Federal Budgets and Allocations
Student
Institution
Professor
Course
Due
Federal Budgets and Allocations
PART 1
Introduction
Knowing the federal budget process and its characteristics is a necessary step in understanding how government decisions on funds management and allocation are made. The Federal Budget as a whole program determines where, how, and at what level the money is being spent in the federal government, the stakeholders, and the multi-step process of presentation. The government officials first offer this to Congress, usually on February 1, with aid from government departments and agencies. After that, Congress took over, looking carefully at, discussing, and further adjusting the original proposal enacted by the legislative committee. Lastly, Congress approves spending and revenue bills. The budgeting process has different kinds of spending, such as discretionary and mandatory spending, and has a bell chart on top of it with specific time frames and a white space for those who will take part. Subsequently, the budget process has gone through much evolution through congressional legislative acts such as the Congressional Budget and Impoundment Control Act of 1974, which have contributed significantly to structuring its layouts and assembling oversight mechanisms. Via this process, different players such as government departments, congressional committees, and interested parties take part, and these players significantly impact how the budget is ultimately composed to pursue policy objectives and meet societal needs. The nature of which and who participates in the federal budget process is evidently a determinant of how the government’s resources are channeled and controlled in accordance with the national fulfillment and duties.
Describe the characteristics of the Federal budget.
The federal budget is a central component of government mode that determines how and where money is spent. It is done in the way, which is a multi-step procedure that has a few general features. First of all, at the federal level, both the president and Congress participate in the budget process. The President is the most important figure in the budgeting process; among his first duties is to submit a budget proposal to Congress no later than the first Monday in February, according to the information provided in the BUDGET-2000-CITIZENSGUIDE. The proposal is a result of a consultation with departments and agencies and is complete with year-by-year spending and taxation information for the upcoming fiscal year. Then, Congress examines and adjusts this proposal and provides it with approval- the bill for spending revenue.
Next and foremost, budgeting goes beyond a simple mechanism of spending as it can be divided into several types, which are two main categories, including most of the spending being operating or capital expenditures (BUDGET-2000-CITIZENSGUIDE). Discretional spending encompasses a third of federal payments, and Congress decides it through bills prevailing each year. However, on the other hand, mandatory spending, which forms almost two-thirds of all spending, is an outcome of permanent appropriations in accordance with the law. The separation of centralized and decentralized funding systems underlies the nature of allocation flexibility. In the third place, the budget process has been timed and arranged in stages. The process starts at the beginning of February and lasts till June 30 (Tax Policy Center, 2022).
Nevertheless, this is generally the case at this stage, as Congress needs help with passing budget resolutions and approval bills. So as to speed up the procedure, Congress sometimes applies a special procedure known as conciliation, which remains designed to accelerate the adoption of proceedings’ bills. Additionally, the budget process tends to get modified from time to time. The modern budget process is driven by the executive branch with theoretically fixed targets of the executive branch for social programs, such as the impoundment of funds for these programs from the period of the Nixon presidency in 1972(Tax Policy Center, 2022). Congress made a comprehensive budget planning legislative process by passing the Congressional Budget and Impoundment Control Act of 1974, which rendered the whole process clear and coherent at the same time. It was proposed to limit a president from taking funds at will and instead lay down a total for both overall revenue and total spending. The final issue is the negotiation between the government and the citizens. The reconciliation process provides an opportunity for the budget committees to revise tax laws and make amends to the target laws according to budget resolution (Tax Policy Center, 2022). This is the case when budget resolution is passed with reconciliation instructions that serve as a guideline for the formulation of a single reconciliation bill, which is considered at each chamber separately. Reconciliation bills are handled under technical rules within the Senate. They are, therefore, constrained by the Byrd rule, which does not allow any increased deficit that extends beyond the budget years provided under the budget resolution.
Who is involved, and what is their role in creating the Federal budget?
Budgeting has the federal budget of several participants, certain with their set of responsibilities and roles. Among the actors are the president, Congress, various government agencies, and different committees. Firstly, the President plays the main part in the creation of the budget. The President submits a budget message, as per the law, to Congress, which is usually on February 1 (BUDGET-2000-CITIZENSGUIDE-4). This particular budget is carried out in collaboration with the Office of Management and Budget (OMB) after consulting with the members of the Cabinet and the departments and agencies. The president’s budget, along with all the expenses and taxes, is an annual report of the government, and it is made available to the public to track the yearly budget plan. It can be considered as the government’s action plan for dealing with current political and economic issues. Congress, wherein the House of Representatives and the Senate form the core, also comes into prominence in revenue allocation and public expenditure of the Federal Budget. Besides the President’s budget, Congress receives a proposal that it reviews, debates, and either approves or not by modifying it in accordance with the budget. It is the House of Representatives and House Appropriations Committee that takes the leadership in initiating the appropriation process.
