http://fpc.state.gov/documents/organization/34649.pdf
The Congressional Budget Process:
A Brief Overview
James V. Saturno
Specialist on the Congress
Government and Finance Division
Summary
The term “budget process,” when applied to the federal government, actually refers
to a number of processes that have evolved separately and that occur with varying
degrees of coordination. This overview, and the accompanying flow chart, are intended
to describe each of the parts of the budget process that involve Congress, clarify the role
played by each, and explain how they operate together. They include: the President’s
budget submission, the budget resolution, reconciliation, sequestration, authorizations,
and appropriations. This report will be updated to reflect any changes in the budget
process.
The Basic Framework. The Constitution grants the “power of the purse” to
Congress,1 but does not establish any specific procedure for the consideration of
budgetary legislation. Although a number of laws and congressional rules contribute to
the federal budget process, two statutes in particular form the basic framework.
The Budget and Accounting Act of 1921, as codified in Title 31 of the United States
Code, established the statutory basis for an executive budget process by requiring the
President to submit to Congress annually a proposed budget for the federal government.
It also created the Bureau of the Budget (reorganized as the Office of Management and
Budget (OMB) in 1970) to assist him in carrying out his responsibilities, and the General
Accounting Office (GAO) to assist Congress as the principal auditing agency of the
federal government.
The Congressional Budget and Impoundment Control Act of 1974 (P.L. 93-344, 88
Stat. 297) established the statutory basis for a congressional budget process, and provided
CRS-2
2 Discretionary spending is that spending not mandated by existing law and made available
through the annual appropriations in such amounts as Congress chooses.
3 Direct spending, also referred to as mandatory or entitlement spending, is that spending
mandated in laws other than appropriations.
for the annual adoption of a concurrent resolution on the budget as a mechanism for
facilitating congressional budgetary decision making. It also established the House and
Senate Budget Committees and created the Congressional Budget Office (CBO) to
provide budgetary information to Congress independent of the executive branch.
The Budget Cycle. The President is required to submit to Congress a proposed
budget by the first Monday in February. Although this budget does not have the force of
law, it is a comprehensive examination of federal revenues and spending, including any
initiatives recommended by the President, and is the start of extensive interaction with
Congress.
Within six weeks of the President’s budget submission, congressional committees
are required to submit their “views and estimates” of spending and revenues within their
respective jurisdictions to the House and Senate Budget Committees. These views and
estimates, along with information from other sources, is then used by each Budget
Committee in drafting and reporting a concurrent resolution on the budget to its respective
house. Other information is gathered by the Budget Committees in reports and hearing
testimony. That information includes budget and economic projections, programmatic
information, and budget priorities, and comes from a variety of sources, such as CBO,
OMB, the Federal Reserve, executive branch agencies, and congressional leadership.
Although it also does not have the force of law, the budget resolution is a central part
of the budget process in Congress. As a concurrent resolution, it represents an agreement
between the House and Senate that establishes budget priorities, and defines the
parameters for all subsequent budgetary actions. The spending, revenue, and public debt
laws necessary to implement decisions agreed to in the budget resolution are subsequently
enacted separately.
Discretionary spending,2 involves annual actions that must be completed before the
beginning of a new fiscal year on October 1. Changes in direct spending3 or revenue laws
may also be a part of budgetary actions in any given year. When these changes are
directly tied to implementing the fiscal policies in the budget resolution for that year, the
reconciliation process may be used. Reconciliation typically follows a timetable
established in the budget resolution. Other budgetary legislation, such as changes in
direct spending or revenue laws separate from the reconciliation process, changes in the
public debt limit, or authorizing legislation, are not tied directly to the annual budget
cycle. However, such legislation may be a necessary part of budgetary actions in any
given year.
The Balanced Budget and Emergency Deficit Control Act of 1985 (P.L. 99-177, 99
Stat. 1037) established the sequester as a means to enforce statutory budget limits.
Amendments to this act were designed to use sequesters to control direct spending and
revenues (through the pay-as-you-go, or PAYGO, process) and discretionary spending
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4 These mechanisms were first established under the Budget Enforcement Act of 1990 (Title XIII
of P.L. 101-508, Omnibus Budget Reconciliation Act of 1990). Originally enacted with a sunset
date of FY1995, they were extended twice, through FY1998 (Title XIV of P.L. 103-66, Omnibus
Budget Reconciliation Act of 1993) and through FY2002 (Budget Enforcement Act of 1997, Title
X of P.L. 105-33, Balanced Budget Act of 1997).
(through spending caps). Those mechanisms expired October 1, 2002.4 Previously, under
these mechanisms, the budgetary impact of all legislation was scored by OMB, and
reported three times each year (a preview with the President’s budget submission, an
update with the Mid-Session Review of the Budget, and a final report 15 after Congress
adjourned). If the final report on either the PAYGO or spending caps mechanism
indicated that the statutory limitations within that category had been violated, the
President was required to issue an order making across-the-board cuts of nonexempt
spending programs within that category.
The Budget Resolution and Reconciliation. The budget resolution represents
an agreement between the House and Senate concerning the overall size of the federal
budget, and the general composition of the budget in terms of functional categories. The
amounts in functional categories are translated into allocations to each committee with
jurisdiction over spending in a process called “crosswalking” under Section 302(a) of the
Congressional Budget Act. Legislation considered by the House and Senate must be
consistent with these allocations, as well as with the aggregate levels of spending and
revenues. Both the allocations and aggregates are enforceable through points of order that
may be made during House or Senate floor consideration of such legislation. These
allocations are supplemented by nonbinding assumptions concerning the substance of
possible budgetary legislation which are included in the reports from the Budget
Committees that accompany the budget resolution in each house.
