How the Federal Budget Process Works — and What Happens When It Doesn’t

With Congress expected to approve a stopgap funding bill before October 1 to keep the government running for the next few months, this is an appropriate time to review how the federal budget process is supposed to work.  Our newly updated backgrounder does just that, describing the laws and procedures under which Congress decides how much money to spend each year, what to spend it on, and how to raise the money to pay for that spending.

More specifically, our backgrounder explains:

• the President’s annual budget request, which is supposed to kick off the budget process;
• the congressional budget resolution — how it is developed, what it contains, and what happens if there is no budget resolution;
• how the terms of the budget resolution are enforced in the House and Senate;
• budget “reconciliation,” an optional procedure used in some years to facilitate the passage of legislation amending tax or entitlement law; and
• statutory deficit-control measures — spending caps, pay-as-you-go requirements, and sequestration.

It also explains the differences between discretionary and mandatory programs and between budget authority and outlays, as well as other concepts that aren’t widely known but are critical to understanding the budget process.

Noting that in recent years the budget process hasn’t always worked as envisioned, our backgrounder describes what happens if, for example, Congress fails to complete a budget resolution or to pass appropriations bills before the October 1 start of the fiscal year.