The Federal Budget: Understanding the Terms and the Players
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This resource identifies major budget terms and players you need to be familiar with as part of your federal advocacy efforts. Although it is an extensive list, it is not all encompassing; you will find additional links and resources throughout and at the end of the document to help fill in the gaps.
What are the terms I need to know and understand?
appropriation: An appropriation enables an agency or department to make spending commitments and expenditures. Except in the case of entitlements, an appropriation determines how many dollars the federal government spends on a program in a given fiscal year.
authorization: When Congress creates a program with specific purposes and guidelines, it is known as an authorization. An authorization gives a government agency the legal authority to fund and operate the program. Programs can be authorized on an annual, multiyear, or permanent basis. Authorization bills set maximum funding levels and include policy guidelines, and they recommend (but do not guarantee) that a certain dollar amount be provided (by the Appropriations process) for the program.
budget resolution: This is a nonbinding resolution passed by both chambers of Congress that serves as a framework for budget decisions. It sets overall spending limits, but does not include funding levels for specific programs.
continuing resolution (CR): This is legislation that extends funding for federal agencies in the event that a budget cannot be passed before a new fiscal year begins, in order to keep federal operations running—typically at the same rate they had previously been funded.
discretionary spending: This term refers to spending determined by the Appropriations Committees and Congress, as opposed to mandatory spending. In addition to defense spending, domestic discretionary spending includes nondefense discretionary (NDD), which encompasses most early childhood and education programs.
discretionary spending caps: Caps are spending limits, which, if exceeded, may trigger across-the-board funding cuts. Congress may choose to increase spending limits, but has typically committed to doing so for both defense and non-defense discretionary programs, ensuring that there is parity between them.
entitlement program: An entitlement program, such as Social Security, Medicare, or Medicaid, requires the government to pay benefits to anyone who is eligible under the program guidelines.
federal fiscal year: This period runs from October 1 through September 30.
mandatory spending: Entitlement programs and other programs that Congress designates as mandatory (as opposed to discretionary) do not rely on the appropriations process. Funding for these programs cannot be altered without an act of Congress.
omnibus: An omnibus bill is a budget that encompasses the 12 appropriations bills in one bill, instead of 12 individual spending bills.
poverty line: Also called poverty level or poverty threshold, the poverty line is an average annual income below which a family of four is defined as living in poverty. It is used to determine eligibility for certain federal programs. In 2017 the federal poverty line for a family of four is $24,600. (To learn more, click here.)
reconciliation: This is a legislative process that allows for special and speedy congressional consideration of certain tax and spending bills. In the Senate, for example, members cannot filibuster reconciliation bills (meaning the party in power only needs 51 votes to pass the bill, instead of 60), and the scope of amendments they can offer to them is limited.
revenues: Revenues are funds flowing into the US Treasury from individual income tax, corporate income taxes, payroll taxes, user fees, and other such vehicles.
sequestration: This is the term for automatic, across-the-board spending cuts triggered by legislation; for example, in the Budget Control Act of 2011, which essentially imposed “caps” on federal spending (see discretionary spending caps), impacting the funds available to support early childhood education programs.
subsidy: Subsidy is direct assistance from the federal government to individuals or businesses for certain activities, helping to defray the costs of those activities.
Who are the players I need to know and understand?
Appropriations Committee: Committees on Appropriations (one in the House of Representatives and one in the Senate) are the groups responsible for determining the precise levels of budget authority for all discretionary programs—in other words, the Appropriations Committees have a major role in deciding how much the government spends and on what.
Appropriations subcommittees: Appropriations subcommittees (12 each in the House and the Senate) are made up of members of the full Appropriations Committee in each chamber. Each subcommittee has jurisdiction over funding for a particular area of the federal government:
- Agriculture, Rural Development, and Food and Drug Administration
- Commerce, Justice, and Science
- Energy and Water
- Financial Services and General Government
- Homeland Security
- Interior and Environment
- Labor, Health and Human Services, and Education
- Legislative Branch
- Military Construction and Veterans Affairs
- State and Foreign Operations
- Transportation, and Housing and Urban Development
Budget Committees: In the House and the Senate, the Budget Committees are responsible for writing a budget resolution, which serves as a framework for budget decisions and sets the overall spending limits, but does not include funding levels for specific programs.
conference committee: In a conference committee, members of the House and Senate work together to reconcile differences in their respective versions of a bill. Both the House and Senate must pass identical versions of any legislation, including a budget, before it can be signed into law by the president.
congressional aide: Congressional aides are support staff for members of Congress. Aides’ titles vary but typically include chief of staff, constituent services representative, legislative assistant, legislative correspondent, legislative directors, press secretary, scheduler, and state and district directors. Some aides are personal staff who work for individual members of Congress, while others are committee staff, who serve either the majority or minority members on congressional committees.
House Ways and Means Committee: In the House, this powerful committee has jurisdiction over all taxes, tariffs, and other means of raising revenue. The US Constitution requires that all bills regarding taxation must originate in the House; and the House requires that all bills concerning taxation go through the Ways and Means Committee. (See Senate Finance Committee.)
Office of Management and Budget (OMB): Part of the executive branch of government, OMB gives guidelines to federal agencies instructing them how to prepare their strategic plans and budgets. It also serves as the president’s accounting office.
President’s Budget: The White House releases the president’s annual spending proposal each February. It represents the administration’s priorities as reflected in the specific funding requests of various federal agencies, but it is ultimately a request to Congress.
Senate Finance Committee: The Senate Finance Committee is the counterpart of the House Ways and Means Committee, with similar duties related to revenue and taxes.
Where can I find additional information about the federal budget?
Center on Budget and Policy Priorities: http://www.cbpp.org/topics/federal-budget
Congressional Budget Office: https://www.cbo.gov/
National Priorities Project: https://www.nationalpriorities.org/budget-basics/federal-budget-101/
Definitions have been selected and adapted primarily from the Center on Budget and Policy Priorities and the National Priorities Project.