How does the federal budget process work?
The federal budget process typically consists of seven steps, outlined in greater detail below:
- President’s budget request
- Budget resolution
- Appropriations bills
- Authorization bills
- Revenue measures
- Budget reconciliation
- Debt limit legislation and raising the U.S. debt ceiling
President Biden’s budget proposal for fiscal year 2023
Join Bloomberg Government’s expert analysts as they lead a deep dive review of President Biden’s budget proposal for fiscal year 2023 and answer questions about the administration’s top priorities.
1. President’s budget request
Early each year, the White House proposes the level of spending for federal agencies and programs. It outlines estimates for revenue and expenditures and details the administration’s policy and spending priorities.
2. Budget resolution
The budget resolution is a blueprint that takes a holistic approach to spending, revenue, and the resulting deficit or surplus to govern internal decision-making. The resolution is without force of law, and it doesn’t go to the president. Lawmakers have often skipped this step in recent years, instead working out a series of two-year deals that increased spending caps that had been set by law. The Senate didn’t adopt budget resolutions for fiscal years 2011 through 2013, as well as FY 2023. The House didn’t adopt a budget resolution for fiscal year 2011. And in FY 2017, the resolution was adopted in January, four months into the fiscal year.
3. Appropriations bills
Federal agencies receive funding for a fiscal year through appropriations bills passed by Congress based on the president’s recommendations and congressional priorities.
What occurs during the appropriations process
The House and Senate appropriations committees are divided into 12 subcommittees, which hold hearings to discuss budget requests and needs. Each subcommittee comes up with a bill that must pass both chambers and be signed by the president to take effect. If a full-year appropriation isn’t in place by Oct. 1, the start of a fiscal year, a continuing resolution can be used to extend funding for a period of time, typically at the previous year’s level.
Congressional appropriations panels split jurisdiction among 12 subcommittees
4. Authorization bills
Authorization measures are used to create departments, agencies, and programs; set rules for how they’re operated; and set funding levels. Some authorization bills provide funding for one or more years without further action, known as a mandatory program. Most authorizations require congressional appropriations action and are referred to as discretionary.
5. Revenue measures
Congress doesn’t have to act each year on a measure raising revenue. Some tax laws are permanent, while others have expiration dates that cause Congress to revisit tax rates, credits, and other rules.
6. Budget reconciliation
The reconciliation process was created by the Congressional Budget Act of 1974. It allows lawmakers to advance spending and tax policies through the Senate with a simple majority.
How the budget reconciliation process works
Budget resolutions can include instructions to committees to report reconciliation legislation, often with a deadline, to meet spending and revenue targets.
The reconciliation instructions also can require reporting of debt-ceiling legislation, which can come in handy because of the simple majority factor.
If more than one committee receives instructions, then the individual committees first send their recommendations to the House and Senate Budget committees, which consolidate the proposals. If a single committee receives instructions (for example, just the House Ways and Means Committee on a revenue measure), its recommendation can be sent directly for a floor vote.
Senate debate time limits
In the Senate, debate is limited to 20 hours, meaning the measures can’t be filibustered. Proponents also only need a simple majority rather than the 60-vote supermajority that applies to most legislation under the chamber’s cloture rules – if everyone shows up, that means 51 votes.
These details make reconciliation bills an attractive target for policy changes that have a budgetary effect (such as health care programs).
7. Debt limit legislation and raising the U.S. debt ceiling
The federal government has a cap on how much debt can be incurred by the federal government. Congress considers legislation to either increase the dollar amount in law or suspend the debt limit for a period of time to allow the government to take steps to finance the difference between the amount of revenue brought in and the amount of spending required by law.
