Your tax dollars at work

Congressional Budget ProcessEnacted to bring order to decision making of how

toEstablishes timetable for orderly decision makingEstablishes rules and procedures for fiscal

legislationIntended to give Congress a level playing field

with the Executive BranchBudget and Accounting Act of 1974

Creates the Congressional Budget Office (CBO) to counter the OMB (Office of Management and Budget); but the GAO (General Accounting Office) is more trustworthy

Key PlayersInterest Groups-lobby agencies, the President and

subcommitteesBureaucratic Agencies-send requests to OMBOffice of Management and Budget-creates the

President’s budgetTax committees in Congress-Ways and Means and

Senate Finance committees write tax codesBudget committees and CBO-set parameters of

Congressional budget process and bind Congress to spending limits

Subject matter Committees-write new laws which require new spending and have oversight powers

Appropriations Committees-decide in each chamber who gets what through hearings

CongressGAO-audit, monitor and evaluate what agencies are

doing with their budget

Budget Process SimplifiedPresident submits a budget (1st Monday in

February)Congress considers Budget Resolution

(“target” spending limits)Congress seeks Reconciliation instructions to

Committees/Allocations of fundingReconciliation enactedAppropriations enacted

Tools of the TradeCongress adopts a “Budget Resolution” or a

blueprint for spending and revenues for the year aheadNo force of law, only guidelines, also doesn’t

need President’s signatureAllocates budget authority to the

Appropriations Committee/ReconciliationCongress spends rest of the year (and

typically more) building the structure they laid out

Income vs. SpendingIncome side Spending sideRevenues (income taxes,

payroll taxes, etc.)

Receipts (fees, asset sales)

Discretionary appropriations (defense 40%, domestic, international, salaries, grants, contracts) can be changed without changing law (30%-40% of budget) comes in 13 appropriations bills

Entitlements (Social Security, Medicare, GSL, veterans benefits) are 60%-70% of budget, can only be changed by law or Reconciliation

Budget TermsThe Budget Resolution is the blueprint Congress

uses to make spending decisions. It is enforced through House and Senate rules and procedures.It is a concurrent resolution and does not need the

President’s signatureThe Resolution allocates funds to the Appropriations

Committees to appropriate discretionary funds and directs Authorizing Committees to recommend changes in laws to bring legislation into line with the plan through reconciliation Reconciliation makes changes in taxes, mandatory and

entitlements spending, and the debt ceiling; it also requires the President’s signature (supposed to be done by June 15th)

Budget TimetableFirst Monday in February President submits budget to Congress for the following fiscal year which starts October 1st.

Congressional committees hold hearings and submit views and estimates of budget , sometimes they don’t even consider the president’s budget (remember iron triangles)

April 15th Congress completes action on the

Congressional BUDGET RESOLUTION for the fiscal year they are working on 10 years ahead, which may include RECONCILIATION Bills to committees of jurisdiction. (Only in 1976, 1977, and 1994 did Congress meet this deadline.)

House ActionIn late May, the House considers appropriations

even in the absence of a Budget ResolutionHouse Appropriations Committees finish

reporting the 13 regular appropriations bills for the fiscal year on June 10th By June 15th Congress completes action on

RECONCILIATION legislation, in order to bring congressional action into line with the Budget Resolution blueprint (Congress never completes Reconciliation legislation by this date, earliest was July 31st, 1981)

June 30th, House completes action on all 13 appropriations bills for fiscal year

Senate action

July/August the Senate completes action on appropriations bills and conference committees meet to work out differences

On September 30th the House and Senate complete action on the conference report on appropriations for the fiscal year that starts October 1st (Bills sent to President for his [or her] signature)

Beginning the Fiscal yearOctober 1st is new fiscal year, and since this date

is rarely met, except for the defense budget, Congress has to pass continuing resolutions authorizing agencies to operate on last years appropriations

Many times Congress will pass omnibus bills, which combines several appropriations bills together because of deadlines missedIn some cases if Congress and the President can’t

agree, some programs will be shutdown such as in 1995 when over 300,000 federal employees had to stay home through November and December

Other Influences on budgetSize of the debt-$13,735,428,931,737.52 Nov.

16th “Blessed are the young, for they shall inherit the national

debt.” Herbert Hoover (1874-1964)

Cost of warNatural DisastersTax cut politicsElection yearEconomic conditions

Some of these unexpected changes may require supplemental appropriations bills (Iraq War)

Budget Breakdown