United States budget process

The process of creating the budget for the United States Government is known as the budget process. The specific procedures for formulating the budget were established in the Congressional Budget and Impoundment Control Act of 1974.

The President's budget request

The budget begins in February with the submission of the President's budget request. According to the act, the budget request is submitted to the Congress on the first Monday in February. At this stage, the budget request is not binding but merely constitutes an extensive proposal of the administration's intended spending for the following fiscal year. The budget proposal includes volumes of supporting information intended to persuade Congress of the necessity and value of the budget provisions. Funding requests for all federal independent agencies and cabinet departments are included in the President's budget request, and each agency and department provides additional detail and supporting documentation to Congress on its own funding requests.

Budget resolution

The next step is the drafting of a budget resolution. The resolution is drafted concurrently by the House and the Senate budget committees. Following the traditional calendar, by early April both committees finalize their drafts and submit it to the respective floors for consideration and adoption.

Once both houses pass the resolution, a conference report is drafted by members of the Senate and the House. The purpose of the conference report is to reconcile any differences that may exist between the House and the Senate versions. Usually, the conference report is adopted finalizing the budget resolution.

In contrast to most legislation passed by Congress, the budget resolution is a concurrent resolution and thus does not become law and does not require the signature of the President. As a result, no money has actually been appropriated at that point. The budget resolution then serves as a blueprint for the actual appropriation process. The fiscal year begins on October 1st.

Structure of the budget

Fundamentally, the budget resolution is structured along 20 budget functions, which are simply categories of spending. A listing of the budget functions can be found below.

Note 1: Estimated budget authority as presented in the President's budget (in million USD)

Discretionary vs. mandatory spending

Each function within the budget contains some line items as discretionary and some as mandatory spending.

Discretionary spending requires an annual appropriation bill, which is a piece of legislation. All discretionary spending is determined by the House and Senate Appropriations Committees and their various sub-committees. Since the spending is typically for a fixed period (usually a year), it is said to be under the discretion of the Congress. Some appropriations last for more than one year (see Appropriation bill for details).

Mandatory spending refers to spending enacted by law, but not dependent on an annual or periodic appropriation bill. Commonly, "mandatory" programs refer to certain entitlement programs that do not require annual appropriations. Social Security benefits, Medicare, and Medicaid, for example, entitle certain individuals to Federal government payments through legislation enacted in the past. The cost of spending for these benefits is estimated every year, but is not subject to periodic congressional approval. The Congress may, however, change mandatory programs or spending through subsequent legislation.

See also

• United States Office of Management and Budget
• United States Budget Deficit
• Government financial reports
• Anti-Deficiency Act

External links

• The Budget Graph A graphical representation of the 2007 United States federal discretionary budget
• Budget Calculator Online calculator that places specific tax or spending numbers in the context of the total U.S. budget. It also compares any spending or revenue item to projected defense spending. (Center for Economic and Policy Research)
• The Congressional Budget Process: an Explanation - published by the Senate Budget Committee, 1998 (PDF file)
• The Budget System and Concepts - a white house publication describing in detail the U.S. Budget System and related concepts (PDF file)
• The President's Budget of the United States Government, FY 1996 -- present.
• 2006 Financial Report of the United States Government

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