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Data-Driven
Decision
Making
Salomey F.
Calixte
MAT210
Prof Evan
Schwartz
9/3/2021
1
Rate of Poverty
United State Poverty Rate
2
Poverty Rate in
States
3
Rate of Poverty
0.00% 5.00% 10.00% 15.00% 20.00% 25.00%
State w ith th e H ig h e st
rate o f P o ve rty
Georgia: District of Columbia:
South Carolina: Alabama:
Kentucky: West Virginia:
New Mexico:
Louisiana: 18.4% Mississippi
4
5
1
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
F ac tors be hind Pove rty
Adverse Weather illiteracy Pandemics Unemployment
Poverty Rate
Description
The graph shows the states with the
highest and lowest poverty rates in
percentage terms. Some of the states
with the highest poverty rates are
Louisiana, Mississippi, West Virginia, and
Georgia (Jelavish, 2021).
6
Important
of the Data
The presentation aims to inform the audience about
the main factors that cause poverty. The data shows
that education is very important in reducing poverty.
The state with the lowest rate of poverty will have the
easiest to implement and manage.
7
Recommendation
Creation of job opportunity
Educating youths to increase the level of
education
Having special attention to the state with
high poverty level
8
Audience
Targeted
The target audience is adults and teenagers
because they have a better understanding of
the issues related to poverty and inequality.
Having teenagers as a part of the group will
help in curbing poverty.
9
Language,
Purpose &
Visual
presentation
The language used in this project is
simple and brief to enable the audience
to understand the presentation. I used a
bar chart to help the adults understand
the basic concepts of presentation.
10
CONCLUSION
Poverty is a social issue that affects every
society. It should be the government's priority.
11
References
-economic-
mobility/poverty-estimates-
trends-analysis
n.d.)
-
270.html
12
https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-
estimates-trends-analysis
https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-
estimates-trends-analysisSlide 1Slide 2Poverty Rate in
StatesSlide 4Slide 5Poverty Rate DescriptionImportant of the
DataRecommendationAudience TargetedLanguage, Purpose &
Visual presentationCONCLUSIONReferences
Policy Basics is a series of brief background reports on issues
related to budgets, taxes, and government assistance programs.
Center on Budget and Policy Priorities | cbpp.org
Note: The COVID-19 recession and subsequent relief packages
have dramatically changed
spending and revenue levels for fiscal years 2020 and 2021. We
use pre-pandemic figures
below to illustrate the composition of the federal budget and
taxes under more normal
circumstances.
Introduction to the Federal Budget Process
This backgrounder describes 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 cover some or all of that spending. The Congressional
Budget Act of 1974
lays out a formal framework for developing and enforcing a
“budget resolution” to
guide the process but in recent years the process has not always
worked as
envisioned.
In this backgrounder, we address:
• 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.
Step One: The President's Budget Request
The process starts when the President submits a detailed budget
request for the coming fiscal year, which
begins on October 1. (The President’s request is supposed to
come by the first Monday in February, but
sometimes the submission is delayed, particularly when a new
Administration takes office or congressional
action on the prior year’s budget has been delayed.) This
budget request — developed through an
interactive process between federal agencies and the President’s
Office of Management and Budget (OMB)
that begins the previous spring (or earlier) — plays three
important roles.
Policy Basics – Introduction to the Federal Budget Process
2
First, it tells Congress what the President recommends for
overall federal fiscal policy: (a) how much money
the federal government should spend on public purposes; (b)
how much it should take in as tax revenues;
and (c) how much of a deficit (or surplus) the federal
government should run, which is simply the difference
between (a) and (b). In most years, federal spending exceeds tax
revenues and the resulting deficit is
financed through borrowing (see chart).
Second, the President’s budget lays out his relative priorities
for federal programs — how much he believes
should be spent on defense, agriculture, education, health, and
so on. The President's budget is very
specific, recommending funding levels for individual “budget
accounts” — federal programs or small groups
of programs. The budget typically sketches out fiscal policy
and budget priorities not only for the coming
year but also for the subsequent nine years. The budget is
accompanied by supporting volumes, including
historical tables that set out past budget figures.
The third role of the President's budget is signaling to
Congress the President’s recommendations for
spending and tax policy changes. As discussed below,
the budget comprises different types of programs,
some that require new funding each year to continue
and others that do not require annual action by
Congress. While the President must recommend
funding levels for annually appropriated programs, he
need not propose legislative changes for ongoing parts
of the budget already funded by prior laws.
• Annually appropriated programs. These
programs fall under the jurisdiction of the House
and Senate Appropriations Committees. Funding
for these programs must be renewed each year
to keep government agencies open and the
programs in this category operating. These
programs are known as “discretionary” because
the laws that establish those programs leave
Congress with the discretion to set the funding levels each year.
That doesn’t mean the programs are
optional or unimportant, however. For example, almost all
defense spending is discretionary, as are
the budgets for a broad set of public services, including
environmental protection, education, job
training, border security, veterans’ health care, scientific
research, transportation, economic
development, some low-income assistance, law enforcement,
and international assistance.
Altogether, discretionary programs make up about one-third of
all federal spending. The President's
budget spells out how much funding he recommends for each
discretionary program.
• Taxes, “mandatory” or “entitlement” programs, and interest.
Nearly all of the federal tax code is set
in ongoing law that either remains in place until changed or
requires renewal only periodically.
