May 3, 2005
How Congress Writes a Budget
By Senator Tom HarkinWith news reports of skyrocketing deficits and cuts in spending, many Americans may wonder how Congress writes the federal government’s budget each year. Right now, Congress is producing a budget for the 2006 fiscal year that begins on October 1. Let me answer some common questions about the budget:
Q. How does this process start off each year?
A. The President submits a budget to Congress in early February. This lays out the President’s priorities, and includes details as to how much money he wants allocated to each federal program. The budget request also sets forth the President’s wishes with regard to reducing or raising taxes. However, the President’s proposed budget is only a recommendation. Congress has the “power of the purse.” And under the Constitution, it is Congress’s job to actually write and pass the budget.
Q. What is the Congressional Budget Resolution?
A. After the President submits his budget request, Congress develops its own budget. The Senate Budget Committee writes and passes a budget proposal, which is then voted on by the entire Senate. A parallel process takes place in the House. Next, members of the Senate and House Budget Committees come together to hammer out a joint Congressional Budget Resolution, which specifies how much money Congress may spend and how much revenue should be collected in the coming fiscal year. This Budget Resolution then goes to the full Senate and House to be debated and voted upon.
Q. If the Budget Resolution sets forth very broad instructions as to how the total budget pie will be divided up, how does Congress decide on the nitty-gritty specifics as to which programs get how much money?
A. Each house of Congress has an Appropriations Committee, divided into subcommittees that control spending in specific areas (agriculture, armed services, homeland security, etc.). Each subcommittee produces an appropriations bill that specifies sums to be spent on each program. Differences in the House and Senate bills are then worked out by a conference committee made up of members of the two appropriation subcommittees. If the final House-Senate bill is passed in both houses, it then goes to the President for signature.
Q. How long does this entire process take?
A. The Budget Resolution is supposed to be passed by April 15, but it often takes longer. Sometimes, the two houses of Congress can’t agree on a Budget Resolution, in which case only a single overall sum for total spending is agreed to. The federal government’s fiscal year runs October 1-September 30. If the appropriations process is not completed by the end of September, Congress passes what is called a “continuing resolution” that extends the previous year’s spending for a set amount of time.
Q. What are some big issues with this year’s budget?
A. The President’s budget for fiscal year 2006 calls for significant cuts in domestic programs, especially agriculture, law enforcement, education, and Medicaid. The President also calls for additional tax cuts. The House and Senate Budget Resolutions generally conformed to the President’s proposals. However the cuts to Medicaid were eliminated by a vote of the full Senate. I have been arguing for fewer cuts to critical domestic programs, and fewer new tax cuts, which mainly benefit the wealthy. Since the proposed tax cuts are larger than the proposed spending cuts in the long term, the deficits will likely continue to grow.