The Budget Process
Through the budget process, the President and Congress decide how much to spend and tax in any one fiscal year. The President's budget is his plan for the next year. But it's just a proposal. After receiving it, Congress has its own budget process to follow. Only after the Congress passes and the President signs the spending bills has the Government created its actual budget.
Congress first passes a "budget resolution"--a framework within which the Members will make their decisions about spending and taxes. It includes targets for total spending, total revenues, the surplus or deficit, and allocations within the spending target for the two types of spending--discretionary and mandatory--explained below.
- Discretionary spending is what the President and Congress must decide to spend for the next year through annual appropriations bills. It includes money for such activities as the FBI, the Coast Guard, housing, education, space exploration, highway construction, defense, and foreign aid. Discretionary spending for FY 2010 was estimated to account for 39% of all federal spending.
- Mandatory spending, which accounts for approximately 61% of all spending in FY 2010, is authorized by permanent laws, not by the annual appropriations bills. It includes entitlements--such as Social Security, Medicare, and Food Stamps--through which individuals receive benefits because of their age, income, or other criteria. It also includes interest on the national debt. The only way the President and Congress can change how much is spent in these accounts is to change the laws which dictate the amount of spending on these mandatory programs.
Once Congress passes the budget resolution, it turns its attention to passing the annual appropriations bills – ideally by the end of September.
Congress begins by examining the President's budget in detail. Scores of committees and subcommittees hold hearings on proposals under their jurisdiction. The President's Budget Director, Cabinet officers, and other Administration officials work with Congress as it accepts some of the President's proposals, rejects others, and changes still others. Congressional rules require that these committees and subcommittees take actions that reflect the budget resolution.
Once the President and Congress approve spending, a number of government agencies oversee the budget in order to ensure that programs are well managed and achieving the intended results and are operating consistently within legal requirements.