PLS 121: American Politics and Government The Constitution The Budget Making Process

Discretionary Budget 2006 ($843.3 billion)

Mandated Budget 2006 ($1,677 billion)

Receipts (Income) 2006 ($2,285.5 billion)

5 / 31 The Federal Debt On 23 September 2007 Total: –$–$8,994,135,431,000 Per capita: –$–$29,677 Percent of GDP: –3–38.5% Daily average increase of –$–$1.36 billion

6 / 31 Two Budget Offices Congressional Budget Office (CBO) and the Office of Management and Budget (OMB)

7 / 31 The CBO Congressional Budget Office –Congressional Budget Office –Oversees the preparation of the Congressional Budget –Sets funding priorities for Congress –Helps president supervise the management of the budget within agencies the Congress oversees

8 / 31 The OMB Office of Management and Budget –Office of Management and Budget –Oversees preparation of the President’s Budget –Sets funding priorities for the administration –Helps president supervise the management of the budget within executive branch agencies

9 / 31 Budget Process Overview –Agencies submit requests to President. –President Packages all this into one budget. –President submits his budget to Congress. –Congress deliberates and passes a Budget Resolution by April 15. –The Resolution passes to the Appropriations Committees, which then treats it like a normal bill and submits it to its 13 subcommittees. –‘Normal Bill’ routines are followed. –The budget needs to pass by Oct 1. –The agencies then make their final budgets based on the real budget passed.

10 / 31 In Depth

11 / 31 Agencies (February of the previous year) National Headquarters for each agency sends out budget requests. These budget requests provide numbers and goals, but also past successes and any other information that might support the budgetary figures. (i.e. they are selling their successes)

12 / 31 Field Units –Program Budget Instructions (PBIs) are sent to field units (or sub-agencies) in March of the previous year. –The PBIs outline what can be accomplished with three different levels of funding: Reduced, Current, Enhanced

13 / 31 The OMB The agencies submit all relevant documents, especially justifications, to the OMB for review. The OMB receives the budgets from all agencies and decides on what to fund and with how much money. –The agencies can appeal this decision, but they rarely do so successfully.

14 / 31 Agencies Now that they know the funds the OMB suggests they receive, they prepare budget justifications for that amount. –Congress uses these justifications as reference material for final decisions on appropriations.

15 / 31 President At this point, the president submits his budget and the budget justifications to Congress by the first Monday of February. February 6, 2006

16 / 31 Budget Committees Budget committees hold hearings –Public hearings held to examine the federal budget and the programs it funds. –Also it uses these hearings to look at the President’s budget in more detail. –Administration officials and Agency heads testify to support their requests. –Other committees also review the President’s budget vis-à-vis their own realms.

17 / 31 Budget Committees Mark-ups (March) –Public meetings to work on the language and the numbers contained in resolutions and legislations affecting the federal budget. –These public meetings, the hearings above, the results from other committees, and numbers out of the Congressional Budget Office (CBO) are used to draft the Budget Resolution.

18 / 31 House and Senate Each pass versions of Budget Resolutions The two chambers may pass different versions of the Budget Resolution.

19 / 31 Conference Committee Works on the Conference Report It is up to the Conference Committee to work out the differences between the two versions of the Budget Resolution. Conference Committee releases Conference Report (April) –The Conference Report is the compromise found by the Conference Committee.

20 / 31 Congress Deadline for Congress to pass Budget Resolution is April 15 The two chambers vote on the Conference Report (on the Budget Resolution) and hopefully pass it by the April 15 deadline. The deadline is not set in stone, but Congress does work hard to meet it.

21 / 31 Congress This establishes guidelines and targets for spending and revenue that Congress uses to consider budget and appropriations legislation. –The Resolution is not Public Law, only a guide for formulating the actual federal budget. However, it is binding on Congress.

22 / 31 Congress Committee Allocations (May 15) The Budget Resolution defines the amount of money allocated to the House and Senate Appropriations Committees. (i.e. it outlines caps on spending and targets for revenue) From the Budget Resolution, the House and Senate Appropriations Committees allocate funds to each of the 12 subcommittees.

23 / 31 Subcommittees Agriculture, Rural Development, and Related Agencies Commerce, Justice, and Science Defense District of Columbia Energy and Water Homeland Security Interior and Related Agencies Labor, Health and Human Services, Education and Related Agencies Legislative Branch Military Construction and Veterans Affairs State, Foreign Operations, and Related Programs Transportation, Treasury, the Judiciary, Housing and Urban Development, and Related Agencies

24 / 31 Appropriations (actually starting in March) The Appropriations subcommittees start holding public hearings to examine the budget. This process continues until all 12 appropriations bills are passed (usually by the end of September)

25 / 31 Appropriations Now that the subcommittee passes all 12 appropriations bills, the full Appropriations Committee passes the Budget. –They can change parts of it. –They can add amendments. –They can do whatever they feel they should do. Eventually, they pass the budget.

26 / 31 House and Senate Floor Vote Both chambers vote upon the bill.

27 / 31 Conference Committee The two chambers tend to pass different budgets, so the Conference Committee will, again, iron out the differences between the two versions.

28 / 31 Congress The Conference Report (of the Budget) is voted upon by both chambers and is passed.

29 / 31 President By October 1: –The president signs the budget into law. –Or he vetoes it.

30 / 31 Agencies Now the agencies know for sure what was funded and what was not. Their own budgets are re- written to reflect this new reality.

31 / 31 Reading Assignment Read: SSB, Chapter 12 Read: Constitution, Article III