The Federal Budget Process: An Interactive Performance in Three Acts

May 19, 2009

Every year, Congress re-enacts the budget process, allocating literally trillions of federal tax dollars to wars, preparation for wars, and the aftermath of wars, and billions to investments in people, cities, towns, structures and the environment. Every year Congress makes choices.

In the old days, this performance was like an opera -- elaborately staged, using arcane language and forms, with no opportunity for audience participation. That was then, this is now. Now the budget is interactive performance -- you can make a difference in how it all turns out.

Setting the Stage: Authorization Bills

In order to receive government funds, a program (or department or agency) must be authorized by Congress. Congress must describe what the money is for, how the program is to operate, who qualifies for grants or loans under the program, and so on. Most programs are reauthorized every three to five years. The Pentagon gets a new authorization every year -- for new or more weapons and new assignments around the world. Foreign aid programs, in contrast, haven’t been reauthorized since 1967. They just muddle along with annual appropriations bills. Authorization bills can be brought up at any time of year. They provide a great opportunity for the rest of us to re-set the stage -- to reshape or expand or limit a program’s authority.

Act One: The Budget Resolution -- Big Picture Time

The president introduces a budget proposal in early February. Typically, the budget proposal comes to Congress with a lot of line-by-line detail, plus analytical information about past spending trends, expected changes in revenues (taxes), and so on. But at first, Congress looks only at a few “top line” numbers: How much income can the government expect? How much spending is projected for entitlement or non-discretionary programs (such as Veteran’s benefits, Medicaid, Medicare)? And how much will be available for discretionary spending (everything else? The answers to these questions become the “budget resolution” -- a document that is just a few pages long, outlining the bare bones of the budget.

Audience participation:

When the whole budget is on the table, it is easy to see the proportions between, say, military spending and investments in other ways to relate to the world at large. Lately 95% military, 5% non military. Or the way our spending patterns respond to threats: 43% of the budget for military responses, less than 3% to respond to climate change. Time to grab the spotlight and shine it on these skewed priorities.

Act Two: Appropriations – The Plot Thickens

Once Congress adopts the budget resolution, Appropriations Committees come enter the stage. Each house of Congress has one large Appropriations Committee, with 12 subcommittees. Each subcommittee gets an allocation to distribute to certain departments. The subcommittees will use the script provided by the President’s detailed budget proposal, but some will feel free to ad lib, adding their own flourishes and deleting some less favored lines.

Great time for audience participation!

This is when we get to suggest that purchasing more WWII-style weapons is a waste of our money, or that the Pell Grant really needs to be increased enough to fully support a low income college student in a state college. We all have lines that we care about.

Act Three: Reconciliation – Resolving the Conflicts

While the appropriations committees look carefully at each line item in the budget, there are some big lumbering programs in the wings that could steal the spotlight and run away with all the money. These are the entitlement programs -- programs that give a certain benefit to eligible people. The programs tend to grow, especially in bad economic times, because more people qualify for assistance, and more assistance is needed. So Congress has to be sure that there are enough funds to pay for these programs, along with the discretionary programs that they have been working on.

How do they do this? With “reconciliation instructions.” Early in the budget process, Congress adopts a sub-script that instructs tax writing committees (Finance in the Senate and Ways and Means in the House) to come up with enough money to cover all the programs, or to find ways to limit eligibility or benefits so that the entitlement programs won’t grow. By the end of the summer, as the fiscal year deadline (September 30) approaches, Congress has to get this piece of work done quickly. So the reconciliation process was invented to “fast track” the recommendations of the Finance Committee and Ways and Means Committee. No filibusters are allowed in the Senate, no amendments in the House. Controversy continues until the last gasp -- but a budget emerges triumphant at the end.

Audience participation: Watch out for surprise endings

The choices will be between cutting programs like unemployment insurance and food stamps, or raising taxes on the other. Since tax-raising is an unpopular move, important social programs can be in danger in this last act.

Reprise: After the Last Bow

The curtain falls, and the work begins again. In September through December, federal agencies lobby the Office of Management and Budget (the President’s office that prepares the budget proposal) to increase their budgets.

It’s a good time for the audience to mingle with the actors (Congress), and start some conversations with agencies and OMB to help write the next script.