James Madison wrote in Federalist No. 58, “This power of the purse may, in fact, be regarded the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure.” The House has the power to pass revenue spending and the Senate can amend to it. Nowhere in the Constitution does it state how a budget is pass, but this process has evolved over time. In early history, the president’s power was to influence the law making process, and to veto any legislation he did not agree with. With the passing of the Budget and Accounting Act of 1921, the president must prepare and summit an annual federal budget. Congress did not have to pass exactly what the president asks but can use it as a starting point. The fiscal year runs from October 1 to September 20. This blog will explain the steps Congress takes to pass a budget.
First I must discuss how Congress got to this point today by discussing the Congressional Budget and Impoundment Control Act of 1974. There were three reasons for this act. First, the Appropriations Committees lost control and turned to backdoor spending which took away powers of the main body to pass legislation. Second, with spending out of control the national debt was increasing at an alarming rate. Third, the president took advantage and at times refused to sign legislation on mandatory spending. The act created three new groups; the House Budget Committee, Senate Budget Committee, and the Congressional Budget Office. Both the House and Senate Budget Committees prepare budget resolutions. The Congressional Budget Office reviews the impact spending will have, and monitor the actions passed by the House and Senate.
Before the budget is passed both the House and Senate Budget Committees report the budget resolutions. These resolutions estimate how much the federal government will spend in a fiscal year. The total spending is then divided into smaller categories, such as nation defense, energy, agriculture, and health care. Because the federal government usually runs deficits the committees also estimate how much the deficit will be. The video below is an example of the House Committee in action. Representative Gerald Connolly is proposing spending on insurance reform by stating that it will reduce the deficit by $100 billion in the next decade. This is just a small sample of the kind of work the budget committees do before legislation is debated on the floor.
After the House and Senate Budget Committees report the resolutions it’s now time for Congress to pass legislation allowing spending for certain programs and agencies. There are two kinds of spending; mandatory spending and discretionary spending. Mandatory spending is automatic; programs such as defense spending, Medicare, Medicaid, and Social Security. Discretionary spending is annual spending. There are two steps authorization and appropriations. First Congress will pass an authorization bill, these bills allows the continuation of a program or agency. Once a program or agency is authorized Congress them appropriates the money to these programs or agencies. There are three types of bills passed. The first being an annual bill, which is a regular bill, second is called a supplemental bill, which address unexpected spending such as funding for emergencies and third and final kind of bill is a continuing resolution, which provides temporary spending. The video below is a sample of the House Committee Appropriations and hearing a testimony from Richard Armitage to get a better understanding on how to spend the money on the Iraq War.
One of the problems Congress has faced over the years is the overwhelming numbers of earmarks in bills. Earmarks are ways for politicians to get money allocated to his or her district or state without debate or being seen. These earmarks, also known as “pork”, are embedded into the budget bills and are considered wasteful spending by many politicians and groups. Earmark reform did not happen until the 110th and 111th Congress. Both the House and Senate passed rules to limit the amount of earmarks allowed into a bill. To make it more transparent the rules also allow reports to be released to the public on earmarks and who sponsored it. The video below address the problem of earmarks. The Senate Committee on Homeland Security and Governmental Affairs is debating the question on pork spending and why it should be limited. Representative Jeff Flake gives us an insight on how earmarks get into bills and why they are a waste of government money.
The budget process is a long and bumpy road. From the House and Senate Budget Committees, to Authorization and Appropriation Committees the budget the President presents to Congress is stripped down, looked over, and molded into a working budget. The Congressional Budget Office then will oversee the budget and give insight on how it will affect the nation’s economy and deficit.