Policy Basics – Introduction to the Federal Budget Process
3
Similarly, more than one-half of federal spending is also
governed by ongoing laws. This category is
known as “mandatory” spending. It includes the three largest
entitlement programs (Social Security,
Medicare, and Medicaid) as well as certain other programs
(including SNAP, formerly food stamps;
federal civilian and military retirement benefits; veterans’
disability benefits; and unemployment
insurance) that are not controlled by annual appropriations.
Interest on the national debt is also paid
automatically, with no need for new legislation. (There is,
however, a separate limit on how much the
Treasury can borrow. This “debt ceiling” must be raised or
suspended through separate legislation
when necessary.)
As noted, the President’s budget does not need to
include recommendations to ensure the continuation of
ongoing mandatory programs and revenues, but it will
nonetheless typically include proposals to alter some
mandatory programs and some aspects of revenue law.
• Recommendations for mandatory programs
typically spell out changes to eligibility criteria
and levels of individual benefits but do not
usually propose binding funding limits. Rather,
funding for these programs is effectively
determined by the eligibility and benefits rules
set in law.
• Changes to the tax code will increase or
decrease taxes. Such proposals will be reflected
as a change in the amount of federal revenue
that the President’s budget projects will be collected the next
year or in future years, relative to what
would otherwise be collected.
Step Two: The Congressional Budget Resolution
Next, Congress generally holds hearings to question
Administration officials about their requests and then
develops its own budget plan, called a “budget resolution.”
This work is done by the House and Senate
Budget Committees, whose primary function is to draft and
enforce the budget resolution. Once the Budget
Committees pass their budget resolutions, the resolutions go to
the House and Senate floors, where they
can be amended (by majority vote). A House-Senate conference
then resolves any differences, and the
budget resolution for the year is adopted when both houses pass
the conference agreement.
The budget resolution is a “concurrent” congressional
resolution, not an ordinary bill, and therefore does not
go to the President for his signature or veto. It also requires
only a majority vote to pass, and its
consideration is one of the few actions that cannot be
filibustered in the Senate. Because it does not go to
the President, a budget resolution cannot enact spending or tax
law. Instead, it sets targets for other
congressional committees that can propose legislation directly
providing or changing spending and taxes.
Policy Basics – Introduction to the Federal Budget Process
4
Congress is supposed to pass the budget resolution by April 15,
but it often takes longer. In recent years it
has been common for Congress not to pass a budget resolution
at all. When that happens, the previous
year’s resolution, which is a multi-year plan, stays in effect,
although the House, the Senate, or both can and
typically do adopt special procedures to set different spending
levels (see box: What if There Is No Budget
Resolution?).
• What is in the budget resolution? Unlike the President’s
budget, which is very detailed, the
congressional budget resolution is a very simple document. It
consists of a set of numbers stating how
much Congress is supposed to spend in each of 19 broad
spending categories (known as budget
“functions”) and how much total revenue the government will
collect, for each of the next five years or
more. (The Congressional Budget Act requires that the
resolution cover a minimum of five years, though
Congress now generally chooses ten years.) The difference
between the two totals — the spending
ceiling and the revenue floor — represents the deficit (or
surplus) expected for each year.
• How spending is defined: budget authority vs. outlays. The
spending totals in the budget resolution are
stated in two different ways: the total amount of “budget
authority,” and the estimated level of
expenditures, or “outlays.” Budget authority is how much
money Congress allows a federal agency to
commit to spend; outlays are how much money actually flows
out of the federal Treasury in a given year.
For example, a bill that appropriated $50 million for building a
bridge would provide $50 million in
budget authority for the coming year, but the outlays might not
reach $50 million until the following year
or even later, when the bridge actually is completed.
Policy Basics – Introduction to the Federal Budget Process
5
Budget authority and outlays thus serve different purposes.
Budget authority represents a limit on the
new financial obligations federal agencies may incur (by
signing contracts or making grants, for
example), and is generally the focus of Congress’ budgetary
decisions. Outlays, because they represent
actual cash flow, help determine the size of the overall deficit
or surplus.
• How committee spending limits get set: 302(a) allocations.
The report that accompanies the budget
resolution includes a table called the “302(a) allocation.” This
table takes the spending totals that are
laid out by budget function in the budget resolution and
distributes them by congressional committee
instead. The House and Senate tables are different from one
another, since committee jurisdictions
vary somewhat between the two chambers.
In both the House and Senate, the Appropriations Committee
receives a single 302(a) allocation for all
of its programs. It then decides on its own how to divide this
funding among its 12 subcommittees,
creating what are known as 302(b) sub-allocations. Similarly,
the various committees with jurisdiction
over mandatory programs each get an allocation that represents
a total dollar limit on all of the
spending legislation they produce that year.
The spending totals in the budget resolution do not apply to
“authorizing” legislation that merely
establishes or changes rules for federal programs funded
through the annual appropriations process.
Unless it changes an entitlement program (such as Social
Security or Medicare), authorizing legislation
does not actually have a budgetary effect. For example, the
education committees could produce
legislation that authorizes a certain amount to be appropriated
on the Title I education program for
disadvantaged children. However, none of that money can be
spent until the annual Labor-Health and
Human Services-Education appropriations bill — which
includes education spending — sets the actual
dollar level for Title I funding for the year, which is frequently
less than the authorized limit.