In contrast, the Senate Appropriations Committee and the Senate play similar roles to their counterparts. Governments, too, are involved in the budgeting process. In the legislative process, the committee is months ahead of other members, crafting policy, making subsidy changes, or investing increased funding. The organizers from the budget departments of the agency monitor expenditures to check the spending and ensure the budgetary limits are adhered to. The OMB takes care of the critical oversight role jointly with agencies; together, they ensure that programs are managed well and achieve results (BUDGET-2000-CITIZENSGUIDE-4).
Apart from the Congress committees, some of the committees for examination and amendment of the budget are also included. On the other hand, House and Senate Budget Committees are in charge of producing the budget resolutions, which include a cap on appropriations and revenues, and the whole budget process’s monitoring. Only a few other committees survive in the House and Senate, including the Appropriations Committees, which scrutinize each proposal for spending and submit a report for allocating funds for individual programs and agencies. Moreover, the House Ways and Means Committee and Senate Finance Committee are the committees that have great influence on taxation since they make the laws regarding taxes that affect government revenues. Additionally, the budget is made up of contributions from various stakeholders and interest groups. These stakeholders may be trying to lobby for certain funding priorities or tax policies, among other things, and this, in turn, might affect key decision-making processes between the President and the Congress. Public meetings, along with consultations and bargaining, occurred throughout the formation of the budget, involving many viewpoints, including those of laypeople.
Describe the process of the Federal budget cycle, including the stakeholders and their roles.
The budget cycle of the Federal government is a set of procedures that start with planning, development, and management of financial affairs while moving into the fiscal year that is ahead. This cycle incorporates several players, and each of them has certain duties and tasks. The process generally commences when the president sheds the budget plan before that of February to Congress but may end up getting its power fully shattered by Congress. This plan summarizes the activities of the administration with respect to scheduled outlays and the sources of revenue for the fiscal year ahead. The President has input from the OMB, which attends meetings with the Cabinet Departments and Agencies to prepare the budget. As the President hands the budget request to Congress, the lawmakers now take center stage in the process. Committees of Congress, like the House and the Senate Budget Committees, will examine the document and develop a concurrent budget resolution. This resolution sets the total funds to be spent and revenue for the fiscal year. It serves as a basis for the spending guidelines to be established during the appropriations process. The House and the Senate Appropriations Committees exert great influence during the budget process following. The congressional committees are mandated to write 13 annual funding bills that finance government departments and programs. They scrutinize the proposed budget submitted by the President, conduct hearings with agency officials, and then go on to decide on how much funding should be allocated to individual programs and agencies.
The government departments also contribute to the budget in the budget lines. The agency program managers are the ones who execute the allocated funds in the annual appropriations bill, which must be spent legally within the given financial limits and plan. The budget officials at the agencies monitor the expenditure and make sure that the money is not exceeded in the spending. In the course of the budgeting process, interest groups and shareholders give suggestions and advocacy concerning the fighting for tax policies or specific funding priorities. Such platforms as public hearings, consultations, and negotiations are venues for giving the stage to all voices. Generally speaking, the budget procedure is a process that has the objective of helping all the resources in the country to satisfy the needs and solve key policy problems. Having passed the budget resolution and the appropriations bill by Congress and the President, they are signed into law, thereby becoming law. The financial year starts on October 1, and governmental institutions place into effect the budget that is legally set out. Following the entire fiscal year, revenue and expenditure are managed by oversight mechanisms like OMB, congressional committees, and the General Accounting Office, which make sure that every spending is in tandem with legal requirements and policy goals.
PART 2
Introduction
During the period from 1960 to 2010, the Federal budget experienced a great deal of changes due to different causes and circumstances such as economy, politics, and society. Every decade was faced with challenges closer to the ones that appeared at different periods; hence, a very bright picture of the changes in budget, tax, and fiscal policy has been drawn. The variations in the Federal budget are manifested through the array of programs encompassed in the 1960s, the military buildup during the 1980s, the budget deficit in the 1990s, and the response to economic crises in the 2000s, which illustrate the dynamic interaction between policy, economy, and society. This essay pinpoints the changes in detail. It gives an insight into how the Federal budget has evolved and influenced the American economy.
