United States budget process
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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.
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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
External links
- Basics of the Budget Process - published by majority staff on the House Committee on the Budget 2001 (PDF file) (http://www.house.gov/budget/budget-process-brf.pdf)
- The Budget System and Concepts - a white house publication describing in detail the U.S. Budget System and related concepts (PDF file) (http://www.whitehouse.gov/omb/budget/fy2006/pdf/concepts.pdf)