The Federal Budget Process

The federal budget process is more accurately viewed as a number of processes involving the executive and legislative branches that outline federal expenditures and revenues for the upcoming fiscal year. The Budget and Accounting Act of 1921 and the Congressional Budget Act of 1974 establish many of the procedures for formulating the budget. Key components include the President’s budget request, the Congressional budget resolution, and the appropriations process.


The President's Budget

The President’s budget request reflects the administration’s recommendations for overall spending and revenue for the upcoming fiscal year as well as the subsequent four fiscal years.

Congressional Budget Resolution

The budget resolution is an agreement between the two legislative chambers establishing spending and revenue levels for the upcoming fiscal years, as well as various rules and procedures governing the budget process.

Mandatory and Discretionary Spending

Discretionary spending is subject to the appropriations process, whereby Congress sets a new funding level each fiscal year. Mandatory spending is all spending that does not take place through appropriations.

Spending and Revenue Levels

Both mandatory and discretionary spending recommendations in the budget resolution are established through the use of 20 categories, known as "budget functions," that encompass a general purpose, such as national defense or transportation.

Points of Order

Decisions about spending, revenue and budget processes established in a budget resolution are enforced in the House and Senate mainly through a procedural hurdle known as a "point of order."

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Reconciliation

Congressional majorities have used the reconciliation process to pass large-scale spending and revenue policies, mainly because reconciliation allows Congress to expedite legislation under a more limited (i.e. filibuster-proof) set of procedural rules.