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Wednesday, December 8, 2010

Introduction to the Federal Budget Process

Bill Heniff Jr., Coordinator
Analyst on Congress and the Legislative Process

Sandy Streeter
Analyst on Congress and the Legislative Process

Megan Suzanne Lynch
Analyst on Congress and the Legislative Process

Jessica Tollestrup
Analyst on Congress and the Legislative Process


Budgeting for the federal government is an enormously complex process. It entails dozens of subprocesses, countless rules and procedures, the efforts of tens of thousands of staff persons in the executive and legislative branches, millions of work hours each year, and the active participation of the President and congressional leaders, as well as other Members of Congress and executive officials.

The enforcement of budgetary decisions involves a complex web of procedures that encompasses both congressional and executive actions. In the last three decades or so, these procedures have been rooted principally in two statutes—the Congressional Budget Act of 1974 and the Budget Enforcement Act (BEA). The 1974 act established a congressional budget process in which budget policies are enforced by Congress during the consideration of individual measures. The BEA is the most recent embodiment of additional enforcement procedures, first established in 1985 and renewed with substantial modification in 1990 and 1997, that have been used by the executive to enforce budget policies after the end of a congressional session. The BEA enforcement procedures were set aside in the latter years of their existence and effectively expired toward the end of the 107
th Congress. Efforts to renew them in the 108th through 110th Congresses were not successful. In the 111th Congress, the pay-as-you-go procedures affecting direct spending and revenue legislation were restored in a modified version by the Statutory Pay-As- You-Go Act of 2010.

The President’s budget is required by law to be submitted to Congress early in the legislative session. While the budget is only a request to Congress, the power to formulate and submit the budget is a vital tool in the President’s direction of the executive branch and of national policy. The President’s proposals often influence congressional revenue and spending decisions, though the extent of the influence varies from year to year and depends more on political and fiscal conditions than on the legal status of the budget.

The Congressional Budget Act of 1974 establishes the congressional budget process as the means by which Congress coordinates the various budget-related actions (such as the consideration of appropriations and revenue measures) taken by it during the course of the year. The process is centered around an annual concurrent resolution on the budget that sets aggregate budget policies and functional spending priorities for at least the next five fiscal years. Because a concurrent resolution is not a law—it cannot be signed or vetoed by the President—the budget resolution does not have statutory effect; no money can be raised or spent pursuant to it. Revenue and spending amounts set in the budget resolution establish the basis for the enforcement of congressional budget policies through points of order.

Congress implements budget resolution policies through action on individual revenue and debtlimit measures, annual appropriations acts, and direct spending legislation. In some years, Congress considers reconciliation legislation pursuant to reconciliation instructions in the budget resolution. Reconciliation legislation is used mainly to bring existing revenue and direct spending laws into conformity with budget resolution policies Initially, reconciliation was a major tool for deficit reduction; in recent years, reconciliation has been used mainly to reduce revenues.



Date of Report: December 2, 2010
Number of Pages: 33
Order Number: 98-721
Price: $29.95

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