Often the report accompanying the budget resolution contains
language describing the assumptions behind
it, including how much it envisions certain programs being cut
or increased. These assumptions generally
serve only as guidance to the other committees.
The budget resolution can also include temporary or permanent
changes to the congressional budget
process.
Step Three: Enacting Budget Legislation
Following adoption of the budget resolution, Congress considers
the annual appropriations bills, which fund
discretionary programs in the coming fiscal year, and considers
legislation to enact changes to mandatory
spending or revenue levels within the dollar constraints
specified in the budget resolution. Mechanisms
exist to enforce the terms of the budget resolution during the
consideration of such legislation, and a special
mechanism known as “reconciliation” exists to expedite the
consideration of mandatory spending and tax
legislation.
Enforcing the Terms of the Budget Resolution
The main enforcement mechanism that prevents Congress from
passing legislation that violates the terms of
the budget resolution is the ability of a single member of the
House or the Senate to raise a budget “point of
Policy Basics – Introduction to the Federal Budget Process
6
order” on the floor to block such legislation. In some recent
years, this point of order has not been
particularly important in the House because it can be waived
there by a simple majority vote on a resolution
developed by the leadership-appointed Rules Committee, which
sets the conditions under which each bill
will be considered on the floor.
However, the budget point of order is important in the Senate,
where any legislation that exceeds a
committee's spending allocation — or cuts taxes below the level
allowed in the budget resolution — is
vulnerable to a budget point of order on the floor that requires
60 votes to waive.
What if There Is No Budget Resolution?
Congress has seldom completed action on the budget resolution
by the April 15 target date specified in
the Budget Act, and it failed to complete action on a resolution
for fiscal years 1999, 2003, 2005, 2007,
each year from 2011 through 2015, and 2019. In the absence of
a budget resolution, the House and
Senate typically enact separate budget targets, which they
“deem” to be a substitute for the budget
resolution. Such deeming resolutions typically provide
spending allocations to the Appropriations
Committees but may serve a variety of other budgetary
purposes. Unless the House or Senate agrees to
such a deeming resolution, the multi-year revenue floors and
spending allocations for mandatory
programs that had been agreed to in the most recent budget
resolution remain in effect.
The Bipartisan Budget Act of 2013, described below, took a
different tack, establishing a “Congressional
Budget” for fiscal years 2014 and 2015 in statute as an
alternative to the concurrent budget resolution
called for in the Congressional Budget Act, including new
appropriations targets for discretionary programs
for each of those years. The Bipartisan Budget Act of 2015 did
the same for the Senate for fiscal year
2017. And the Bipartisan Budget Act of 2018 did the same for
both chambers for fiscal years 2018 and
2019, even though a budget resolution for 2018 had been agreed
to by Congress three and a half months
earlier.
Appropriations bills (or amendments to them) must fit within
the 302(a) allocation given to the
Appropriations Committee as well as the committee-determined
302(b) sub-allocations for the coming fiscal
year. Entitlement bills (or any amendments offered to them)
must not exceed the budget resolution's 302
allocation for the applicable committee and must not cause
revenues to fall below the revenue floor, both in
the first year and over the total multi-year period covered by the
budget resolution. The cost of a tax or
entitlement bill is determined (or “scored”) by the Budget
Committees, nearly always by relying on estimates
provided by the nonpartisan Congressional Budget Office
(CBO). CBO measures the cost of tax or
entitlement legislation against a budgetary “baseline” that
projects mandatory spending and tax receipts
under current law.
The Budget "Reconciliation" Process
From time to time, Congress makes use of an optional, special
procedure outlined in the Congressional
Budget Act known as “reconciliation” to expedite the
consideration of mandatory spending and tax
legislation. This procedure was originally designed as a deficit-
reduction tool, to force committees to
Policy Basics – Introduction to the Federal Budget Process
7
produce spending cuts or tax increases called for in the budget
resolution. However, it was used to enact tax
cuts several times during the George W. Bush Administration
and again under the Trump Administration in
2017, thereby increasing projected deficits.
• What is a reconciliation bill? A reconciliation bill is a single
piece of legislation that typically includes
multiple provisions (generally developed by several
committees), all of which directly affect the federal
budget — whether mandatory spending, taxes, or both. A
reconciliation bill, like the budget resolution,
cannot be filibustered by the Senate, so it only requires a
majority vote to pass.
• How does the reconciliation process work? If Congress
decides to use the reconciliation process,
language known as a "reconciliation directive" must be included
in the budget resolution. The
reconciliation directive instructs committees to produce
legislation by a specific date that meets
certain spending or tax targets. (If they fail to produce this
legislation, the Budget Committee chair
generally has the right to offer floor amendments to meet the
reconciliation targets for them, a threat
which usually produces compliance with the directive.) The
Budget Committee then packages all of
these bills together into one bill that goes to the floor for an up-
or-down vote, with limited opportunity
for amendment. After the House and Senate resolve the
differences between their competing bills, a
final conference agreement is considered on the floor of each
chamber and, if adopted, then goes to
the President for his signature or veto.
• Constraints on reconciliation: the “Byrd rule.” While
reconciliation enables Congress to bundle
together several different provisions from different committees
affecting a broad range of programs, it
faces one major constraint: the “Byrd rule,” named after the late
Senator Robert Byrd of West Virginia.
