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One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors. -- Plato (429-347 BC)

Friday, September 27, 2013

Understanding The Federal Budget And Appropriations Process

What if Congress passes and the President signs 5 of the 12 bills? Are they included in a shut down or a CR? The answer to that is "no". ~ Randy Neugebauer

U.S. Rep. Randy Neugebauer
by Randy Neugebauer: As a continuation of our ongoing series about Congress, I would like to discuss the federal budget and appropriations process. In recent years, this process has been somewhat disjointed and unreliable. In other years, it has worked quite smoothly. In this email, I will try to explain how the process was designed to work and why, in recent years, we have had so many problems.

The federal budgeting process starts each year when the President outlines his vision for federal expenditures in a budget document submitted to Congress. There is no requirement for Congress to use this document or its priorities, but it gives the President an opportunity to make his spending preferences known.

As you know, however, it is Congress that has the power to control how America's tax money is spent. In the spring of each year, the House drafts a budget resolution. This is a document which outlines the Congressional priorities for spending. It focuses less on specifics of individual programs and more on overall spending levels. To compare to a family's budget, it might provide for $12,000 per year for housing, $10,000 a year for food, $2,500 a year for clothing and $1,500 for an annual vacation. The federal budget resolution might allocate $100 billion for defense programs, $50 billion for transportation projects and $10 billion for education. Of course, this is a simplified example as the actual budget resolution has thousands of priorities and provides an overall blueprint for how the money would be spent for each of them.

After the budget resolution priorities are set, the appropriations process begins. There are 12 appropriations bills broken into various categories. There are Defense Appropriations, Labor, Health and Human Services Appropriations, Agriculture Appropriations and Military Construction Appropriations bills, just to name a few. Each of these bills are considered within the Appropriations Committee and they actually fund the individual priority programs within each bill. For example, while the Budget Resolution says that we will spend $100 billion on defense programs overall, the Defense Appropriations bill actually breaks down the individual programs and priorities and decides how much money each will get. The B-1 Bomber might get $100 million for its operations, while the F-16 gets $150 million. The numbers I am referencing are only examples for the purpose of this discussion.

Congress and the Appropriations Committee set spending priorities for each of the 12 bills and for all of the programs that fall within each category. Once a bill has been voted on by Appropriations Committee Members, it is passed from the Committee and sent to the House Floor for all members to vote on. Members have an opportunity in committee or on the House Floor to offer amendments to each bill if they have a priority or program they would like to see funded differently. Once each bill passes the House, it is sent to the Senate where they make changes. If there are differences, the bill could either be sent back to the House for a new vote with the Senate's changes or it could be sent to a House-Senate Conference Committee which would be formed to work out the differences.

As you may know, Congress must complete its work on the 12 appropriations bills by the September 30th deadline. When this work is complete, the federal government is fully-funded and all of the priorities are set at funding levels that make most everyone happy. More likely, however, is the case that only some, or even none, of the bills are finalized by the end of the fiscal year on September 30th. This is most likely to occur when the House and Senate are led by different party leadership and there is no agreement on spending priorities. We have seen a lot of this in recent years, particularly since the House has been regularly completing its business on Appropriations bills while the Senate has been failing to consider them at all.

When the appropriations bills are not completed in time for the September 30th deadline, there are a couple of options. First, Congress can pass what is known as a Continuing Resolution or a "CR". Generally, a CR continues the same funding levels from the previous year for a period of time into the next fiscal year, this is commonly known as a "clean" CR. However, different funding levels can be chosen in a CR if all of the parties ultimately agree. The most recent CR that was signed into law in March 2013 which is set to expire in a couple of days, locked in reduced federal spending levels. Alternatively, spending levels can be increased. These changes are unusual in a CR, but can and do occur. Ultimately, if Congress cannot agree upon a CR or finalize the 12 annual appropriations bills, then the government will shut down and there will not be funding for these programs until a CR or the 12 bills are passed and signed into law.

You might wonder, what if Congress passes and the President signs 5 of the 12 bills? Are they included in a shut down or a CR? The answer to that is "no". If Congress passes and the President signs into law the Defense Appropriations bill, then even if the rest of the bills are not finalized, defense programs will be funded at the levels outlined in the law. During government shutdowns in the 1990s, this occurred. Several of the appropriations bills were finalized as a part of the regular appropriations process before September 30th. Those programs went on unaffected during the shutdowns. However the programs in the remaining bills that were not completed were impacted and government services were closed in those categories until a new agreement in a CR or a finalized appropriations bill were reached.

In recent years, it has been less and less common for the House, Senate and the President to finalize appropriations bills because the spending priorities are so far apart. As you know, the President and many Democrats are unconcerned about skyrocketing federal deficits. In general, they want more spending for programs like ObamaCare. Republicans want to bring federal spending levels down dramatically to improve our country's finances for current and future generations. In most past years, Congress and the President have been able to eventually come together to find common ground and find spending levels that are acceptable enough to be signed into law. In recent years, as you know, this has been increasingly difficult. This weekend, as the September 30th deadline nears for 2013, we are approaching one of those times when common ground has yet to be reached.

One additional term that has been used frequently in recent years is the debt limit. The debt limit is not formally a part of the federal budget process, but it has received so much attention recently that I thought I would explain it here. The debt limit is similar to a family's credit card limit. Like some families, America is spending more money than it earns. When a family reaches its credit card spending limit and wants to spend more, it has to call the credit company and ask for permission. Our national debt limit is no different. When the Treasury Department/Administration are nearing the national limit on what they are allowed to spend, they must reach out to Congress and notify Members that we are nearing our credit limit. Congress may then act to allow Treasury to borrow more or it may say "no". When you hear of Congress and the President negotiating over the "debt limit", we are essentially negotiating over whether or not and/or by how much to increase America's credit card limit.

You might wonder why has this has become such an issue recently; if you are like most Americans, up until the past few years, you had probably never even heard of the debt limit. The reason for this is because in most of the recent decades our spending hasn't been out-of-control. During the early 1990s, there were even some years the federal government ran a surplus. So, there was no need to raise the debt limit. And when there was, it took years and years to spend enough to need an increase. However, in recent years, our government has been running huge $1 trillion deficits annually. Because of these spending levels, we are exceeding our credit limit much, much faster than we have ever done so before.

Like you, I am deeply concerned about how we spend money in America right now. I believe that we need to run our country like families and businesses and live within our means. We should not use CR's to fund the government, but instead we should get our budget and appropriations bills done on time so we can set spending priorities that make sense for the long term. We should keep our borrowing and spending under control so we do not need to increase our credit card limit every few months. My pledge to you is that my colleagues and I will continue to fight this President and Democrats in Congress to get our federal spending back under control. Our nation deserves nothing less and neither do our children and grandchildren.
Randy Neugebauer is the U.S. Representative for Texas's 19th congressional district, having served since a special election in 2003. He is a member of the Republican Party. The district includes a large swath of West Texas, including Lubbock and Abilene. According to a 2011 survey by the National Journal, Neugebauer is "the most conservative" member of the House.

Tags: Randy Neugebauer, Federal Budget, Appropriation Process, appropriation process, continuing resolutions, debt limit  To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!
Posted by Bill Smith at 5:10 PM - Post Link


Anonymous Al Page said...

Thank you for including the article by US REP. Neugebeaur. This is the most comprehensive explanation of the budget process I have ever read or heard!

faithful subscriber,


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