President Trump released his annual budget today, which has led to many news stories about how he plans on cutting certain programs or changing the way the federal government works. President Trump may indeed have ideas about how the federal government should spend money, but he cannot do anything alone. The $4.8 trillion budget (an increase of $700 billion over the previous fiscal year) he released is merely the official start of the budget process.
The process for determining how much money the federal government will spend in the next fiscal year will take until at least October, more likely longer. There are many steps that Congress must take between now and then until we know how much money individual departments or agencies will receive.
The President’s Budget
While the law states that the president must submit his budget by the first Monday of February, in many years presidents submit them later (President Trump only missed this deadline by a week – last year he submitted his budget in March). The president’s budget has a few parts:
- Recommendations on spending for the next fiscal year (which runs from October 1 through September 30)
- Proposals for major policy changes that have budget implications, such as reforms to programs like Social Security or Medicaid
- Projections for future spending levels, revenue collections, and budget deficits
- Historical data on spending and revenue amounts
It is important to outline a few things that the president’s budget does not do:
- It does not set any spending. It merely recommends what the president would like to see spending levels set at.
- It is not law. This is not the president announcing how spending will proceed in the next fiscal year. If he recommends the elimination of a certain program or cuts in another program, these eliminations or cuts will not happen unless Congress agrees.
- It does not bind Congress to do anything. The president’s budget is delivered to Congress, but Congress does not have to adopt any of it. In fact, Congress routinely ignores it.
So why is the president’s budget resolution important? Its importance lies in laying out the president’s overall vision for federal spending. It indicates the programs he thinks are important, those he thinks should be cut (or eliminated), and often outlines a path towards a balanced budget.
However, as a practical matter, the president’s budget resolution does not directly affect spending. It may indicate that, as Congress finishes up its spending process (described below), the president may veto spending bills that deviate from his priorities. Even that is not necessarily true, however, as negotiations over actual spending bills later in the year often ignore the president’s budget priorities in favor of more immediate concerns.
President Trump’s Fiscal Year 2021 budget proposal, released on February 10, can be found here.
Congressional Budget Resolutions
Once the president releases his budget, the House and Senate Budget Committees consider them. The Congressional Budget Office (CBO) also analyzes the budget. The committees consider the CBO analysis and are supposed to release their budget resolutions by April 1. The full House and Senate then consider these resolutions and adopt them, usually with amendments, by April 15.
The adopted budget resolutions are not laws, so are not subject to presidential veto. However, they do set the funding allocations that the appropriations committees in each house use to set their spending bills. These committees, described in more detail below, set the actual spending levels for the fiscal year for discretionary government programs (that is, for programs that are not entitlements such as Social Security or Medicaid).
While passing a budget resolution is helpful in setting a federal spending blueprint, it is not mandatory. In fact, in Fiscal Years 2011, 2012, 2013, and 2020, Congress did not pass a budget resolution. When that happens, the prior year’s budget resolution sets the spending blueprint that appropriations committees follow.
These budget resolutions can also contain “reconciliation instructions.” These are instructions to committees to make changes to the law that have budget implications. The reconciliation process is not subject to a Senate filibuster, and must be considered on a faster timeframe than other legislation. That makes it a useful tool to enact policy that does not have strong bipartisan support.
The Appropriations Process
The House and Senate Appropriations Committees are the committees that actually set spending levels for discretionary government programs. These committees each have 12 subcommittees that use the budget resolution allocations to determine how much government departments and agencies spend.
These 12 appropriations bills are supposed to be completed by Congress and signed by the president by the beginning of the fiscal year, October 1. That rarely happens. This leads to a variety of maneuvers to fund the federal government for temporary time periods or, failing that, a government shutdown.
What Does This Mean to You?
The budget process is how the government determines how much it will spend on the programs it administers. It also helps determine how much the deficit will be and how much the government will add to the national debt. If this process breaks down due to disagreement between the President and Congress, it could also lead to another government shutdown. Since President Trump has just released his budget, it remains to be seen what will happen with spending, the deficit, and a possible government shutdown this year.