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.

Contents

The President's Budget

The budget process begins in February with the submission of the President's budget. According to the act, the budget is due on the first Monday in February. At this stage, the budget is not binding but merely constitues an extensive proposal of the administration's intended spending for the following fiscal year. In addition to the actual proposal, the President submits volumes of supporting information intended to persuade Congress of the necessity and value of the budget provisions. In addition to the President, each independent agency and cabinet department also submits its own budget proposal which will be incorporated into the final version of the budget.

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 blue print for the actual appropriation process.

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.

Function Title FY 20051
050 National Defense 423,098
150 International Affairs 29,569
250 General Science, Space and Technology 24,459
270 Energy 1,883
300 Natural Resources and Environment 30,286
350 Agriculture 22,353
370 Commerce and Housing Credit 8,092
400 Transportation 69,494
450 Community and Regional Development 12,949
500 Education, Training, Employment and Social Services 91,817
550 Health 248,780
570 Medicare 293,574
600 Income Security 342,324
650 Social Security 516,457
700 Veterans Benefits and Services 65,444
750 Administration of Justice 40,781
800 General Government 19,392
900 Net Interest 177,909
920 Allowances (798)
950 Undistributed Offsetting Receipts (63,108)
Total: 2,354,755

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 annual appropriation through corresponding legislation. All discretionary spending is determined by the U.S. House Committee on Appropriations and its various sub-committees. Since the spending has to be explicitly renewed, it's said to be under the annual discretion of Congress.

Mandatory spending derives from certain entitlement programs that Congress has established over time. Those do not require specific annual appropriations unless the entitlement changes. Veterans benefits, for example, entitle certain individuals to government funds through legislation enacted in the past. The cost of these benefits is estimated every year but is not subject to explicit congressional approval.

See also

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