Political Science 345: The Legislative Process Class 16: The Budgetary Process I

1. Political Science 345: The Legislative ProcessClass 16: The Budgetary Process I Professor Jon Rogowski

2. Your household budget • Spending > Income = Deficit • Borrowing = Debt • Debt is not free • Interest payments mean less income for other stuff

3. Government Budget • Congress passes laws “authorize” spending and raising revenues • Each year, Congress “appropriates” funds to pay for programs • If Congress appropriates more than its revenues, it must borrow to make up the deficit

4. Deficit: Annual difference between revenues and spending Obama

5. The Federal Debt

9. The Broad Strokes of the Budget Process • Submission of budget by President • Prepared by OMB • Congressional review of President's budget • Handled by various committees • Congressional action on spending bills • Appropriations committee • Execution of spending-related laws • Generally done by executive agencies • Audits and reviews of agency spending (GAO)

10. The “Official” Timetable

11. Imagine… • 535 representatives have important things they want to do • They are using other people’s money • There is no overall cap on how much they can spend • What will happen?

12. The restaurant game • Large group sits down at a fancy restaurant…..

13. Budgeting process (round 1) • Each year, President proposes budget • H & S adopt Budget Resolution that sets overall spending targets for 13Appropriations categories • Appropriations subcommittees propose specific spending for programs • H & S agree on Budget Reconciliation that adjusts subcommittee proposals that conforms to (adjusted) overall spending targets • President signs Budget into law

14. Budgeting process (round 1) • Each year, President proposes budget • H & S adopt Budget Resolution that sets overall spending targets for 13Appropriations categories • Appropriations subcommittees propose specific spending for programs • H & S agree on Budget Reconciliation that reconciles Budget Resolution and subcommittee requests • President signs Budget into law Prescription for overspending!

15. The restaurant game • Large group sits down at a fancy restaurant….. How do you solve this?

16. Budgeting process (round 2) • Set deficit reduction target • Pass Budget Resolution • If Reconciliation exceeds Resolution, implement across the board cuts.

17. Budgeting process (round 2) • Set deficit reduction target • Pass Budget Resolution • If Reconciliation exceeds Resolution, implement across the board cuts. Prescription for overspending!

18. “Smoke and Mirrors” • Annual budget focus encourages gimmicks • Entitlement spending is off budget • “Emergency” spending is off budget

19. Brief History of Federal Budgeting • Historically decentralized, Congress at the center • 1921 Budget Act, creates GAO • 1950s-1970s: Growth in defense and social spending • Deficits in Vietnam, Medicare/Medicaid • Nixon & Presidential Impoundments • “Backdoor financing” by authorizing committees • Budget and Impoundment Control Act of 1974 • Passed over Nixon’s Veto • Deficits in 1980s, early 1990s • Multiple attempts at deficit-cutting • Surpluses in late 1990s • Tax cuts, increased spending in 2000s

20. The budget process in more detail • Budget resolution • Concurrent resolution • 1974 Budget Act • Binds Congress, but is not a law • House and Senate Budget Committees • Can be altered by Appropriations committee • Sets aggregate spending and revenue levels • Components of budget resolution: • Sets aggregate spending and revenue goals • Multiyear targets (5+ years) • Sets limits on entitlement • Spending levels across 20 categories

21. Functional Categories

22. Appropriations Committees • Twelve subcommittees (1 for each general appropriation bill): • Agriculture • Commerce, Justice, Science • Defense • Energy and Water • Financial Services • Homeland Security • Interior and Environment • Labor, HHS, Education • Legislative Branch • Military Construction, VA • State, Foreign Operations • Transportation, HUD • Emergency Supplementals

23. The 1974 Budget Act • Centralized and Regularized the Budget Process • Created Budget Committee in each chamber • Created Congressional Budget Office (CBO) • House Committee • rotating membership • partisan • Members have “turf“ interests • Committee is Privileged • Senate Committee • Traditional standing committee • Prestigious/powerful committee • Impoundment Act: does not allow president to withhold funds from programs he opposes

24. Steps in Budget Process Process set by 1974 Budget Act Typical Process after 1980 President Submits Budget President Submits Budget Pass First Budget Resolution Pass First Budget Resolution Pass Authorization & Appropriations Bills Pass Authorization Pass Reconciliation & Appropriations Legislation Bills Pass Second Budget Resolution Pass Reconciliation Legislation Fiscal Year Begins October 1 Fiscal Year Begins October 1

25. Budget Resolution in the 2 Chambers • The House • Budget Resolution is a privileged matter in the House • Usually, special rule: a substitute-based amendment structure • The Gephardt Rule (Rule 28) and Debt Ceilings in the House The Senate • Privileged matter: Motion to proceed is not debatable • Debate on resolution itself is limited to 50 hours, • “Vote-a-rama:” unlimited, debate-free amendments after 50 hrs • Germaneness requirement on amendments, waived with 60 votes

26. The Budget Resolution’s “dimensions” • Revenues, Expenses, • Multi-year forecasts The Budget Resolution as an “upper limit” • Establishes points of order in both chambers • Special rules frequently waived in House • Reconciliation Instructions • Part of budget resolution • Aimed at specific committees • Sets targets for changes in law

27. The 2013 Budget Resolutions • H.Con.Res. 25 introduced by Paul Ryan (“Path to Prosperity”) • Passed 221-207 • S.Con.Res. 8 • Passed 50-49