Capitolworks: Just The Facts…The Congressional Budget Process And How The President’s Budget Fits In

May 22, 2017

In anticipation of the President’s budget set to be released tomorrow, we thought a short explanation of the budget process might help to set a context for its release and how this budget fits into the overall Congressional budget process. Like most things this year, the budget process has not stuck to its usual course leaving us all a bit perplexed as to what budget we are currently working under, what does the President’s budget mean and what budget are the House and Senate currently working on. All good questions. Let’s see what answers we can offer.

 

The federal fiscal year starts on October 1st and ends on September 31st. Traditionally, the budget process kicks off with the release of the President’s budget request to Congress sometime between the first Monday in January and the first Monday in February. However, there are exceptions to this rule and one of them allows for a delay in the President’s budget process if there is a new President from a different party taking office. Much anticipated and once released, the President’s budget is exciting for the press and pundits as it offers “insight” into the Administration’s priorities. However, it is much ado about nothing in reality. Remember from previous posts; the budget power is a fundamental right of Congress and in particularly the House which must initiate all budget bills. So, does that mean that the President’s budget has no power?

 

Yes and no. The country is not bound, nor is Congress, by anything that is in the President’s budget. So, that’s a no. However, the President’s budget does serve as a blueprint for Congress and provides evidence of the President's priorities regarding spending and savings if the President held such power. Also, those in Congress that align with the President and his priorities will attempt to fulfill some of his requests. So, there is the yes. But how will those Members help the President’s priorities find a way into the Congressional budget as that is the budget that ultimately funds the federal government?

 

The next step in the process is for both Congressional chambers to take the President’s budget, along with their priorities, and enact what’s called a budget resolution. You may remember from our previous post that a budget resolution serves as a framework for the congressional budget process. The resolution is not signed by the President and is not considered law. And in fact, not every year is a budget resolution enacted (in which case the previous year’s resolution remains in effect). However, it does guide Congress as to where taxes, spending, and revenue should be found and may include instructions as to what tools may be used to pass the budget. For example, it may include instructions for Congress to use reconciliation for passage.

 

From the resolution, the budget process moves on to the committees within Congress that distribute the money. These committees are called appropriation committees, and there are 12 such committees in both chambers. The appropriation committees determine the budget authority for all discretionary spending within their committee. Examples of these appropriation committees include: armed services, foreign relations, health education labor and pensions (known as Labor-H) just to name a few. The appropriations committees in both chambers must pass all of their appropriation bills successfully, work out any differences between the two chambers, and have the President sign the bill into law before the beginning of each fiscal year. If not accomplished, then the federal government may be faced with shutting down. While a full shut down is rare, it has, in fact, happened. However, to avoid such a messy and humiliating situation, Congress may use a budget tool known as a “continuing resolution” or CR.

 

A continuing resolution will keep the government open by simply extending last year’s budget. Increasingly this has been the tool of choice as Congress has been unable to produce the appropriation bills necessary for formulating a new budget. For example, a CR was passed in September and then again in December of 2016. Most recently, the House passed another CR on May 4th when they also passed their repeal and replace health care bill. Therefore, the federal government is still functioning under the 2016 budget and, there is even talk about Congress enacting another CR for the entire ’18 fiscal year.

 

There is one last tactic that Congress may use to pass a budget although it is the least popular option available to them. Should they choose, Congress may elect to pass an end of year “Omnibus” bill that essentially rolls all of the different appropriation bills into one large bill. Why is this tactic unpopular? You have likely heard terms such as “full of pork,” “earmarks,” etc. That is because an Omnibus bill is so large, it can be used to “hide” other bills including pet projects of various Congressional Members. Also, because of its size and scope, it can also be veto proof allowing more Members to make use of it for their personal interests while still ensuring that the President will sign it into law.

 

So, which budget matters to us? The President’s or Congress’? The answer is that they both do. However, we must remember that the President’s budget is a blueprint, not a mandate and that ultimately, Congress holds the budget purse strings. This year we have seen the budget process out of sync with the “typical” order due to a new incoming Administration. Such deviations are allowed but can also cause great confusion for those of us trying to sort through the public rhetoric.

 

Tomorrow we will see the President’s budget, and it will help us all better understand the priorities of this Administration. There will no doubt be a frenzy of information and analysis tomorrow after the President’s budget is released. Hopefully, though, you now have a better understanding that while it is interesting to have insight into the Administration’s priorities, in fact, all that is offered is just that, insight.

 

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CAPITOLWORKS LLC, 304 E Street NE Washington, DC 20002

202.841.4341

        brooke@capitolworksllc.com          

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