Policy Guides

The Essential Guide to the Federal Budget

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To receive federal funding, federal agencies must begin developing their budgets 18 months ahead of the next fiscal year. They must also monitor the progress of their requests as they are pushed and pulled through the White House, House of Representatives and Senate.

The federal budget process: step-by-step

  • Step 1: Agencies and Office of Management and Budget begin working on future budgets. The process begins in the executive branch of government and sets fiscal policy, proposing how much should be spent on public programs and how much revenue should be generated through taxes, and how much deficit or surplus should be tolerated.  
  • Step 2: President sends a proposed budget to Congress the first Monday in February. While this deadline is never missed, several other deadlines throughout the budget process timeline are often missed. There is no penalty for missing a federal budget deadline.  

Guide to the federal budget

  • Step 3: Congressional Budget Office submits economic and budget reports to congressional budget committees.  
  • Step 4: The House Budget Committee holds hearings, questions administration officials and drafts a budget resolution. The Senate Budget Committee drafts a budget resolution. This is also when hearings are being held and the administration is answering questions on the Senate side. During this step, both the House budget resolution and the Senate budget resolutions go to the floor for a vote.

  • Step 5: A committee made up of both House and Senate members resolves any differences between the two resolutions.

  • Step 6: The House votes on the conference report, which passes with a simple majority.  
  • Step 7: The Senate votes on the conference report, which passes with a simple majority.  

  • Step 8: Twelve appropriations committees in the House and twelve appropriations committees in the Senate hold public hearings and prepare appropriations bills. Discretionary spending limits are set by the budget resolution, which also constraints tax or entitlement bills. 

  • Step 9: Appropriations Committees in the House and Senate vote on the 12 bills approved in subcommittee.  
  • Step 10: Full House and full Senate vote on each appropriations bill.

  • Step 11: The president either signs or vetoes each appropriations bill. If bills do not pass or end in a veto, Congress must pass – and the president must sign – a continuing resolution, or an omnibus bill packaging any unfinished funding measures to prevent a government shutdown.

Keeping the Budget on Track

Congress uses several tools that help move along the budget process and prevent it from derailing.

  • Budget Reconciliation Bills: Driven by budget committees, these expedited bills modify existing laws so that taxes, mandatory spending or debt limit will conform to the budget resolution. The Senate largely forbids the use of such bills if they result in deficit increases, and the House prohibits their use if they increase mandatory spending.  
  • Fortifying the Budget Resolution: Any member of the House or the Senate can raise a “point of order” on the floor to stop and appropriations bill that strays from the budget resolution. In the House, a move can be waived by a simple majority vote, but the Senate requires 60 votes to waive a point of order.  
  • Omnibus Spending Bill: If Congress fails to complete its individual appropriations bill, congressional leaders and the White House often arrange to lump all remaining spending together into a massive omnibus appropriation, which moves through each chamber and is signed by the president.  
  • Statues against the Deficit: Several laws passed since 2010 have sought to curb the deficit, including through automatic across-the-board cuts in selected mandatory and discretionary spending. This sequestration is split evenly between defense and non-defense discretionary funding. However, without a significant boost in revenues or cuts in spending, recent “sequestration relief” bills will once again begin growing the deficit:

Projected Federal Budget (in trillions)

This post was adapted from POLITICO Pro’s Guide to the Federal Budget infographic. 

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