Week 8: The Budget and Appropriations Process Flashcards
Why has congress failed to pass a budget in 8 of the last seven years?
Hmm
2 types of federal spending
Discretionary and mandatory (also called direct or entitlement spending)
Discretionary spending consists of
Programs and agencies funded by Congress through small annual appropriations bills under the jurisdiction of the House and Senate appropriations committees
Mandatory or entitlement spending
Consists of obligations embedded in statutes that must be fulfilled unless Congress enacts new legislation revising its earlier commitments
Presidents budget
- submitted annually by first Monday in February
- Contained presidents discretionary and mandatory spending priorities, tax policies, deficits, and debt
- 10 year budget projections
- can be starting point for budget discussions with Congress
Presidents signature required on legislation
4 types of committees responsible for fiscal decision making each with their own unique rules and responsibilities
- Appropriating
- Authorizing
- Taxing
- Budgeting
The Constitution
Did not prescribe a budgetary system for congress
Appropriations
The process by which congress provides budget authority, usually through the enactment of 12 separate appropriations bills
Budget Authority
The authority for federal agencies to spend or otherwise obligate money, accomplished through enactment into law of appropriations bills.
Budget outlays
Money that is spent in a given fiscal year, as opposed to money that is appropriated for that year.
One years budget authority can result in outlays over several years, and the outlays in any given year result from a mix of budget authority from that year and prior years.
Budget authority is similar to putting money into a checking account, outlays occurs when checks are written and cashed.
Discretionary spending
Programs that congress can finance as it chooses through appropriations. With the exception of paying entitlement benefits to individuals.
Almost everything the government does is financed by discretionary spending.
Examples: all federal agencies, Congress and the White House, the courts, the military, and programs such as space exploration and child nutrition.
About 1/3 of all federal spending falls into this category.
Fiscal year
The federal governments budget year. Fiscal year 2020 runs from October 1 2019 to September 30 2020.
Mandatory spending
Made up mostly of entitlements, which are programs whose eligibility requirements are written into law. Anyone who meets those requirements is entitled to money until congress changes the law.
Examples: Social Security, Medicare, Medicaid, unemployment benefits, food stamps, federal pensions.
Another major category of mandatory spending is interest paid to holders of federal government bonds. Social security and interest payments are permanently appropriated.
And although budget authority for some entitlements is provided through the appropriations process, appropriators have little or no control over the money.
Mandatory spending accounts for about 2/3 of all federal spending
Pay as you go (paygo) rule
This Senate and House procedure requires that all tax cuts, new entitlement programs, and expansions of existing entitlement programs be budget neutral -
That is, offset either by additional taxes or by cuts in existing entitlement programs
Reconciliation
The process by which tax laws and spending programs are changed, or reconciled, to reach outlay and revenue targets set in the congressional budget resolution.
Established by the 1974 Congressional Budget Act, it was first used in 1980.