This Senate rule provides a point of order against any provision
of (or amendment to) a reconciliation
bill that is deemed “extraneous” to the purpose of amending
entitlement or tax law. If a point of order
is raised under the Byrd rule, the offending provision is
automatically stripped from the bill unless at
least 60 senators vote to waive the rule. This makes it difficult,
for example, to include any policy
changes in a reconciliation bill unless they have direct fiscal
implications. Under this rule, changes in
the authorization of discretionary appropriations are not
allowed, nor, for example, are changes to civil
rights or employment law or even the budget process. Changes
to Social Security also are not
permitted under the Byrd rule, even if they are budgetary.
In addition, the Byrd rule bars any entitlement increases or tax
cuts that cost money beyond the five
(or more) years covered by the reconciliation directive, unless
other provisions in the bill fully offset
these "out-year" costs.
What If Appropriations Bills Are Not Passed on Time?
If Congress does not complete action on an appropriations bill
before the start of the fiscal year on October
1, it must pass, and the President must sign, a continuing
resolution (CR) to provide stopgap funding for
affected agencies and discretionary programs. If Congress
doesn’t pass or the President will not sign a CR
because it contains provisions he finds unacceptable , agencies
that have not received funding through the
ordinary appropriations process must shut down operations.
Policy Basics – Introduction to the Federal Budget Process
8
A dispute between President Trump and Congress over border
wall funding led to a 35-day shutdown of
federal agencies under nine different departments starting
December 22, 2018. A dispute over delay or
defunding of health reform legislation between President Obama
and congressional Republicans led to a 16-
day shutdown of ordinary government operations beginning
October 1, 2013. And a dispute between
President Clinton and congressional Republicans in the winter
of 1995-96 produced a 21-day shutdown of
substantial portions of the federal government.
Statutory Deficit-Control Mechanisms
Separately from the limits established in the annual budget
process, Congress operates under statutory
deficit-control mechanisms that prevent tax and mandatory
spending legislation from increasing the deficit
and that constrain discretionary spending.
• PAYGO. Under the 2010 Statutory Pay-As-You Go (PAYGO)
Act, any legislative changes to taxes or
mandatory spending that increase projected multi-year deficits
must be “offset” or paid for by other
changes to taxes or mandatory spending that reduce deficits by
an equivalent amount. Violation of
PAYGO triggers across-the-board cuts (“sequestration”) in
selected mandatory programs to restore the
balance between budget costs and savings. (In addition, the
House and Senate each enforce the PAYGO
principle though similar internal rules, independent of the
Congressional Budget Act.)
• Discretionary funding caps. The 2011 Budget Control Act
(BCA) imposed limits or “caps” on the level of
discretionary appropriations for defense and for non-defense
programs in each year through 2021.
Appropriations in excess of the cap in either category trigger
sequestration in that category to reduce
funding to the capped level.
• BCA sequestration. On top of any sequestration triggered by
PAYGO or funding cap violations, the BCA
also requires additional sequestration each year through 2021 in
discretionary and select mandatory
programs, split evenly between defense and non-defense
funding. This BCA sequestration was
implemented as a result of the failure of a joint select
committee that had been created by the BCA to
propose a legislative plan in the fall of 2011 that would reduce
deficits by $1.2 trillion over ten years. In
the case of discretionary programs, for 2014 and after, this
special sequestration mechanism operates
by reducing the appropriations caps below the level that the
BCA originally set.
If budget legislation violates these statutes, the applicable
sequestration penalties occur automatically,
unless Congress also modifies the requirements. For example,
policymakers modified the 2013 BCA
sequestration requirement in the American Taxpayer Relief Act
of 2012. Similarly, the Bipartisan Budget Act
of 2013, worked out by Senate Budget Committee Chair Patty
Murray (D-WA) and House Budget Committee
Chair Paul Ryan (R-WI), reduced sequestration cuts in 2014 and
2015 while extending BCA sequestration of
mandatory programs through 2023. Congress approved three
subsequent budget deals in 2015,2018, and
2019 to provide even bigger relief for fiscal years 2016-
2017,2018-2019, and 2020-2021 respectively.
Policy Basics – Introduction to the Federal Budget Process
9
Conclusion
The annual federal budget process begins with a detailed
proposal from the President; Congress next
develops a blueprint called a budget resolution that sets limits
on how much each committee can spend or
reduce revenues in bills considered over the course of the year;
and the terms of the budget resolution are
then enforced against individual appropriations, entitlement
bills, and tax bills on the House and Senate
floors. In addition, Congress sometimes uses a special
procedure called “reconciliation” to facilitate the
passage of deficit-reduction legislation or other major
entitlement or tax legislation. Moreover, budget
legislation is subject to statutory deficit-control requirements.
Legislation implementing a budget resolution
that violates those requirements could trigger across-the-board
budget “sequestration” cuts to offset the
violations.
