April 01, 2009

How the Budget of the U.S. Government is Decided

The President’s budget is a mix of Obama’s wish list, and the recommendation of various Departments, agencies, and coordinating offices. Here's my (limited) understanding of how the U.S. Government decided its budget.

First Monday in February
Obama must submit his budget to Congress (Congress is composed of the Senate and the House) no later than the first Monday in February 2009. It represents a broad framework for his agenda.

April 1
Congress responds to the President’s Budget with its own version. Both the Senate and the House must submit their markups by April 1, 2009 (today). At this point, the budget is still a resolution and not law. It includes input from the administration, constituencies, and Members of Congress.

Depending on which party is in leadership, Congress’s budget can be either very different or similar to the President’s. Currently, the President is a democrat, and Congress is democratic as well (to give you an idea of how often Presidents and Congress were ruled from different parties, see next post).

It’s a little tricky to draw up a budget since it must reflect
- Budget rules,
- Actual revenues, and
- Mandatory spending (programs for which the Government is obliged to pay)

June 10
The Appropriation process begins – this is basically a fight over small non-defense discretionary spending.

Congress annually considers 11 or more appropriation measures, which provides funding for numerous activities. These measures fund national defense, education, homeland security, crime, but also government operations for the federal agencies. Congress has developed certain (arcane and complicated) rules and practices for the proceeding for these measures: this is the Appropriation process.

House and Senate Appropriation Committees control about 40% of the total deferral spending for a fiscal year, and the House and Senate Legislative Committees control the rest.

June 15
Congress completes action on reconciliation legislation

June 30
House completes action on annual appropriation bills

At the end of the process, Congress develops a Conference Report, a report accompanying the bill which explains much of the bill language and gives specific directions.

Finally, if passed, Congress sends the report to the President for signature.
At this point, the President can:
- Veto the bill. In that case, the process must start over again
- Sign the bill into law. And that’s our Government budget for the year

October 1
Fiscal year begins

Here is President Obama’s proposed budget, submitted on February 26, 2009

1 comment:

Anonymous said...

You make it sound so simple :)
Very informative, thanks!