Your tax dollars at work

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

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

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

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

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

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 15 th )

Budget Timetable First Monday in February President submits budget to Congress for the following fiscal year which starts October 1 st. Congressional committees hold hearings and submit views and estimates of budget, sometimes they don’t even consider the president’s budget (remember iron triangles)

April 15 th 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.)

House Action In late May, the House considers appropriations even in the absence of a Budget Resolution House Appropriations Committees finish reporting the 13 regular appropriations bills for the fiscal year on June 10 th By June 15 th 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 31 st, 1981) June 30 th, House completes action on all 13 appropriations bills for fiscal year

Senate action July/August the Senate completes action on appropriations bills and conference committees meet to work out differences On September 30 th the House and Senate complete action on the conference report on appropriations for the fiscal year that starts October 1 st (Bills sent to President for his [or her] signature)

Beginning the Fiscal year October 1 st 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 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

Other Influences on budget Size of the debt-$13,735,428,931, Nov. 16 th$13,735,428,931, “Blessed are the young, for they shall inherit the national debt.” Herbert Hoover ( ) Cost of war Natural Disasters Tax cut politics Election year Economic conditions Some of these unexpected changes may require supplemental appropriations bills (Iraq War)

Budget Breakdown