Updated April 2, 2020
For more information on the federal budget process see:
Introduction to Budget “Reconciliation”
https://www.cbpp.org/research/federal-budget/introduction-to-
budget-reconciliation
Policy Basics: The “Pay-As-You-Go” Budget Rule
https://www.cbpp.org/research/federal-budget/policy-basics-the-
pay-as-you-go-budget-rule
Policy Basics: Non-Defense Discretionary Programs
https://www.cbpp.org/research/policy-basics-non-defense-
discretionary-programs
Policy Basics: Where Do Our Federal Tax Dollars Go?
https://www.cbpp.org/research/federal-budget/policy-basics-
where-do-our-federal-tax-dollars-go
Policy Basics: Deficits, Debts, and Interest
https://www.cbpp.org/research/federal-budget/policy-basics-
deficits-debt-and-interest
https://www.cbpp.org/research/federal-budget/introduction-to-
budget-reconciliation
https://www.cbpp.org/research/federal-budget/policy-basics-the-
pay-as-you-go-budget-rule
https://www.cbpp.org/research/policy-basics-non-defense-
discretionary-programs
https://www.cbpp.org/research/federal-budget/policy-basics-
where-do-our-federal-tax-dollars-go
https://www.cbpp.org/research/federal-budget/policy-basics-
deficits-debt-and-interest

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Data-Driven Decision MakingSalomey F. Calixte

  • 1. Data-Driven Decision Making Salomey F. Calixte MAT210 Prof Evan Schwartz 9/3/2021 1 Rate of Poverty United State Poverty Rate 2 Poverty Rate in States
  • 2. 3 Rate of Poverty 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% State w ith th e H ig h e st rate o f P o ve rty Georgia: District of Columbia: South Carolina: Alabama: Kentucky: West Virginia: New Mexico: Louisiana: 18.4% Mississippi 4 5 1 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% F ac tors be hind Pove rty Adverse Weather illiteracy Pandemics Unemployment
  • 3. Poverty Rate Description The graph shows the states with the highest and lowest poverty rates in percentage terms. Some of the states with the highest poverty rates are Louisiana, Mississippi, West Virginia, and Georgia (Jelavish, 2021). 6 Important of the Data The presentation aims to inform the audience about the main factors that cause poverty. The data shows that education is very important in reducing poverty. The state with the lowest rate of poverty will have the easiest to implement and manage. 7 Recommendation Creation of job opportunity Educating youths to increase the level of education Having special attention to the state with high poverty level
  • 4. 8 Audience Targeted The target audience is adults and teenagers because they have a better understanding of the issues related to poverty and inequality. Having teenagers as a part of the group will help in curbing poverty. 9 Language, Purpose & Visual presentation The language used in this project is simple and brief to enable the audience to understand the presentation. I used a bar chart to help the adults understand the basic concepts of presentation. 10 CONCLUSION Poverty is a social issue that affects every society. It should be the government's priority.
  • 5. 11 References -economic- mobility/poverty-estimates- trends-analysis n.d.) - 270.html 12 https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty- estimates-trends-analysis https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty- estimates-trends-analysisSlide 1Slide 2Poverty Rate in StatesSlide 4Slide 5Poverty Rate DescriptionImportant of the DataRecommendationAudience TargetedLanguage, Purpose & Visual presentationCONCLUSIONReferences Policy Basics is a series of brief background reports on issues related to budgets, taxes, and government assistance programs.
  • 6. Center on Budget and Policy Priorities | cbpp.org Note: The COVID-19 recession and subsequent relief packages have dramatically changed spending and revenue levels for fiscal years 2020 and 2021. We use pre-pandemic figures below to illustrate the composition of the federal budget and taxes under more normal circumstances. Introduction to the Federal Budget Process This backgrounder describes 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 cover some or all of that spending. The Congressional Budget Act of 1974 lays out a formal framework for developing and enforcing a “budget resolution” to guide the process but in recent years the process has not always worked as envisioned. In this backgrounder, we address: • 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
  • 7. 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. Step One: The President's Budget Request The process starts when the President submits a detailed budget request for the coming fiscal year, which begins on October 1. (The President’s request is supposed to come by the first Monday in February, but sometimes the submission is delayed, particularly when a new Administration takes office or congressional action on the prior year’s budget has been delayed.) This budget request — developed through an interactive process between federal agencies and the President’s Office of Management and Budget (OMB) that begins the previous spring (or earlier) — plays three important roles. Policy Basics – Introduction to the Federal Budget Process 2 First, it tells Congress what the President recommends for overall federal fiscal policy: (a) how much money the federal government should spend on public purposes; (b) how much it should take in as tax revenues; and (c) how much of a deficit (or surplus) the federal
  • 8. government should run, which is simply the difference between (a) and (b). In most years, federal spending exceeds tax revenues and the resulting deficit is financed through borrowing (see chart). Second, the President’s budget lays out his relative priorities for federal programs — how much he believes should be spent on defense, agriculture, education, health, and so on. The President's budget is very specific, recommending funding levels for individual “budget accounts” — federal programs or small groups of programs. The budget typically sketches out fiscal policy and budget priorities not only for the coming year but also for the subsequent nine years. The budget is accompanied by supporting volumes, including historical tables that set out past budget figures. The third role of the President's budget is signaling to Congress the President’s recommendations for spending and tax policy changes. As discussed below, the budget comprises different types of programs, some that require new funding each year to continue and others that do not require annual action by Congress. While the President must recommend funding levels for annually appropriated programs, he need not propose legislative changes for ongoing parts of the budget already funded by prior laws. • Annually appropriated programs. These programs fall under the jurisdiction of the House and Senate Appropriations Committees. Funding for these programs must be renewed each year to keep government agencies open and the programs in this category operating. These programs are known as “discretionary” because