Federal Budget Focus Changes 1960-2010
| 1960-1969 | The 1960-1969 government budget is characterized by an increase in funding, especially for Medicare and Medicaid welfare programs and military troops, because of the Vietnam War (Mannen, 2020). The period itself was characterized by balancing social spending with decreasing taxes to stimulate economic growth. |
| 1970-1979 | The 1970s can be described as a period of economic troubles; high inflation and unemployment played a key role in the formulation of the nation’s economic policy. Government spending was on the rise due to the high demand for the benefits. It was accelerated by the outlay for entitlement programs and the expense of defense. Nevertheless, the Budgeting Act of 1974, which came as a result of the concern about the following deficits, was passed aimed at controlling spending. |
| 1980-1989 | In the 1980s, the government budget significantly increased after Ronald Reagan became president, and there was more money for military spending. During this time, there were sizable defense expenditures and the enlargement of military means dictated by Reagan’s defense program and the shield of the Cold War with the Soviet Union. Nevertheless, defense spending grew significantly as compared to the decrease in domestic spending and implementation of tax cuts as a part of Reagan’s economic policies, which were a set of measures aimed at stimulating economic growth and promoting conservative fiscal principles. |
| 1990-1999 | Throughout the 1990s, the Federal budget was continually amended. During the first part, activities on budget deficits were undertaken, and the amount of spending being done by the government was reduced. President George H.W. Bush signed the Omnibus Budget Reconciliation Act of 1990, which was aimed at cutting expenditures and raising revenues using methods like tax increases(Hayasaki, 2023).In this case, where the central part of the decade was characterized by the deterioration of the budget situation due to low economic growth and tax revenues, the later period benefitted from economic expansion and increasing budget revenues. Bill Clinton’s administration considered budget deficit prevention and budget surpluses to be highlights of the budget. This was attained via a mixture of budget cuts together with higher taxes, as shown in the Balance Budget Act of 1997. Besides that, the 1990s was marked by improving welfare policy with the launch of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, which was aimed to change and improve the welfare system’s efficiency and to encourage the road to self-sufficient among participants |
| 2000-2010 | The time between the years 2000 and 2010 signaled a time of budgetary change brought about by internal and external factors such as economics and politics. At the beginning of the decade, there was a period of economic prosperity for the United States in which a budget surplus was achieved due to the increased growth of the economy and tax income. Nonetheless, the events of 9/11 were a turning point to this tendency, as they led to higher amounts of government expenditure on national security and defense. President George W. Bush’s administration had responded effectively through the costly military interventions in Afghanistan and Iraq, which provoked the growing defense spending capacity of the United States(Phillips, 2023). Similarly, the Bush administration passed the Economic Growth and Tax Reconciliation Act of 2001 and the Jobs and Growth Tax Reconciliation Act of 2003, which were tax cuts in addition to the ones signed before (Sabry, 2024). Such tax cuts, though they help economic development, yield budget deficits as well. The financial crisis of 2008 resulted in a severe crisis for the Federal budget as the government had to devote resources to controlling the crisis, rescuing struggling financial institutions, and implementing emergency measures to sustain the economy. The Troubled Asset Relief Program (TARP) was activated to support banks and financial institutions, whereas stimulus packages were aimed at boosting economic activity and alleviating the effects of the crisis. During the whole decade, entitlement spending elevated as well. This trend was caused by, for instance, the growth of the older generation and rising healthcare fees. Dollars were also spent to provide Social Security, Medicare, and Medicaid, time and again diverting income for long-term financing. |
References
BUDGET-2000-CITIZENSGUIDE-4.pdf. https://www.govinfo.gov/content/pkg/BUDGET-2000-CITIZENSGUIDE/pdf/BUDGET-2000-CITIZENSGUIDE-4.pdf
Hayasaki, S. (2023). The Unlikely Heroes of Progressive Taxation: CEOs’ Support for Bill Clinton’s Tax Increase Package in 1993. journal of policy history, 35(2), 219-253. https://doi.org/10.1017/S089803062200032X
Mannen, W. (2020). Arms, Revenue, and Entitlements: US Deficits in the Cold War, 1945-1991. Lexington Books. ISBN-13978-1793607096
Phillips, B. J. (2023). How did 9/11 affect terrorism research? Examining articles and authors, 1970–2019. Terrorism and political violence, 35(2), 409–432. https://doi.org/10.1080/09546553.2021.1935889
Sabry, F. (2024). Supply Side Economics: Unlocking Prosperity, a Comprehensive Guide to Supply Side Economics (Vol. 468). One Billion Knowledgeable.
Tax Policy Center. (2022).THE TAX POLICY CENTER.Briefing Book. https://www.taxpolicycenter.org/briefing-book/what-schedule-federal-budget-process