The President has released his budget for the 2014 fiscal year, and the House and Senate have passed their budgets as well. None of these will ever implement a dime of taxing or spending – the budget never has that authority. So do they matter at all, or is this all for show?
Let’s start with a walkthrough of how the spending process works for the Federal Government. This is what a government class would teach. It’s not that useful though, so we’ll go through it quickly.
The government’s fiscal year starts October 1. The President is supposed to release his budget in early February. The House and Senate then pass their own budgets, and then meet in conference to work out the differences and agree to a single Congressional budget resolution. Congress then passes legislation that does spend money, called “appropriations,” which the President signs into law like any other bill (or it passes over his veto). If that legislation is not in line with the Congressional budget, a member can stop it by raising a point of order.
In reality, it rarely looks like that. The President is often late in releasing his budget, and the House and Senate have not agreed on a Congressional budget since the 2009 fiscal year. The President’s budget has zero legal force – it’s just a suggestion. The Congressional budget is not signed into law by the President – it is a concurrent resolution that only affects Congressional procedure. The Congressional budget does set limits that can be enforced with a point of order, but those can be waived with the same amount of support that would be needed to pass a bill anyway. So if a bill has enough support to pass, it has enough support to overcome the point of order.
So does any of this matter? Yes, but what matters isn’t necessarily what gets the most attention. The overall spending limits in a Congressional budget set guidelines that do tend to influence subsequent legislation, since they represent an understanding to which Members of Congress agreed. The rules for passing a budget allow nearly unlimited amendments, which are voted on in rapid succession in a late-night Vote-a-Rama. Those amendments are almost always non-binding, but they do provide an opportunity to put Congress on-the-record about issues that would otherwise not receive a vote. Sometimes, the result can be a signal that leads to binding legislation in the future.
The most important part of the Congressional budget is called “reconciliation.” This enables Congress to fast-track legislation that cannot be filibustered, meaning the Senate can pass it with a simple majority vote. The budget can include reconciliation instructions to Congressional committees to produce legislation within certain parameters. If the committee produces a bill that fits the criteria laid out in the budget, it is considered under the fast-track rules.
Reconciliation has enabled the passage of a large portion of recent major laws. Health Care Reform was passed in part through this process, as was a major reform of student loans. The Bush Tax Cuts of 2001 and 2003 were passed through reconciliation. Ever wonder why the continued health insurance you can get when you leave a job is called COBRA? Consolidated Omnibus Budget Reconciliation Act of 1985.
What about the President’s budget? It’s just a suggestion, and the major suggestions that get the most media attention are often ignored by Congress. But look past the headline-grabbing proposals, and the nuts-and-bolts of the budget are extremely important.
The President’s budget is composed of the budgets from the various agencies of the government, who produce detailed plans and justifications for the money they request. Congress can change those plans at will in their spending bills, but the agency budgets set a default which is usually followed by Congress. Changes can attract major media attention. When you read an article about Congress buying tanks the Pentagon doesn’t want, that means Congress spent more on tanks than the amount requested in the President’s budget.
So what should you look for in a budget? For the President’s budget, look at the agency budgets that serve as the foundation underneath the headlines. For the Congressional budget, look at reconciliation instructions. In both cases, look for policy statements that may serve to commit the President and Congress to binding decisions in the future. But remember that decisions on spending for the upcoming fiscal year aren’t made in the budget – the real action is in appropriations bills.