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The Budget Process L32-345

The Budget Process L32-345. Brief History of Federal Budgeting. Historically decentralized, Congress at the center 1921 Budget Act, creates GAO 1950s-1970s: Growth in defense and social spending Deficits in Vietnam, Medicare/Medicaid Nixon & Presidential Impoundments

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The Budget Process L32-345

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  1. The Budget ProcessL32-345

  2. Brief History of Federal Budgeting • Historically decentralized, Congress at the center • 1921 Budget Act, creates GAO • 1950s-1970s: Growth in defense and social spending • Deficits in Vietnam, Medicare/Medicaid • Nixon & Presidential Impoundments • “Backdoor financing” by authorizing committees • Budget and Impoundment Control Act of 1974 • Passed over Nixon’s Veto • Deficits in 1980s, early 1990s • Multiple attempts at deficit-cutting • Surpluses in late 1990s • Tax cuts, increased spending in 2000s

  3. The Broad Strokes of the Budget Process • Submission of budget by President • Prepared by OMB • Congressional review of President's budget • Handled by various committees • Congressional action on spending bills • Appropriations committee • Execution of spending-related laws • Generally done by executive agencies • Audits and reviews of agency spending (GAO)

  4. The budget process in more detail • Budget resolution • Concurrent resolution • 1974 Budget Act • House and Senate Budget Committees • Can be altered by Appropriations committee • Sets aggregate spending and revenue levels • 2 parts of budget resolution: • Aggregate spending and revenue • Multiyear targets • Spending levels across 20 categories

  5. Functional Categories

  6. Timetable • President submits budget (1st Mon. in Feb.) • Congress passes budget resolution (Apr.15) • Appropriations bills considered (May 15-on) • All appropriations bills reported (June 10) • Reconciliation legislation finished (June 15) • Typically starts in House (Constitution) • Appropriations bills finished (June 30) Timetable rarely (never?) followed

  7. Appropriations Committees • Twelve subcommittees (1 for each general appropriation bill): • Agriculture • Commerce, Justice, Science • Defense • Energy and Water • Financial Services • Homeland Security • Interior and Environment • Labor, HHS, Education • Legislative Branch • Military Construction, VA • State, Foreign Operations • Transportation, HUD • Emergency Supplementals • Supplemental appropriations

  8. Figure 12.4. Steps in Budget Process Process set by 1974 Budget Act Typical Process after 1980 President Submits Budget President Submits Budget Pass First Budget Resolution Pass First Budget Resolution Pass Authorization & Appropriations Bills Pass Authorization Pass Reconciliation & Appropriations Legislation Bills Pass Second Budget Resolution Pass Reconciliation Legislation Fiscal Year Begins October 1 Fiscal Year Begins October 1

  9. The 1974 Budget Act • Centralized and Regularized the Budget Process • Created Budget Committee in each chamber • Created Congressional Budget Office (CBO) • House Committee • rotating membership • partisan • Members have “turf“ interests • Committee is Privileged • Senate Committee • Traditional standing committee • Prestigious/powerful committee

  10. Budget Resolution in the 2 Chambers • The House • Budget Resolution is a privileged matter in the House • Usually, special rule: a substitute-based amendment structure • The Gephardt Rule (Rule 28) and Debt Ceilings in the House The Senate • Privileged matter: Motion to proceed is not debatable • Debate on resolution itself is limited to 50 hours, • “Vote-a-rama:” unlimited, debate-free amendments after 50 hrs • Germaneness requirement on amendments, waived with 60 votes

  11. The Budget Resolution’s “dimensions” • Revenues, Expenses, • Multi-year forecasts The Budget Resolution as an “upper limit” • Establishes points of order in both chambers • Special rules frequently waivers in House • Reconciliation Instructions • Part of budget resolution • Aimed at specific committees • Sets targets for changes in law

  12. The 2009 House Budget Resolution • Special rule: H.Res.316 • 4 Amendments in the nature of a substitute • At most one amendment can pass. • Voted on in the following order: • Progressive Caucus (84-348) • Republican Study Committee (111-322) • Congressional Black Caucus (113-318-1) • GOP (137-293) • Final vote: 233-196

