The Federal Budget Process

Introduction

The federal budget process can be an extremely long and convoluted affair. It originates in the Executive Branch, makes its way through both houses of Congress, than back to the President for final approval. Please read the primer below to gain a better understanding of how the budget process works.

The President's Budget Request

The U.S. Government's fiscal year starts on October 1 of each year. For example, the 2007 fiscal year starts on October 1, 2006, and runs through September 30, 2007. The budget must provide funding for all of these programs for the entire fiscal year. Towards the beginning of a given fiscal year, the White House begins preparations for the following year's budget. The President consults with each department, and assembles the President's Budget Request, based on this information or what his/her priorities may be. The deadline for sending this final request to Congress is February 1: so for FY-2007, President Bush had to submit his budget by February 1, 2006.

The Congressional Budget Resolution

The Constitution dictates that budget legislation must originate in the House, as a joint resolution. The House Budget Committee examines the President's request, and decides how it wants to allocate money. The budget is divided into various accounts. The account most pertinent to the foreign affairs community is the foreign affairs budget, the 150 Account. The defense budget is the 050 Account, and various other budgets go into other accounts. The House's Budget Resolution determines exactly how much money each account will receive. These are called the 302(a) allocations.

In the mean time, the Senate, although it cannot originate a budget resolution, works on its own budget using the same process. When the House passes its resolution, the Senate simply strikes all of the information below the enacting clause of the bill, and replaces its own bill as an amendment. The bill then goes to a conference committee where the differences are negotiated, and both Houses then vote to pass the Final Budget resolution.

The Appropriations Process

The Budget Resolution specifies the total cap that can be spent in each account, and in the entire budget. Given this information, the House Appropriations Committee allocates funds to the Appropriations subcommittees. These allocations are called 302(b)'s. For the foreign affairs budget, two House Appropriations subcommittees handle the funding: the Foreign Operations subcommittee, and the Department of State, Science, the Judiciary, and Department of Commerce subcommittee. The Senate has the Department of State and Foreign Operations subcommittee.

Appropriations legislation must originate in the House. The subcommittees start each of their respective appropriations bills, and specify exactly how much funding goes to each program. When the bill passes its respective subcommittee, it goes to the full Appropriations Committee. The full committee usually changes some funding in the form of amendments. The full committee then votes on the bill, and if passed, it goes to the House Floor. If it does not pass, which is highly unusual, it returns to the subcommittee. The bill then goes to the respective Senate Appropriations subcommittee.

The specific Senate appropriations subcommittee then amends the bill and specifies its levels of appropriations. The bills then follow the same process as they did in the House, going to full committee, and then to the floor. Amendments can, and generally are always added in each phase.

A conference committee is then formed to hammer out the differences between the appropriations bills, and the new bill then return both the House and Senate floors for an up or down vote: no amendments allowed.

Signing into Law

The appropriations bills then return to the President's desk, where he/she either signs them into law, or has the option of vetoing the bill. The President does not normally veto appropriations legislation.

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Last modified: 05/02/08