The Federal Budget Process AP Government Economic Policy Unit

Terms Budget- List of expenditures Revenue- Income, majority from income taxes Expenditures- Federal spending Deficit- When expenditures exceed revenue

Tax and Finance Committees House Ways and Means Committee- The House of Representatives committee that, along with the Senate Finance Committee, writes the tax codes, subject to approval of Congress as a whole Senate Finance Committee- Senate committee that, along with the House Ways and Means Committee, writes the tax codes, subject to approval of Congress as a whole

Entitlements Federal programs that guarantee a specific level of benefits to persons who meet requirements set by law Person is “entitled” to benefits if they meet the criteria set by the federal government Spending on entitlements is mandated by the Federal law

Examples -Social Security -Medicare -Medicaid -V.A. Programs -Unemployment Programs -Food Stamps -Retirement Plans for Federal Employees

Entitlements Positives Negatives Provides needed benefits to American citizens Government cannot delay or avoid payment in the budget No Congressional discretion on money allotted 2/3 of budget Less money for discretionary spending

Proposed at the State of the Union Message in January The Budget Process Proposed at the State of the Union Message in January

Office of Management and Budget (OMB) OMB sends instructions to agencies Agencies send requests to OMB OMB revises the budget

Congressional Budget Office (CBO) President submits budget to Congress by the first week in February CBO looks over and sends report to both chambers of Congress

Appropriations Committee The appropriations committee holds hearings and sets budget targets Reconciliation bills are made if budget does not meet targets

Finalizing the Budget By October 1st, all appropriations bills should be passed If they are not passed, Congress has to pass a continuing resolution where agencies run on last year’s budget