  13. Reconciliation • Optional part of the budget process • Committees recommend changes to law to meet targets set in budget resolution • Budget Committee merges recommendations and sends to the floor • In the House: considered under special rule • In Senate: • 20 hour time-limit for measure • 10 hour time-limit for Conference Report • Germaneness rule applies to both

  14. The Byrd Rule • Applies to Senate consideration • Named for Senator Robert Byrd (D, WV) • First used in 1985-86 • Made law in 1990 (Budget Enforcement Act) • Reconciliation bills must be consistent with instructions • No material outside of the committee(s) jurisdictions • No extraneous material • No provisions that increase deficit • Applies to both bill & amendments • Presiding Officer rules on objection • Advised by Parliamentarian (Alan Frumin) • Waiver requires 60 votes (3/5ths of members sworn)

  15. Impoundments, Deferrals, Recissions • What they are • Presidential notication to Congress of recissions and deferrals required • Acceptance requires both chambers to pass resolution within 45 days • Questionable constitutionality in light of INS v. Chadha (1983)

  16. Beyond the Budget Resolution:Budgets and Appropriations in Normal Times

  17. The Ins-and-Outs of Budget Politics • Discretionary vs. Direct Spending • The Power of the Authorizing Committees • Budget Authority vs. Budget Outlays • Multi-year Outlays vs. Multi-year Authority

  18. Authorizations and Appropriations • Formal 2-step procedure by which money is allocated • Authorization Bill: describes programs and recommends funding levels • Appropriations Bill: allocates funding to the programs • Authorizations are intended to precede appropriations • Standing, multi-year, and single-year authorizations • Most appropriations for single year only

  19. Authorization-Appropriation Process • House Rule 21 prohibits intermingling of legislation and appropriations • Frequently waived by special rule • Senate Rule XVI requires that amendments to general appropriations bills be germane • But appropriations can be added to non-appropriations bills as amendments • Filibuster is a threat for all bills

  20. Why a “two step” budget process? • Early Legislatures tried to separate policy and spending. • Intermingled bills are often delayed longer • Policy should be debated with “cool minds,” etc. • Intermingling of the two is inevitable.

  21. Failure of the Two-Step • Bargaining: bundling policy and money • Logrolling/coalition building • Appropriations bills are “must-pass" • Authorization bills often die in Senate • Appropriations bills are better protected in the Senate • Authorizing committees require special rules in House

  22. Details of the Process • 12 Regular (“General") Appropriations Bills • - 1 for each Appropriations subcommittee • Several “emergency” supplemental appropriations bills per year • “Continuing resolutions" when needed • - 1995 showdown with Clinton • These deal with the approximately 30% of spending that is ”directly controllable."

  23. Other Dimensions of Budget Politics • Off-Budget status (e.g., Highway Trust Fund) • Borrowing & Contract authority (Obligations clause of U.S. Constitution) • Entitlements • automatic eligibility for federal benefits) • “Tax expenditures" (tax breaks/incentives) • Limitation Riders

  24. Direct Spending • Not funded through the authorization-appropriation process, but through authorizing committee directly (bypassing appropriations); 3 types: • Contract authority: Agencies have power to enter into contracts that subsequently must be covered • Borrowing authority: Agencies can borrow money from the public or the Treasury • Mandatory Entitlements: Establish legally enforceable rights without reference to dollar amounts (over 1/2 all federal spending)

  25. Earmarks • What are they? • Congressionally directed spending • No-bid contracts • Choice of location or type of good • Limited tax benefits • Where are they? • Bills • Conference Reports • Committee and subcommittee reports

  26. Limitation Riders • Prohibitions on spending • ”None of the funds provided in this Act shall be used for…“ • Making Policy with Money • A tool for Congressional oversight of agencies • Limits on limitations under House Rules: • Cannot impose additional duties on agency officials • Cannot interfere with discretionary authority • Cannot require officials to make new determinations

  27. Deficit Reduction Attempts, Briefly • Gramm-Rudman-Hollings (1985): undermined by fancy accounting & exclusions • Budget Enforcement Act (1990) • Undermined by “emergency spending“ • Disasters? Yes. • Wars? Maybe. • 2000 Census? Probably not. • Pay-As-You-Go (PAYGO) provisions

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