The Federal Budget: An Insider's Guide to National Priorities
- Understanding the Budget Process
- The 2008 Budget
- The Fight for New Priorities
- The Bush Tax & Budget Legacy
The federal budget provides an overview of how much the nation plans to spend, and on what; how much the nation plans to raise in revenues, and how; and how much of a deficit (or surplus) the nation expects to run. It is an unparalleled window into the priorities that the President and Congress plan to pursue for the next fiscal year and beyond.
Understanding the Budget Process
The President's Budget
Each year, the President proposes an annual budget plan that includes an explanation of how much revenue the nation will collect, proposals for any new tax policies that will be pursued to reach those revenue goals, and a plan for spending federal revenues, including whether spending will be cut or increased. The President's budget outlines the position of the Executive branch on matters related to the budget for the upcoming year, and includes projections for the next five or more years.
The Congressional Budget
After receiving the President's budget, Congress develops its own budget blueprint. The congressional budget resolution must be approved by the House and Senate, but does not require the President's signature.
The budget resolution can also include changes to rules that govern Congress' budgeting. In 2007, Congress used the budget process to reinstate a "pay-as-you-go" ("pay-go") rule that effectively restrained the growth of deficits in the 1990s. The "pay-go" rule allows Congress to enact new tax cuts or certain kinds of new spending only if it can pay for them by raising new revenues or cutting spending. There are procedures for waiving the rule.
The budget is a powerful indicator of the priorities of the President and Congress, and it affects the politics and policy outcomes of the legislative process. However, separate legislation is required to make the changes to tax and spending policies called for in the budget, and to appropriate funds for specific government programs for the coming year.
Information & resources:
The Federal Budget: Why it Matters and How You Can Make a Difference, Center on Budget and Policy Priorities, Coalition on Human Needs (January 24, 2007).
Background on the Federal Budget, Center on Budget and Policy Priorities.
Introduction to the Federal Budget Process, Center on Budget and Policy Priorities (2007).
The Bush budget: Déjà vu all over again
On February 5, 2007, President Bush sent his proposed budget for Fiscal Year 2008 to Congress. The budget resembles his budgets of the past six years: more cuts in funding for domestic programs vital to low- and moderate-income families and more tax cuts skewed to the wealthiest Americans. Even his widely rejected plan to privatize Social Security resurfaced.
Analyses of the President's budget show that it would force cuts in services families need to stay secure and get ahead. For example:
- 300,000 additional children would be deprived of child care assistance in 2010;
- 30,000 children could lose Head Start services in FY 2008;
- 300,000 people would lose Food Stamp benefits;
- nearly one million fewer low-income households will get help with soaring heating and cooling bills; and
- the State Children's Health Insurance Program (SCHIP) would not have sufficient funds to maintain current services, much less expand coverage to the nation's approximately nine million uninsured children.
At the same time, the President's budget spares no expense when it comes to tax cuts for the wealthy few. The budget proposes to make the Bush tax cuts permanent, at a cost over just the next 10 years of about $3.5 trillion. Nearly one-third of the benefits would go to the top 1 percent of households — those with annual incomes above $400,000.
Congressional budget for FY 2008: A step in the right direction
On May 17, 2007, Congress approved its budget blueprint for FY 2008. The congressional budget rejects the cuts to services in the President's budget; starts to address unmet needs; and puts restraints on new, unpaid-for tax cuts. It authorizes:
- an overall increase of 3 percent beyond inflation in overall funding for domestic programs funded by annual appropriations, such as education, medical research, and Head Start;
- up to $50 billion in additional funding for SCHIP, enough to continue coverage for all of those currently eligible and expand coverage for the uninsured, to be paid for with new revenues or savings;
- up to $20 billion in additional funding for the Farm Bill, including the Food Stamp program, to be paid for with new revenues or savings; and
- rules governing the congressional budget process that require that new tax cuts, as well as increases in certain kinds of spending, be paid for.
Information & resources:
Increasing Inequality, Increasing Insecurity for Women and Their Families: An Analysis of the President's FY 2008 Budget, National Women’s Law Center (February 2007).
President's Budget Would Cut Deeply Into Important Public Service and Adversely Affect States, Center on Budget and Policy Priorities (February 21, 2007).
State-by-State Tables, Projected Cuts Under the President's FY 08 Budget Plan, Center on Budget and Policy Priorities (March 1, 2007).
Congressional Budget Plan: A Brief Analysis of the Conference Agreement, Center on Budget and Policy Priorities (May 29, 2007).