  • 9. the laws that establish those programs leave Congress with the discretion to set the funding levels each year. That doesn’t mean the programs are optional or unimportant, however. For example, almost all defense spending is discretionary, as are the budgets for a broad set of public services, including environmental protection, education, job training, border security, veterans’ health care, scientific research, transportation, economic development, some low-income assistance, law enforcement, and international assistance. Altogether, discretionary programs make up about one-third of all federal spending. The President's budget spells out how much funding he recommends for each discretionary program. • Taxes, “mandatory” or “entitlement” programs, and interest. Nearly all of the federal tax code is set in ongoing law that either remains in place until changed or requires renewal only periodically. Policy Basics – Introduction to the Federal Budget Process 3 Similarly, more than one-half of federal spending is also governed by ongoing laws. This category is known as “mandatory” spending. It includes the three largest entitlement programs (Social Security, Medicare, and Medicaid) as well as certain other programs (including SNAP, formerly food stamps;
  • 10. federal civilian and military retirement benefits; veterans’ disability benefits; and unemployment insurance) that are not controlled by annual appropriations. Interest on the national debt is also paid automatically, with no need for new legislation. (There is, however, a separate limit on how much the Treasury can borrow. This “debt ceiling” must be raised or suspended through separate legislation when necessary.) As noted, the President’s budget does not need to include recommendations to ensure the continuation of ongoing mandatory programs and revenues, but it will nonetheless typically include proposals to alter some mandatory programs and some aspects of revenue law. • Recommendations for mandatory programs typically spell out changes to eligibility criteria and levels of individual benefits but do not usually propose binding funding limits. Rather, funding for these programs is effectively determined by the eligibility and benefits rules set in law. • Changes to the tax code will increase or decrease taxes. Such proposals will be reflected as a change in the amount of federal revenue that the President’s budget projects will be collected the next year or in future years, relative to what would otherwise be collected. Step Two: The Congressional Budget Resolution Next, Congress generally holds hearings to question Administration officials about their requests and then
  • 11. develops its own budget plan, called a “budget resolution.” This work is done by the House and Senate Budget Committees, whose primary function is to draft and enforce the budget resolution. Once the Budget Committees pass their budget resolutions, the resolutions go to the House and Senate floors, where they can be amended (by majority vote). A House-Senate conference then resolves any differences, and the budget resolution for the year is adopted when both houses pass the conference agreement. The budget resolution is a “concurrent” congressional resolution, not an ordinary bill, and therefore does not go to the President for his signature or veto. It also requires only a majority vote to pass, and its consideration is one of the few actions that cannot be filibustered in the Senate. Because it does not go to the President, a budget resolution cannot enact spending or tax law. Instead, it sets targets for other congressional committees that can propose legislation directly providing or changing spending and taxes. Policy Basics – Introduction to the Federal Budget Process 4 Congress is supposed to pass the budget resolution by April 15, but it often takes longer. In recent years it has been common for Congress not to pass a budget resolution at all. When that happens, the previous
  • 12. year’s resolution, which is a multi-year plan, stays in effect, although the House, the Senate, or both can and typically do adopt special procedures to set different spending levels (see box: What if There Is No Budget Resolution?). • What is in the budget resolution? Unlike the President’s budget, which is very detailed, the congressional budget resolution is a very simple document. It consists of a set of numbers stating how much Congress is supposed to spend in each of 19 broad spending categories (known as budget “functions”) and how much total revenue the government will collect, for each of the next five years or more. (The Congressional Budget Act requires that the resolution cover a minimum of five years, though Congress now generally chooses ten years.) The difference between the two totals — the spending ceiling and the revenue floor — represents the deficit (or surplus) expected for each year. • How spending is defined: budget authority vs. outlays. The spending totals in the budget resolution are stated in two different ways: the total amount of “budget authority,” and the estimated level of expenditures, or “outlays.” Budget authority is how much money Congress allows a federal agency to commit to spend; outlays are how much money actually flows out of the federal Treasury in a given year. For example, a bill that appropriated $50 million for building a bridge would provide $50 million in
  • 13. budget authority for the coming year, but the outlays might not reach $50 million until the following year or even later, when the bridge actually is completed. Policy Basics – Introduction to the Federal Budget Process 5 Budget authority and outlays thus serve different purposes. Budget authority represents a limit on the new financial obligations federal agencies may incur (by signing contracts or making grants, for example), and is generally the focus of Congress’ budgetary decisions. Outlays, because they represent actual cash flow, help determine the size of the overall deficit or surplus. • How committee spending limits get set: 302(a) allocations. The report that accompanies the budget resolution includes a table called the “302(a) allocation.” This table takes the spending totals that are laid out by budget function in the budget resolution and distributes them by congressional committee instead. The House and Senate tables are different from one another, since committee jurisdictions vary somewhat between the two chambers. In both the House and Senate, the Appropriations Committee receives a single 302(a) allocation for all of its programs. It then decides on its own how to divide this funding among its 12 subcommittees, creating what are known as 302(b) sub-allocations. Similarly,
