How the federal budget is generated
The federal budget is a mechanism used to create the US federal budget. The 1974 Budget Control Act established the process. The Budget Control Act centralized and consolidated this budget authority.The House originate spending bills and the Senate amends them.
9 Steps to the Federal Budget Process
FY 2023 is from Oct 1, 2023 to Sept 30,2024.The budget process for the FY 2023 budget start in the fall of 2020.
All federal agencies submit their budget request to the Office of Budget and Management.OMB prepares and manage the budget for the president.
OMB sends its budget budget review remarks back to the federal institution.
Agencies present their final budget requests.OMB then gather the final budget and forwards it to the incoming president.
January is the deadline by which a president must shape their budget preferences in the State of the Union Address.The Council of Economic Advisor submits the Economic Report to the President.
First Monday in Feburary
This is final date by which the president must submit his budget to Congress. The President’s budget puts their priorties into dollars for three sectors
- The budget must reflect the impact of changes to the tax code on federal revenue.
- Funding levels for federal agencies
- Changes to mandatory programs already enacted by Congress such as Affordable care Act, The Troubled Asset Relief Program, Medicaid,Social Security, Medicare.
Congress makes a budget resolution to guide spending. The House and Senate Budget Committees hold hearings with agency officials who clarify why they needs the fund requested.The committees forward their resolutions to a floor vote.
The House and Senate sort out their differences in a conference committee.The ultimate budget resolution must be passed by majority votes in Senate and House.Congress most of times skip this step and default to the prior year’s resolution.
Congress uses the budget resolution to guide bills.The House and Senate each have 12 Appropriations Subcommittees.Congress Specify funds for each agency in discretionary budget.They hold more hearings then prepare and pass their bills.These go to 12 conference committees to sort out the differences.The ultimate bill go to the floor for a vote before submitting to the president for signature.
Each house of Congress has authorizing committees to address any changes to tax laws or mandatory spending.These go to House and Senate Budget Committee for a vote. A conference committee sort out the differences.
The ultimately bill goes to the floor for a final vote before submitting to the president.The constitution dictates that they must approve or veto within next `10 days.A veto means process restart again.
This is the deadline by which all bills should be signed into law.Congress has two options if this does not happen. It can pass a continuing resolution to keep federal agencies running at their current levels or it can permit a government shutdown.
A government shutdown means all non essential discretionary programs close and workers are furloughed without pay.This happened in 2019,2018 and 2013.
The president submits a Mid Session Review of the budget to Congress.
The Performance of the US Treasury
The Treasury Department Financial Management Services executes the budget once its in effect.This is the institution that collects revenue, delinquent debt,make payments and issue reports.
The Main Purpose of the Federal Budget Process
Article 1 Section 7 of the US Constitution gives Congress the power to raise spend and revenue. Elected officials represent the will of the voters or they dont stay in office.Congress must agree on where the tax burden falls and on who receives the benefit of spending.