The federal budget

1. The Federal Budget
Bureaucratic Politics

2. Introduction
• Themes for the lecture:
• Budget process is political struggle between President
and Congress.
• The Office of Management and Budget plays a large
role with the ability to control and inject the president’s
brand of politics into the process.

3. Budget Process: Fiscal
Year 2011
• Fiscal Year
• October 1st to September 30th
• Named for the years in which it ends
• Example:
• FY 2011: October 1, 2010 – September 30, 2011
• January 2009
• State of the Union Address (February 24, 2009/ January 24, 2010)
• President submits budget proposal to Congress for FY 2010
• 15 days after Congress begins its session (January 6, 2009).
• January 21, 2009
• OMB sends “allowance letters” to agencies
• Allowance letters – letters that specifies the estimated funds that are available
to the agency.
• Congress begins its own budget process with a target date of October 1, 2010.

4. Budget Process: Fiscal
Year 2011
• May 2009
• OMB sends out calls for estimates to all executive agencies.
• Agency divisions submit budget recommendations to agency heads.
• Includes:
• Budget
• Priorities
• June 2009
• Agency heads request “issue papers”
• Justifications for programs that have the potential to be cut.
• This helps to reconcile between the allowance letter and what the agency
needs.
• July 2009
• OMB mid-session review (mid-session of Congress)
• Form of audit that ensures agencies spend money the way they are supposed to.
(similar to GAO)

5. Budget Process: Fiscal
Year 2011
• September 2009
• Budget submissions from agencies to the OMB (end of fiscal year 2009) –
begin to develop president’s budget proposal.
• Detailed budget outlays
• Budget outlay – agency expenditures during a given fiscal period, fulfilling budget
obligations incurred during the same or a previous period.
• Justifications
• Supporting documents and analytic studies to justify continuing, expanding, or new
programs.
• Budget examiners
• Assigned to an agency
• Work at the agency
• Paid by the OMB
• Examine budget estimates
• Make recommendations to the OMB
• OMB evaluates whether spending is in line with the president’s priorities.
• October 2009
• Budget revisions (to account for FY 10 Congressional Appropriations)
• 2010 Appropriations have implications for 2011

6. Budget Process: Fiscal
Year 2011
• November 2009
• Treasury certification for FY 2009 based on audits (spend every cent)
• GAO (Congress)
• OMB (Exec.)
• OMB Passback
• After looking at the budget submissions, the OMB makes changes and then passes back to the
agency
• Changes may be general or specific, this allows for presidential control
• Passback makes adjustments to agency budget proposals based on Treasury certification.
• Demonstrates favoritism toward certain programs
• Passback appeals
• Appeal decision is made by the agency head
• Only agency head can appeal to the president
• President submits the current services budget
• Estimate of the cost of maintaining the current level of government services if existing programs
and policies remain unchanged for the next fiscal year (adjusted for inflation).
• January 2010
• President submits a budget proposal to Congress for FY 11 (it’s a recommendation)
• Congress begins its own process with a target date of October 1, 2011

7. Budget Process: Fiscal Year 2011
• Congressional Actors in the Budget
Process
• Congressional Budget Office
• Created by the Congressional Budget and
Impoundment Control Act of 1974
• Provides information to Budget Committees
to assist in the construction of the budget
resolution.
• Authorizations Committees
• Authorization – laws that establish or continue
(reauthorization) federal agencies and
programs, recommends funding them at
certain levels, and authorizes the enactment of
appropriations to fund those agencies and
programs.
• These are the standing committees of the
House and Senate.
• These are the same committees responsible for
creating and overseeing the agencies under
their jurisdiction.
• Determine maximum spending levels for each
government program.
• Appropriations Committees
• Appropriation – the process by which
Congress provides budget authority, usually
through the enactment of thirteen separate
appropriations bills.
House Senate
House Appropriations
Subcommittees
Senate Appropriations
Subcommittees
- 13 Subcommittees - 13 Subcommittees
- Concerned with spending - Concerned with spending
Budget Committee Budget Committee
- coordinate taxing and
spending
- coordinate taxing and
spending
Ways and Means
Committee
Senate Finance Committee
- Taxing legislation - Taxing legislation
Congressional Budget Office

8. Budget Process: Fiscal
Year 2011
• March 2010
• “Views and estimates” from appropriations committees to Budget Committees
• Estimates of spending and revenues within their respective jurisdictions
• Goal is to eventually have 14 pieces of legislation (13 appropriations committees + 1 tax
= 14 total)
• April 15, 2010
• The Budget Resolution
• By this date Congress must pass the budget resolution.
• Statement of congressional budgeting priorities
• This is a concurrent resolution which means that it not signed by the president (no opportunity for veto)
• Determines:
• Funding levels for agencies
• Determines maximum spending level caps for each program approved
• Has a coordinating effect on all committees
• Also establishes an acceptable amount of debt
• Budget Committee
• Testimony from the OMB (chance for influence)
• Passed by majority of the Budget Committee
• Conference committee
• Must be passed by both chambers

9. Budget Process: Fiscal
Year 2011
• Summer 2010
• Midsession OMB review
• Hearings and markup for appropriations bills by subcommittees and committees
• Agency testimony
• OMB testimony
• CBO testimony
• October 1, 2010
• Bills must be passed in identical form in both houses by September 30th.
• President must sign the 13 appropriations bills and 1 tax bill into law.
• FY 11 begins
• Government Shutdown
• If laws not passed or agreement between President and Congress not reached, the federal
government may shut down
• Can use continuing resolutions to keep funds flowing (stop-gap appropriations bills)
• Continues to fund the agency at its current level until a budget can be passed.
• Treasury Department sets up “checking accounts” from which agencies draw money from.
• Additional Comments
• Impoundment – the power of the President to withhold from federal departments or agencies
some or all of the funds appropriated by Congress.