  • 14. the various committees with jurisdiction over mandatory programs each get an allocation that represents a total dollar limit on all of the spending legislation they produce that year. The spending totals in the budget resolution do not apply to “authorizing” legislation that merely establishes or changes rules for federal programs funded through the annual appropriations process. Unless it changes an entitlement program (such as Social Security or Medicare), authorizing legislation does not actually have a budgetary effect. For example, the education committees could produce legislation that authorizes a certain amount to be appropriated on the Title I education program for disadvantaged children. However, none of that money can be spent until the annual Labor-Health and Human Services-Education appropriations bill — which includes education spending — sets the actual dollar level for Title I funding for the year, which is frequently less than the authorized limit. Often the report accompanying the budget resolution contains language describing the assumptions behind it, including how much it envisions certain programs being cut or increased. These assumptions generally serve only as guidance to the other committees. The budget resolution can also include temporary or permanent changes to the congressional budget process. Step Three: Enacting Budget Legislation Following adoption of the budget resolution, Congress considers the annual appropriations bills, which fund discretionary programs in the coming fiscal year, and considers
  • 15. legislation to enact changes to mandatory spending or revenue levels within the dollar constraints specified in the budget resolution. Mechanisms exist to enforce the terms of the budget resolution during the consideration of such legislation, and a special mechanism known as “reconciliation” exists to expedite the consideration of mandatory spending and tax legislation. Enforcing the Terms of the Budget Resolution The main enforcement mechanism that prevents Congress from passing legislation that violates the terms of the budget resolution is the ability of a single member of the House or the Senate to raise a budget “point of Policy Basics – Introduction to the Federal Budget Process 6 order” on the floor to block such legislation. In some recent years, this point of order has not been particularly important in the House because it can be waived there by a simple majority vote on a resolution developed by the leadership-appointed Rules Committee, which sets the conditions under which each bill will be considered on the floor. However, the budget point of order is important in the Senate, where any legislation that exceeds a committee's spending allocation — or cuts taxes below the level allowed in the budget resolution — is vulnerable to a budget point of order on the floor that requires
  • 16. 60 votes to waive. What if There Is No Budget Resolution? Congress has seldom completed action on the budget resolution by the April 15 target date specified in the Budget Act, and it failed to complete action on a resolution for fiscal years 1999, 2003, 2005, 2007, each year from 2011 through 2015, and 2019. In the absence of a budget resolution, the House and Senate typically enact separate budget targets, which they “deem” to be a substitute for the budget resolution. Such deeming resolutions typically provide spending allocations to the Appropriations Committees but may serve a variety of other budgetary purposes. Unless the House or Senate agrees to such a deeming resolution, the multi-year revenue floors and spending allocations for mandatory programs that had been agreed to in the most recent budget resolution remain in effect. The Bipartisan Budget Act of 2013, described below, took a different tack, establishing a “Congressional Budget” for fiscal years 2014 and 2015 in statute as an alternative to the concurrent budget resolution called for in the Congressional Budget Act, including new appropriations targets for discretionary programs for each of those years. The Bipartisan Budget Act of 2015 did the same for the Senate for fiscal year 2017. And the Bipartisan Budget Act of 2018 did the same for both chambers for fiscal years 2018 and 2019, even though a budget resolution for 2018 had been agreed to by Congress three and a half months earlier.
  • 17. Appropriations bills (or amendments to them) must fit within the 302(a) allocation given to the Appropriations Committee as well as the committee-determined 302(b) sub-allocations for the coming fiscal year. Entitlement bills (or any amendments offered to them) must not exceed the budget resolution's 302 allocation for the applicable committee and must not cause revenues to fall below the revenue floor, both in the first year and over the total multi-year period covered by the budget resolution. The cost of a tax or entitlement bill is determined (or “scored”) by the Budget Committees, nearly always by relying on estimates provided by the nonpartisan Congressional Budget Office (CBO). CBO measures the cost of tax or entitlement legislation against a budgetary “baseline” that projects mandatory spending and tax receipts under current law. The Budget "Reconciliation" Process From time to time, Congress makes use of an optional, special procedure outlined in the Congressional Budget Act known as “reconciliation” to expedite the consideration of mandatory spending and tax legislation. This procedure was originally designed as a deficit- reduction tool, to force committees to Policy Basics – Introduction to the Federal Budget Process 7 produce spending cuts or tax increases called for in the budget resolution. However, it was used to enact tax cuts several times during the George W. Bush Administration
  • 18. and again under the Trump Administration in 2017, thereby increasing projected deficits. • What is a reconciliation bill? A reconciliation bill is a single piece of legislation that typically includes multiple provisions (generally developed by several committees), all of which directly affect the federal budget — whether mandatory spending, taxes, or both. A reconciliation bill, like the budget resolution, cannot be filibustered by the Senate, so it only requires a majority vote to pass. • How does the reconciliation process work? If Congress decides to use the reconciliation process, language known as a "reconciliation directive" must be included in the budget resolution. The reconciliation directive instructs committees to produce legislation by a specific date that meets certain spending or tax targets. (If they fail to produce this legislation, the Budget Committee chair generally has the right to offer floor amendments to meet the reconciliation targets for them, a threat which usually produces compliance with the directive.) The Budget Committee then packages all of these bills together into one bill that goes to the floor for an up- or-down vote, with limited opportunity for amendment. After the House and Senate resolve the differences between their competing bills, a final conference agreement is considered on the floor of each chamber and, if adopted, then goes to the President for his signature or veto. • Constraints on reconciliation: the “Byrd rule.” While
