About the Budget Process

The Federal Budget

The federal budget isn’t one specific document or piece of legislation, but rather the end result of process that is arguably the most important action undertaken by the federal government each year. It may seem like a mind-numbing set of numbers and columns, but it has a direct impact on state and local governments, communities, businesses, and individuals. Moreover, the federal budget serves as a fundamental statement of who we are as a nation. In personal and organizational budgets, the spending choices made reflect what is valued. The same holds true for the federal budget – how we generate revenue and spend resources as a nation demonstrates what our priorities and values are.

The National Advocacy Center believes that the federal budget should be evaluated through a moral lens. Drawing from the Biblical tradition, Catholic Social Teaching, and Good Shepherd values, we ask: Does the budget promote human dignity, the common good and opportunity for all? How will the budget impact the most vulnerable members of society? Does it address the most critical needs our society is facing? How well does it plan for the future? What kind of stewardship does it provide over our natural and economic resources?

The National Advocacy Center has also recently joined with other faith-based advocacy organizations to develop a set of common principles for evaluating the federal budget from our shared sacred traditions. These principles can be found in an annual statement, “A Faith Reflection on the Federal Budget."

How the Budget Process Works

Unfortunately, the complicated and often contentious process of developing the federal budget can make it difficult for the public to follow and participate in the debate. The following provides a brief guide to the federal budget process along with links to additional information and analysis of what is happening with the budget so far this year.

Step 1: The President’s Budget

Each year, by the first Monday in February, the President is required to submit a detailed budget to Congress indicating the President’s priorities for revenue and spending for the next federal fiscal year, which runs from October 1^st of the current calendar year to September 30^th of the following year. The President’s budget isn’t binding, but it starts the overall budget conversation for the year and often sets the parameters for the debate.

Click here for an NAC analysis of President Bush’s budget for FY2008.

Step 2: The Congressional Budget Resolution

Once the President’s budget has been delivered to Congress, the House and Senate then hold hearings on it and the Budget Committees begin to develop their budget resolutions. Each chamber drafts and passes its own budget resolution. Once each chamber approves its resolution, the differences between the two must be worked out in a conference committee and a final budget resolution passed.

The final budget resolution provides a “blueprint” for spending and tax decisions. It does not set binding spending amounts for specific programs, but it does outline the overall limit on spending for broad categories such as Education, Health, and National Defense. The budget resolution can also include other items such as reconciliation directives, which can require specific congressional committees to make spending cuts or revenue changes (more on reconciliation). In addition, the budget resolution can make changes to the rules that govern the budget process – what kinds of limits are placed on spending and tax cuts, how these limits are enforced, what kinds of calculations are used to come up with the budget numbers. Although both reconciliation and budget rules can be very confusing, they have a significant impact on the resources available to Congress and how they are spent.

For more detailed information about the first two steps of the budget process, the Center on Budget and Policy Priorities "Introduction To The Federal Budget Process" is a helpful resource.

The federal budget contains two kinds of spending: mandatory and discretionary. Mandatory spending accounts for roughly two-thirds of the federal budget and includes “entitlement” programs such as Medicare and Social Security. This spending is set by permanent laws which automatically determine the funding levels for each year. Discretionary spending encompasses all other spending and it is set each year by Congress through the Appropriations process.

Step 3: Appropriations

While the budget resolution provides an overall limit for discretionary spending, it is up to the Appropriations Committees to determine levels of funding for the specific programs. The House and Senate Appropriations Committees are divided into subcommittees, which are responsible for specific areas of spending. Until this year, both the House and Senate had 13 corresponding appropriations subcommittees that develop detailed spending or appropriations bills, which determine the specific funding amounts for programs. Once each subcommittee agrees on a bill, it then goes to the full committee for approval. The full House or Senate must then vote on the appropriations bills, reach a compromise on them with the other chamber, and secure the president’s signature for them to go into effect.

This process doesn’t always run smoothly. Although the target date for Congress to complete all 13 appropriations bills is the end of the current fiscal year, September 30, it is rarely met. The process will be further complicated this year by the fact that the House and Senate will no longer produce the same number of appropriations bills - the House is reorganizing its Appropriations Committee to produce only 10 bills, while the Senate will mantain the traditional 13. This will make it much more difficult for the two chambers to resolve differences between bills because they will no longer cover the same areas of spending.

If Congress is unable to reach agreement on spending bills before the new fiscal year begins, they can pass "continuing resolutions," which keep current funding levels in place until all of the appropriations bills are signed into law. In recent years, Congress has fallen so far behind in the appropriations process that it has packaged several appropriations bills together into one “omnibus” appropriations bill at the end of the session.

Charting the Budget Process

All in all, this following chart provides a general picture of what the entire budget process is supposed to look like.

The President’s Budget

First Week of February

Senate Budget Resolution

House Budget Resolution

Budget Conference Committee

Congressional Budget Resolution

Target Date – April 15th

Appropriations Process

May-September

The Budget Process

Other committees write legislation to meet reconciliation directives in the budget resolution - April-August

Each bill goes to the full

Appropriations Committee

Each bill goes to the full

House

Conference Committees are created

for each bill to reconcile differences

Each bill goes to the full

Senate

Conference Reports return to the

House and Senate for final approval

President signs bills into law – the budget is complete! (hopefully by the start of the new fiscal year, Oct. 1)

13 Senate Appropriations

Subcommittees draft bills

Each bill goes to the full

Appropriations Committee

10 House Appropriations

Subcommittees draft bills

Appropriations Process

(Discretionary Spending)

Links

Budget Trainings - Coalition on Human Needs

Budget 101 - The Washington Post

Budget Tutorial - U.S. House Budget Committee

The Budget - U.S. Senate Virtual Reference Desk