What is the federal budget?
The federal budget is a compilation of numbers about the revenues, spending, and borrowing and debt of the government. Revenues come largely from taxes, but stem from other sources as well (such as duties, fines, licenses, and gifts). The fiscal year for each budget starts at the beginning of October and goes until the end of September the following year.
* In general. the Government spends most of your money on a few major programs.
- Social Security
- Interest on National Debt
* The Government collects most of its revenues from a few main sources:
- Income Taxes
- Social Security Receipts
* Because all of the revenues do not cover the costs of all spending, the Government borrows money to finance this deficit. The total it has borrowed over the years, but not repaid, is the national debt.
Types of Spending:
Discretionary - 35% of all Federal Spending
This is the money the President and Congress must decide to spend each year. It includes money for such programs as the FBI, the Coast Guard, housing, education, space exploration, highway construction, defense, and foreign aid.Mandatory - 65% of all Federal Spending
This is the money that the Federal Government appends automatically - unless the President and Congress change the laws that govern it. It includes entitlements - such as Social Security, Medicare, and Food Stamps - through which individuals receive benefits because they meet some criteria of eligibility (e.g. age, income). It also includes interest on the national debt, which the Government pays to individuals and institutions that buy saving bonds and other US securities. Despite its name, however, mandatory spending is not fixed in stone. The President and Congress can change the laws that govern entitlements or taxes, but they must take explicit action to do so.
The Budget Process:
- The President's Budget is sent to Congress in early February. This proposal is his/her plan for the next fiscal year, beginning October 1. This plan, however, only becomes official after Congress passes, and the President signs spending bills and legislation creating new taxes and entitlements.
- After receiving the President's budget, Congress examines it in detail. Scores of committees and subcommittees hold hearings on proposals under their jurisdiction. The House and Senate Armed Services Committees, for instance, would hold hearings on the President's defense plan. If the President's plan contains proposals that affect Federal revenues, the House Ways and Means and Senate Finance committees would hold hearings. The President, the Budget Director, the Cabinet, and others work with Congress as it accepts some proposals, rejects others, and changes still others.
- Each year Congress must pass and the President must sign, 13 appropriation bills that include all of the discretionary spending. The President and Congress do not have to enact new laws governing entitlements or taxes. If they do not, the Government will pay the benefits for Social Security and other programs and collect the taxes required by laws in place.
|1st Monday in February||President submits budget request, compiled by the Office of Budget and Management, to Congress.|
|February 15||CBO submits report on economic and budget outlook to budget committees. Congressional committees hold hearings on the President’s budget and the Budget committees report a concurrent resolution on the budget.|
|April 15th||Action to be completed on congressional budget resolution.|
|May||House consideration of annual appropriations bills may begin.|
|June 10th||House Appropriations Committee reports last regular appropriations bill.|
|June 30th||Action on appropriations to be completed by House.|
|July 15th||President transmits Mid-Session Review of the budget.|
|October 1st||Fiscal year begins.|
Appropriation - A legislative grant of money to finance a government program.
Congressional Budget Office - Provides expert technical and computer services to Congress; analyzes the budget proposal of the office of management and budget; determines the economic consequences of legislation.
Entitlements - A law that requires the paying of monetary benefits to some person or persons who meet the eligibility requirements established by the law; a binding obligation of the government (i.e. Social Security).
General Accounting Office (GAO) - Checks to see that government spending is proper and reasonable; headed by the Comptroller General who is appointed by the President, with the Senate's approval, for a 15 year term.
Office of Budget and Management - An advisory body that prepares the national budget and reviews agency requests for congressional appropriations. The OMB prepares the national budget, supervises and controls the administration of the budget, and helps the President propose legislation dealing with the budget. In addition, the OMB assists in the preparation of proposed executive orders and keeps the President informed of all overall activities of the government. The Director of the OMB is appointed by the President with Senate approval.
Reconciliation - A concurrent resolution, passed by both houses of Congress, that reconciles the specific amounts to be spend in the coming fiscal year with the overall budget ceiling.
Source: Office of Management and Budget