Learn about the federal government’s budget process, from the president’s budget plan to Congress’s work creating funding bills for the president to sign.
Every year, the U.S. Congress begins work on a federal budget for the next fiscal year. The federal government’s fiscal year runs from October 1 of one calendar year through September 30 of the next.
Annual funding areas
The annual budget covers three spending areas:
Mandatory spending - funding for Social Security, Medicare, veterans benefits, and other spending required by law. This typically uses over half of all funding.
Discretionary spending - federal agency funding. Congress sets funding levels for these each year. This usually accounts for around a third of all funding.
Interest on the debt - this usually uses less than 10 percent of all funding.
Creating the U.S. federal budget
The budget planning begins a year before the budget is to go into effect.
Proposed funding is divided among 12 subcommittees, which hold hearings. Each is responsible for funding for different government functions such as defense spending or energy and water.
The House and Senate create their own budget resolutions, which must be negotiated and merged. Both houses must pass a single version of each funding bill.
Congress sends the approved funding bills to the president to sign or veto.
Budgeting for the national government involves four (4) distinct processes or phases : budget preparation, budget authorization, budget execution and accountability. While distinctly separate, these processes overlap in the implementation during a budget year.
Step 5: The President Signs Each Appropriations Bill and the Budget Becomes Law. The president must sign each appropriations bill after it has passed Congress for the bill to become law.
The budgeting process lets an organization plan and prepare its budgets for a set period. It involves reviewing past budgets, identifying and forecasting revenue for the coming period, and assigning amounts to spend on a company's various costs.
The budget reflects decisions to tax and spend, to borrow and lend, and to consume and invest. Those decisions define the size of the federal government and its role in the national economy. Policymakers use the federal budget process to establish spending priorities and identify revenues to pay for those activities.
The budget has four stages viz., (1) estimates of expenditures and revenues, (2) first estimate of deficit, (3) narrowing of deficit and (4) presentation and approval of budget.
The President Submits a Proposed Budget to Congress
Following the procedure required by the Congressional Budget and Impoundment Control Act of 1974, the President presents a proposed budget for the coming Fiscal Year to Congress on or before the first Monday in February.
Phase I - Development of annual budget goals. Phase II - Identifying budget assumptions. Phase III - Forecasting of annual expenses. Phase IV - Monitoring of expenses and making appropriate adjustments regularly.
Introduction: My name is Lidia Grady, I am a thankful, fine, glamorous, lucky, lively, pleasant, shiny person who loves writing and wants to share my knowledge and understanding with you.
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