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Federal Budget Process

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1 Federal Budget Process
Libertyville High School

2 What is the Federal Budget?
The Budget of the United States Government is the President's proposal to the U.S. Congress which recommends funding levels for the next fiscal year, beginning October 1

3 Step One: Picking the “Bottom Line Number”
Office of Management and Budget (OMB) develops a budget for the next year Based on national economic situation Also based on executive agency estimates and projections

4 Picking the Bottom Line Number
President presents budget to Congress in Joint Session address Congressional Budget Office (CBO) analyzes president’s budget CBO then reports to House Ways & Means, Senate Finance committees re. revenues

5 Picking the Bottom Line Number
House, Senate budget committees report Budget Resolutions to floor Budget resolution, if agreed to by both chambers, binds Congress to a total expenditure level Thus, budget resolution = the bottom line

6 Budget Perspective: How much is a Trillion?
How long is a trillion seconds? "One million seconds comes out to be about 11½ days. A billion seconds is 32 years. And a trillion seconds is 32,000 years.” David Schwartz (author, How Much is a Million?) Using $1000 bills to get to $1 million = 4 inches; using $1000 bills, to get to $1 trillion = 67 miles high!

7 Step Two: Appropriations, or Dividing up the Bottom Line
Appropriations process begins in House Thirteen appropriations bills, in Appropriations Committee Committee divides budget number into 13 spending bills, 1 for each subcom. Each subcommittee holds hearings, testimony from federal agencies re budget requests

8 Step Two: Appropriations, or Dividing up the Bottom Line
SEE HOW A BILL BECOMES A LAW to see how each of the 13 appropriations bills become law

9 FY 2013 Federal Budget Total Amount Spent = 3.45 Trillion

10 Step Three: Reconciliation, or Making the Budget Work
Reconciliation legislation is the non-numbers part of the budget Reconciliation includes tax increases or reductions, other changes in law to make budget work

11 Step Three: Reconciliation, or Making the Budget Work
Continuing Resolutions may be passed CR are passed after October 1, to keep federal agencies funded at current levels until budget adopted How does Reconciliation and CRs get passed? “How a bill becomes a law” process

12 Parts of the Budget Discretionary Spending
Programs that don’t relate to entitlements It is here that most spending cuts occur Example Education Transportation EPA Judicial, Legislative, Executive branches

13 Parts of the Budget Military Spending Discretionary spending
BUT politically difficult to cut, especially when troops are deployed overseas Most military spending is on personal services (salary, benefits)

14 Parts of the Budget Non-Discretionary Spending
Entitlements: government payments that are guaranteed to a (usually large) segment of the population Entitlements Social Security Medicare Medicaid Interest on Debt

15 Parts of the Budget (Non-Discretionary)
Interest payments Annual deficit is the amount that spending exceeds revenue each year National debt is the total amount of money owed by the government to its lenders Parts of the Budget (Non-Discretionary)

16 US Deficit, 2013 Current deficit

17 National Debt Percentage of National Debt owed, as of 3/12

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