  • 19. reconciliation enables Congress to bundle together several different provisions from different committees affecting a broad range of programs, it faces one major constraint: the “Byrd rule,” named after the late Senator Robert Byrd of West Virginia. This Senate rule provides a point of order against any provision of (or amendment to) a reconciliation bill that is deemed “extraneous” to the purpose of amending entitlement or tax law. If a point of order is raised under the Byrd rule, the offending provision is automatically stripped from the bill unless at least 60 senators vote to waive the rule. This makes it difficult, for example, to include any policy changes in a reconciliation bill unless they have direct fiscal implications. Under this rule, changes in the authorization of discretionary appropriations are not allowed, nor, for example, are changes to civil rights or employment law or even the budget process. Changes to Social Security also are not permitted under the Byrd rule, even if they are budgetary. In addition, the Byrd rule bars any entitlement increases or tax cuts that cost money beyond the five (or more) years covered by the reconciliation directive, unless other provisions in the bill fully offset these "out-year" costs. What If Appropriations Bills Are Not Passed on Time? If Congress does not complete action on an appropriations bill before the start of the fiscal year on October 1, it must pass, and the President must sign, a continuing resolution (CR) to provide stopgap funding for affected agencies and discretionary programs. If Congress doesn’t pass or the President will not sign a CR because it contains provisions he finds unacceptable , agencies
  • 20. that have not received funding through the ordinary appropriations process must shut down operations. Policy Basics – Introduction to the Federal Budget Process 8 A dispute between President Trump and Congress over border wall funding led to a 35-day shutdown of federal agencies under nine different departments starting December 22, 2018. A dispute over delay or defunding of health reform legislation between President Obama and congressional Republicans led to a 16- day shutdown of ordinary government operations beginning October 1, 2013. And a dispute between President Clinton and congressional Republicans in the winter of 1995-96 produced a 21-day shutdown of substantial portions of the federal government. Statutory Deficit-Control Mechanisms Separately from the limits established in the annual budget process, Congress operates under statutory deficit-control mechanisms that prevent tax and mandatory spending legislation from increasing the deficit and that constrain discretionary spending. • PAYGO. Under the 2010 Statutory Pay-As-You Go (PAYGO) Act, any legislative changes to taxes or mandatory spending that increase projected multi-year deficits must be “offset” or paid for by other changes to taxes or mandatory spending that reduce deficits by
  • 21. an equivalent amount. Violation of PAYGO triggers across-the-board cuts (“sequestration”) in selected mandatory programs to restore the balance between budget costs and savings. (In addition, the House and Senate each enforce the PAYGO principle though similar internal rules, independent of the Congressional Budget Act.) • Discretionary funding caps. The 2011 Budget Control Act (BCA) imposed limits or “caps” on the level of discretionary appropriations for defense and for non-defense programs in each year through 2021. Appropriations in excess of the cap in either category trigger sequestration in that category to reduce funding to the capped level. • BCA sequestration. On top of any sequestration triggered by PAYGO or funding cap violations, the BCA also requires additional sequestration each year through 2021 in discretionary and select mandatory programs, split evenly between defense and non-defense funding. This BCA sequestration was implemented as a result of the failure of a joint select committee that had been created by the BCA to propose a legislative plan in the fall of 2011 that would reduce deficits by $1.2 trillion over ten years. In the case of discretionary programs, for 2014 and after, this special sequestration mechanism operates by reducing the appropriations caps below the level that the BCA originally set. If budget legislation violates these statutes, the applicable sequestration penalties occur automatically, unless Congress also modifies the requirements. For example, policymakers modified the 2013 BCA sequestration requirement in the American Taxpayer Relief Act
  • 22. of 2012. Similarly, the Bipartisan Budget Act of 2013, worked out by Senate Budget Committee Chair Patty Murray (D-WA) and House Budget Committee Chair Paul Ryan (R-WI), reduced sequestration cuts in 2014 and 2015 while extending BCA sequestration of mandatory programs through 2023. Congress approved three subsequent budget deals in 2015,2018, and 2019 to provide even bigger relief for fiscal years 2016- 2017,2018-2019, and 2020-2021 respectively. Policy Basics – Introduction to the Federal Budget Process 9 Conclusion The annual federal budget process begins with a detailed proposal from the President; Congress next develops a blueprint called a budget resolution that sets limits on how much each committee can spend or reduce revenues in bills considered over the course of the year; and the terms of the budget resolution are then enforced against individual appropriations, entitlement bills, and tax bills on the House and Senate floors. In addition, Congress sometimes uses a special procedure called “reconciliation” to facilitate the passage of deficit-reduction legislation or other major entitlement or tax legislation. Moreover, budget legislation is subject to statutory deficit-control requirements. Legislation implementing a budget resolution that violates those requirements could trigger across-the-board
  • 23. budget “sequestration” cuts to offset the violations. Updated April 2, 2020 For more information on the federal budget process see: Introduction to Budget “Reconciliation” https://www.cbpp.org/research/federal-budget/introduction-to- budget-reconciliation Policy Basics: The “Pay-As-You-Go” Budget Rule https://www.cbpp.org/research/federal-budget/policy-basics-the- pay-as-you-go-budget-rule Policy Basics: Non-Defense Discretionary Programs https://www.cbpp.org/research/policy-basics-non-defense- discretionary-programs Policy Basics: Where Do Our Federal Tax Dollars Go? https://www.cbpp.org/research/federal-budget/policy-basics- where-do-our-federal-tax-dollars-go Policy Basics: Deficits, Debts, and Interest https://www.cbpp.org/research/federal-budget/policy-basics- deficits-debt-and-interest https://www.cbpp.org/research/federal-budget/introduction-to- budget-reconciliation https://www.cbpp.org/research/federal-budget/policy-basics-the- pay-as-you-go-budget-rule https://www.cbpp.org/research/policy-basics-non-defense-