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US Federal Budget Process

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Updated February 14, 2007
This federal budget process document is a quick primer outlining the steps taken as the budget moves from concept to reality.

President's Proposed Budget

The budget process begins the first month in February, when the President submits his proposal to Congress. This step in the process is governed by the Budget and Accounting Act of 1921.

The Act also established the Bureau of the Budget which, since 1970 (Nixon Administration), is known as the Office of Management and Budget (OMB). OMB is the largest and arguably the most powerful group in the Executive Office of the President. OMB is also responsible for overseeing management and budgets of executive branch agencies as well as advising the President on a variety of issues.

The President's proposed budget includes extensive supporting documentation to make the case for White House spending - and saving - priorities.

Congressional Budget Resolution

The Congressional Budget Resolution is developed following the guidelines of the Congressional Budget and Impoundment Control Act of 1974. This Act also created the House and Senate Budget Committees and the Congressional Budget Office (CBO).

The Congressional Budget Resolution is the Congressional proposal for managing the federal government. It includes estimated revenue, new budget authorities, proposed outlays, net surplus or deficit, and the resulting estimated level of public debt.

See the table for categories of spending.

This is a joint resolution - crafted under the direction of the House and Senate Budget Committees - that does not require Presidential signature and does not carry the authority of law. Congress should pass this resolution by 15 April, but the date is often ignored.

Types of Spending

There are two types of spending: mandatory (direct) and discretionary.

Mandatory spending does not require an annual appropriation because the enabling legislation included the budget authority. Commonly cited programs in this category include Social Security, Medicare and Medicaid.

Discretionary spending -- which accounts for only about one-third of what the Federal Government spends each year -- requires legislative action authorizing the government to spend money.

Finalizing A Budget

House and Senate Appropriations Committees hold hearings, taking testimony from OMB, executive agency officials and others. Each subcommittee is charged with developing one appropriation bill:
  1. Agriculture, rural revelopment, Food and Drug Administration
  2. Commerce, Justice, State, Judiciary
  3. Defense
  4. District of Columbia
  5. Energy and water development
  6. Foreign operations, export financing
  7. Homeland Security
  8. Interior
  9. Labor, Health and Human Services, Education
  10. Legislative Branch
  11. Military construction
  12. Transportation, Treasury, General Government
  13. Veterans Affairs, Housing and Urban Development, Independent Agencies


There are some parlimentary rules that make these bills unique. For example, Senators cannot filibuster the budget resolution or a reconciliation bill.

One controversial appropriation that drew attention in the 2006 mid-term elections is the earmark. These "directed" appropriations are one way a Congressman can bring home money directly to the home state or district, eliminating executive agency discretion.

The fiscal year begins on 1 October. If Congress has not finalized a budget that the President has signed, it must pass a continuing resolution and the President must sign it or else the government will shut down.

What You Can Do

If budget or deficit issues have you hot around the collar, it's time to contact your elected representatives in the Senate and House. Next, contact the chairmen of the Appropriations and Budget Committees. Finally, if someone from your home state is on either House Committee, contact them, too.

Federal Budget Functions (Categories)

Function numberBudget function
050National defense
150International affairs
250General science, space, and technology
270Energy
300Natural resources and environment
350Agriculture
370Commerce and housing credit
400Transportation
450Community and regional development
500Education, training, employment, and social services
550Health
570Medicare
600Income security
650Social Security
700Veterans benefits and services
750Administration of justice
800General government
900Net interest
920Allowances
950Undistributed offsetting receipts
Source: House Committee on the Budget, Basics of the budget process: a briefing paper, February 2001 (cache copy)
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