In some years, the budget resolution includes reconciliation instructions.
Reconciliation instructions are intended to identify the committees that must recommend
changes in laws affecting revenues or direct spending programs within their jurisdiction
in order to implement the priorities agreed to in the budget resolution. All committees
receiving such instructions must submit recommended legislative language to the Budget
Committee in their respective chamber, which packages the recommended language as
an omnibus measure and reports the measure without substantive revision. A
reconciliation bill would then be considered, and possibly amended, by the full House or
Senate. In the House, reconciliation bills are typically considered under the terms of a
special rule. In the Senate, reconciliation bills are considered under limitations imposed
by Section 305, 310, and 313 of the Congressional Budget Act. These sections limit
debate on a reconciliation bill to 20 hours, and limit the types of amendments that may
be considered.
The Appropriations Process. The annual appropriations process provides
funding for discretionary spending programs through 13 regular appropriations bills.
Congress must enact these measures prior to the beginning of each fiscal year (October
1) or provide interim funding for the affected programs through a “continuing resolution.”
By custom, appropriations bills originate in the House, but may be amended by the
Senate, as other legislation.
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5 Authorizations are legislation that establish, continue, or modify an agency or program, and
authorize the enactment of appropriations for that purpose. Authorizations may be temporary or
permanent, and their provisions may be general or specific, but they do not themselves provide
funding in the absence of appropriations actions. Although House and Senate rules generally
prohibit unauthorized appropriations, both provide exceptions in their respective rules and the
prohibition itself may be waived.
6 CRS Report RL31443, The “Deeming Resolution”: A Budget Enforcement Tool, by Robert
Keith.
The House and Senate Appropriations Committees are organized into 13
subcommittees, each of which is responsible for developing an appropriations bill.
Appropriations bills are constrained in terms of both their purpose and the amount of
funding they provide. Appropriations are constrained in terms of purpose because the
rules of both the House (Rule XXI) and the Senate (Rule XVI) generally require
authorization prior to consideration of appropriations for an agency or program.5
Constraints in terms of the amount of funding exist on several levels. For individual
items or programs, funding may be limited to the level recommended in authorizing
legislation. Also, between FY1991 and FY2002, the discretionary spending provided in
appropriations acts were limited by discretionary spending caps (these spending caps are
described below). Finally, the allocations from the budget resolution made to the
Appropriations Committees under Section 302(a) of the Budget Act provide limits that
may be enforced procedurally through points of order in the House and Senate during
consideration of the legislation. In the absence of a final agreement on a concurrent
resolution on the budget, the House or Senate may adopt a “deeming resolution” to
establish provisional enforcement levels.6
Section 302(b) of the Budget Act further requires the House and Senate
Appropriations Committees to subdivide the amounts allocated to them under the budget
resolution among their subcommittees. These suballocations are to be made “as soon as
practicable after a concurrent resolution on the budget is agreed to.” Because each
subcommittee is responsible for developing a single general appropriations bill, the
process of making suballocations effectively determines the spending level for each of the
13 regular appropriations bills. Legislation (or amendments) that would cause the
suballocations made under 302(b) to be exceeded is subject to a point of order. The
Appropriations Committees can (and do) issue revised subdivisions over the course of
appropriations actions to reflect changes in spending priorities effected during floor
consideration or in conference.
Revenue and Public Debt Legislation. The budget resolution provides a
guideline for the overall level of revenues, but not for their composition. Legislative
language controlling revenues is reported by the committees of jurisdiction (the House
Ways and Means Committee and the Senate Finance Committee). The revenue level
agreed to in the budget resolution acts as a minimum, limiting consideration of revenue
legislation that would decrease revenue below that level. In addition, Article I, Section
7 of the Constitution requires that all revenue measures originate in the House of
Representatives, although the Senate may amend them, as other legislation. Revenue
legislation may be considered at any time, although revenue provisions are often included
in reconciliation legislation.
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7 CRS Report RS21519, Legislative Procedures for Adjusting the Public Debt Limit: A Brief
Overview, by Robert Keith and Bill Heniff Jr.
The budget resolution also specifies an appropriate level for the public debt that
reflects the budgetary policies agreed to in the resolution. Any change in the authorized
level of the public debt must be implemented through a statutory enactment.7
Budget Enforcement and Sequestration. The statutory budget enforcement
procedures of recent years have been part of the Balanced Budget and Emergency Deficit
Control Act of 1985, as amended. Between 1990 and 2002, the act provided two separate
mechanisms: spending caps in Section 251, designed to limit discretionary spending to
a designated level; and the PAYGO process in Section 252, designed to limit changes in
the level of revenues and direct spending by new legislation. In both cases, the
mechanism was enforced by a presidential sequester order after the end of a congressional
session. If legislation were enacted that would violate the limits established under either
of these mechanisms, the President was required to issue an order for an across-the-board
spending cut of nonexempt spending programs within that category. Although formal
enforcement of these mechanisms was through a presidential order, by enforcing the
allocations and aggregates for spending and revenues provided in the budget resolution
consistent with these limits, Congress was able to use points of order to enforce them as
well. Although statutory limits expired at the end of FY2002, Congress continues to use
the concurrent resolution on the budget to establish and enforce budgetary limits.
