United States budget process
The process of creating the
budget for the United States Government is known as the
budget process. The specific procedures for formulating the budget were established in the
Congressional Budget and Impoundment Control Act of 1974.
The budget process begins in February with the submission of the
President's budget. According to the U.S. Constitution, the budget is submitted to the Congress on the first Monday in February. At this stage, the budget is not binding but merely constitues an extensive proposal of the administration's intended spending for the following
fiscal year. In addition to the actual proposal, the President submits volumes of supporting information intended to persuade
Congress of the necessity and value of the budget provisions. In addition to the President, each
independent agency and
cabinet department also submits its own budget proposal which will be incorporated into the final version of the budget.
The next step is the drafting of a budget resolution. The resolution is drafted concurrently by the
House and the
Senate budget committees. Following the traditional calendar, by early April both committees finalize their drafts and submit it to the respective floors for consideration and adoption.
Once both houses pass the resolution, a conference report is drafted by members of the Senate and the House. The purpose of the conference report is to reconcile any differences that may exist between the House and the Senate versions. Usually, the conference report is adopted finalizing the budget resolution.
In contrast to most legislation passed by Congress, the budget resolution is a
concurrent resolution and thus does not become law and does not require the signature of the President. As a result, no money has actually been
appropriated at that point. The budget resolution then serves as a blueprint for the actual appropriation process.
The fiscal year begins on October 1st.
Fundamentally, the budget resolution is structured along 20 budget
functions, which are simply categories of spending. A listing of the budget functions can be found below.
| Function | Title | FY 2005 | | 050 | National Defense | 423,098 |
| 150 | International Affairs | 29,569 |
| 250 | General Science, Space and Technology | 24,459 |
| 270 | Energy | 1,883 |
| 300 | Natural Resources and Environment | 30,286 |
| 350 | Agriculture | 22,353 |
| 370 | Commerce and Housing Credit | 8,092 |
| 400 | Transportation | 69,494 |
| 450 | Community and Regional Development | 12,949 |
| 500 | Education, Training, Employment and Social Services | 91,817 |
| 550 | Health | 248,780 |
| 570 | Medicare | 293,574 |
| 600 | Income Security | 342,324 |
| 650 | Social Security | 516,457 |
| 700 | Veterans Benefits and Services | 65,444 |
| 750 | Administration of Justice | 40,781 |
| 800 | General Government | 19,392 |
| 900 | Net Interest | 177,909 |
| 920 | Allowances | (798) |
| 950 | Undistributed Offsetting Receipts | (63,108) |
| Total: | 2,354,755 |
Estimated budget authority as presented in the President's budget (in million USD)Each function within the budget contains some line items as discretionary and some as mandatory spending.
Discretionary spending requires an annual appropriation bill, which is a piece of legislation. All discretionary spending is determined by the
U.S. House Committee on Appropriations and its various
sub-committees. Since the spending is typically for a fixed period (usually a year), it is said to be under the
discretion of the Congress. Some appropriations last for more than one year (see
Appropriation bill for details).
Mandatory spending refers to spending enacted by law, but not dependent on an annual or periodic appropriation bill. Commonly, "mandatory" programs are send to refer to certain entitlement programs that do not require annual appropriations. Social Security benefits, for example, entitle certain individuals to Federal government payments through legislation enacted in the past. The cost of spending for these benefits is estimated every year, but is not subject to periodic congressional approval. The Congress may, however, change mandatory programs or spending through subsequent legislation.
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United States Office of Management and Budget*
United States Budget Deficit*
Budget Calculator Online calculator that places specific tax or spending numbers in the context of the total U.S. budget. It also compares any spending or revenue item to projected defense spending. (Center for Economic and Policy Research)
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Basics of the Budget Process - published by majority staff on the House Committee on the Budget 2001 (
PDF file)
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The Budget System and Concepts - a white house publication describing in detail the U.S. Budget System and related concepts (PDF file)
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The President's Budget of the United States Government, FY 1996 -- present.
