PLS 121: American Politics and GovernmentPLS 121: American Politics and Government

The Constitution The Constitution

The Budget Making Process

Discretionary Budget 2006 ($843.3 billion)

3%

1%

41%

8%

3%

9%4% 5% 1% 3% 2% 4%

1%

1%

1%

2% 2% 5% 1%

1%

0%

1%

1%

2%

AGR COM DEF DEd DOE HHS DHS HUD

INT JUS LABOR STATE TRN TRS VA ACE

EPA President Judicial Legislative NASA NSF SSA Other

Mandated Budget 2006 ($1,677 billion)

33%

20%12%

22%

13%

Social Security Medicare Medicaid Other Interest on the Debt

Receipts (Income) 2006 ($2,285.5 billion)

44%

12%

37%

3%1%1%2%

Personal Corporate SSI Excise Estate Customs Other

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The Federal Debt

• On 23 September 2007

• Total:– $8,994,135,431,000

• Per capita: – $29,677

• Percent of GDP: – 38.5%

• Daily average increase of– $1.36 billion

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Two Budget Offices

• Congressional Budget Office (CBO) and the Office of Management and Budget (OMB)

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The CBO

• Congressional Budget Office– Congressional Budget Office– Oversees the preparation of the

Congressional Budget– Sets funding priorities for Congress– Helps president supervise the

management of the budget within agencies the Congress oversees

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The OMB

• Office of Management and Budget– Office of Management and Budget– Oversees preparation of the

President’s Budget– Sets funding priorities for the

administration– Helps president supervise the

management of the budget within executive branch agencies

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Budget Process Overview

– Agencies submit requests to President.– President Packages all this into one

budget.– President submits his budget to

Congress.– Congress deliberates and passes a

Budget Resolution by April 15.– The Resolution passes to the

Appropriations Committees, which then treats it like a normal bill and submits it to its 13 subcommittees.

– ‘Normal Bill’ routines are followed.– The budget needs to pass by Oct 1.– The agencies then make their final

budgets based on the real budget passed. 

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In Depth

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Agencies

• (February of the previous year)

• National Headquarters for each agency sends out budget requests.

• These budget requests provide numbers and goals, but also past successes and any other information that might support the budgetary figures. (i.e. they are selling their successes)

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Field Units

– Program Budget Instructions (PBIs) are sent to field units (or sub-agencies) in March of the previous year.

– The PBIs outline what can be accomplished with three different levels of funding:

• Reduced,

• Current,

• Enhanced

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The OMB

• The agencies submit all relevant documents, especially justifications, to the OMB for review.

• The OMB receives the budgets from all agencies and decides on what to fund and with how much money.– The agencies can appeal this

decision, but they rarely do so successfully.

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Agencies

• Now that they know the funds the OMB suggests they receive, they prepare budget justifications for that amount.– Congress uses these justifications

as reference material for final decisions on appropriations.

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President

• At this point, the president submits his budget and the budget justifications to Congress by the first Monday of February.February 6, 2006

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Budget Committees

• Budget committees hold hearings– Public hearings held to examine

the federal budget and the programs it funds.

– Also it uses these hearings to look at the President’s budget in more detail.

– Administration officials and Agency heads testify to support their requests.

– Other committees also review the President’s budget vis-à-vis their own realms.

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Budget Committees

• Mark-ups (March)– Public meetings to work on the

language and the numbers contained in resolutions and legislations affecting the federal budget.

– These public meetings, the hearings above, the results from other committees, and numbers out of the Congressional Budget Office (CBO) are used to draft the Budget Resolution.

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House and Senate

• Each pass versions of Budget Resolutions

• The two chambers may pass different versions of the Budget Resolution.

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Conference Committee

• Works on the Conference Report

• It is up to the Conference Committee to work out the differences between the two versions of the Budget Resolution.

• Conference Committee releases Conference Report (April)– The Conference Report is the

compromise found by the Conference Committee.

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Congress

• Deadline for Congress to pass Budget Resolution is April 15

• The two chambers vote on the Conference Report (on the Budget Resolution) and hopefully pass it by the April 15 deadline.

• The deadline is not set in stone, but Congress does work hard to meet it.

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Congress

• This establishes guidelines and targets for spending and revenue that Congress uses to consider budget and appropriations legislation.– The Resolution is not Public Law,

only a guide for formulating the actual federal budget. However, it is binding on Congress.

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Congress

• Committee Allocations (May 15)

• The Budget Resolution defines the amount of money allocated to the House and Senate Appropriations Committees. (i.e. it outlines caps on spending and targets for revenue)

• From the Budget Resolution, the House and Senate Appropriations Committees allocate funds to each of the 12 subcommittees.

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Subcommittees

• Agriculture, Rural Development, and Related Agencies

• Commerce, Justice, and Science

• Defense

• District of Columbia

• Energy and Water

• Homeland Security

• Interior and Related Agencies

• Labor, Health and Human Services, Education and Related Agencies

• Legislative Branch

• Military Construction and Veterans Affairs

• State, Foreign Operations, and Related Programs

• Transportation, Treasury, the Judiciary, Housing and Urban Development, and Related Agencies

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Appropriations

(actually starting in March)

• The Appropriations subcommittees start holding public hearings to examine the budget.

• This process continues until all 12 appropriations bills are passed (usually by the end of September)

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Appropriations

• Now that the subcommittee passes all 12 appropriations bills, the full Appropriations Committee passes the Budget.– They can change parts of it.

– They can add amendments.

– They can do whatever they feel they should do.

• Eventually, they pass the budget.

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House and Senate Floor Vote

• Both chambers vote upon the bill.

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Conference Committee

• The two chambers tend to pass different budgets, so the Conference Committee will, again, iron out the differences between the two versions.

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Congress

• The Conference Report (of the Budget) is voted upon by both chambers and is passed.

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President

• By October 1:– The president signs the budget into

law.

– Or he vetoes it.

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Agencies

• Now the agencies know for sure what was funded and what was not.

• Their own budgets are re-written to reflect this new reality.

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Reading Assignment

• Read: SSB, Chapter 12

• Read: Constitution, Article III