About The President's Annual Budget Proposal

The First Step in the U.S. Federal Budget Process

Bound volumes of President Trump’s 2018 budget proposal
Senate Budget Committee Presents President Trump's FY2018 Budget To Media. Alex Wong / Getty Images

The annual federal budget process begins the first Monday in February of each year and should be concluded by October 1, the start of the new Federal Fiscal Year. In some -- make that most -- years, the October 1 date is not met. Here is how the process is supposed to work.

The President Submits a Budget Proposal to Congress

In the first step of the annual U.S. federal budget process, the President of the United States formulates and submits a budget request for the upcoming fiscal year to Congress.

Under the Budget and Accounting Act of 1921, the president is required to submit his or her proposed budget to Congress for each government fiscal year, the 12-month period beginning on October 1 and ending on September 30 of the next calendar year. Current federal budget law requires the president to submit the budget proposal budget between the first Monday in January and the first Monday in February. Typically, the president’s budget is submitted during the first week of February. However, especially in years when the new, incoming president belongs to a different party than the former president, submittal of the budget may be delayed.

The president’s budget proposal may also be delayed by pressing government financial difficulties. For example, President Barack Obama did not submit his FY 2014 budget proposal until April 10, 2013, due to ongoing negotiations with Congress over the implementation of the budget sequester and mandatory spending cuts dictated by the Budget Control Act of 2011.

In fiscal year 2016, the federal budget called for the expenditure of nearly $4 trillion. So, as you might imagine, deciding exactly how that much taxpayer money is to be spent represents a major part of the president’s job.

While the formulation of the president’s annual budget proposal takes several months, the Congressional Budget and Impoundment Control Act of 1974 (the Budget Act) requires that it be presented to Congress on or before the first Monday in February.

In formulating the budget request, the president is assisted by the Office of Management and Budget (OMB), a major, independent part of the Executive Office of the President. The president’s budget proposals, as well as the final approved budget, are posted on the OMB website.

Based on the input of the federal agencies, the president's budget proposal projects estimated spending, revenue, and borrowing levels broken down by functional categories for the coming fiscal year to start on October 1.The president’s budget proposal includes volumes of information prepared by the president intended to convince Congress that the president’s spending priorities and amounts are justified. In addition, each federal executive branch agency and independent agency includes its own funding request and supporting information. All of these documents are also posted on the OMB website.

The president's budget proposal includes a suggested level of funding for each Cabinet-level agency and all programs currently administered by them.

The president's budget proposal serves as a "starting point" for the Congress to consider. Congress is under no obligation to adopt all or any of the President's budget and often makes significant changes. However, since the President must ultimately approve all future bills they might pass, Congress is often reluctant to completely ignore the spending priorities of the President's budget.

House and Senate Budget Committees Report the Budget Resolution

The Congressional Budget Act requires passage of an annual "Congressional Budget Resolution", a concurrent resolution passed in identical form by both House and Senate, but not requiring the President's signature.

The Budget Resolution is an important document providing Congress an opportunity to lay out its own spending, revenue, borrowing and economic goals for the coming fiscal year, as well as the next five future fiscal years. In recent years, the Budget Resolution has included suggestions for government program spending reforms leading to the goal of a balanced budget.

Both the House and Senate Budget Committees hold hearings on the annual Budget Resolution. The committees seek testimony from presidential administration officials, Members of Congress and expert witnesses. Based on testimony and their deliberations, each committee writes or "marks-up" its respective version of the Budget Resolution.

The Budget Committees are required to present or "report" their final Budget Resolution for consideration by the full House and Senate by April 1.

What is Budget Reconciliation?

Created by the Congressional Budget Act of 1974, budget reconciliation allows for expedited consideration of certain tax, spending, and debt-limit legislation. In the Senate, bills considered under the rules of reconciliation may not be filibustered and the scope of proposed amendments is strictly limited. Reconciliation offers a great advantage for passing controversial budget and tax measures.

To date, lawmakers have enacted 21 budget bills by reconciliation since 1980, the first year the process became available to them. Four other measures passed by Congress under reconciliation were vetoed by the presidents at the time. In 1981, Congress used reconciliation to pass several of President Ronald Reagan’s controversial government spending cuts. Throughout the rest of the 1980s and 1990s, several deficit-reduction bills used reconciliation, as well as welfare reform in 1996. In 2001 and 2003, reconciliation sped the passage of major tax cuts proposed by President George W. Bush to stimulate the economy during a deep recession. More recently, reconciliation was used in 2010 to amend the Affordable Care Act and modify the federal student loan program, and in 2017 to enact large tax cuts. In 2016 and again in 2017, Republican majorities in the Senate attempted to use the reconciliation process to repeal key elements of the Affordable Care Act—Obamacare. President Obama vetoed the first attempt, while the second attempt failed to pass in the Senate.

Next Steps: Congress Prepares its Budget Resolution

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Longley, Robert. "About The President's Annual Budget Proposal." ThoughtCo, Mar. 3, 2021, thoughtco.com/the-presidents-budget-proposal-3321453. Longley, Robert. (2021, March 3). About The President's Annual Budget Proposal. Retrieved from https://www.thoughtco.com/the-presidents-budget-proposal-3321453 Longley, Robert. "About The President's Annual Budget Proposal." ThoughtCo. https://www.thoughtco.com/the-presidents-budget-proposal-3321453 (accessed July 29, 2021).