conflicts. In these cases, the authorities may need to appropriate more spending to handle the crisis. This type of funding is allocated through legislation known as supplemental appropriations.

It'south Even Messier than It Sounds

The process above is the way the federal budget is supposed to exist made, just information technology rarely goes according to plan. Just regardless of how the process goes, there are always points where people in this state can weigh in to let their representatives know what they want, and don't want, in the federal upkeep.

Endnotes

  1. U.S. Constitution, article 1, department 8, clause 1.
  2. Congressional Research Service, "Introduction to the Federal Budget Process," Written report 98-721, 3 December. 2012.
  3. Congressional Inquiry Service, "Overview of the Authorisation-Appropriations Procedure," Written report 20-731, 26 November. 2012.
  4. Congressional Research Service, "Mandatory Spending: Evolution and Growth Since 1962," Report 33-074, 10 Mar. 2014.
  5. Congressional Research Service, "Introduction to the Federal Budget Procedure," Report 98-721, 3 Dec. 2012.
  6. U.S. Constitution, commodity 1, section 7, clause 2.
  7. Congressional Research Service, "The Congressional Budget Process: A Brief Overview," Report 20-095, 22 Aug. 2011.
  8. Congressional Research Service, "The Congressional Budget Procedure: A Cursory Overview," Written report xx-095, 22 Aug. 2011.
  9. Congressional Research Service, "The Congressional Appropriations Process: An Introduction," Report 42388, 14 Nov. 2014.
  10. Congressional Research Service, "The Congressional Budget Process: A Brief Overview," Report 20-095, 22 Aug. 2011.
  11. Congressional Research Service, "Continuing Resolutions: Overview of Components and Recent Practices," Study 42647, xiv Jan. 2016.