Congressional Budget Process

2. Congressional Budget Process Your tax dollars at work

3. Budget Process Simplified • President submits a budget (1st Monday in February) • Congress considers Budget Resolution (“target” spending limits) • Congress seeks Reconciliation instructions to Committees/Allocations of funding • Reconciliation enacted • Appropriations enacted

4. Congressional Budget Process • Enacted to bring order to decision making of how to • Establishes timetable for orderly decision making • Establishes rules and procedures for fiscal legislation • Intended to give Congress a level playing field with the Executive Branch • Budget 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

5. Key Players • Interest Groups-lobby agencies, the President and subcommittees • Bureaucratic Agencies-send requests to OMB • Office of Management and Budget-creates the President’s budget • Tax committees in Congress-Ways and Means and Senate Finance committees write tax codes • Budget 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 • Congress • GAO-audit, monitor and evaluate what agencies are doing with their budget

6. Tools of the Trade • Congress adopts a “Budget Resolution” or a blueprint for spending and revenues for the year ahead • No force of law, only guidelines, also doesn’t need President’s signature • Allocates budget authority to the Appropriations Committee/Reconciliation • Congress spends rest of the year (and typically more) building the structure they laid out

7. Income vs. Spending Income side Spending side • Revenues (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

8. Budget Terms • The 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 signature • The 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)

9. Budget Timetable

10. 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.)

11. House Action • In late May, the House considers appropriations even in the absence of a Budget Resolution • House Appropriations Sub-Committees finish reporting the 12 regular appropriations bills for the fiscal year on June 10th(chairmen referred as “College of Cardinals”) • 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 12 appropriations bills for fiscal year

12. Senate action • July/August the Senate completes action on appropriations bills and conference committees meet to work out differences (2009 $10 B given to high speed rail in House, $2 B in Senate, compromise to $8 B) • 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)

13. Beginning the Fiscal year • October 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 missed or supplemental bills (flip-flop possible) • In 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

14. Decision making in Real Life (buying a car) • How much car can we afford? Budget Comm. • Do we need a second job or a loan? Ways and Means/Finance Comm. • What car should we buy? Authorizing Comm. • Signing the Contract Authorizing Comm. • Writing the monthly payment check Appropriations Comm. • Transmission busts Supplemental Appropriations

15. Other Influences on budget • Size of the debt-$12,036,667,750,791.28 Nov. 20th • “Blessed are the young, for they shall inherit the national debt.” Herbert Hoover (1874-1964) • Cost of war • Natural Disasters • Foreign Aid • Tax cut politics • Election year • Economic conditions • Some of these unexpected changes may require supplemental appropriations bills (Iraq War)

16. 2007 Budget $2 + trillion

17. Budget Breakdown