HGov: Budget Process


By law the federal budget requires the president to propose to Congress the budget for the entire federal government each fiscal year. The actual preparation of the budget is the responsibility of the Office of Management and Budget (OMB). Each federal agency will draw up a list of its own spending plans and sends these plans to the OMB. The president and his advisers study the preliminary budget and sends the spending requests back to the agencies for fine-tuning. After a final presidential review, the budget is sent to Congress. Certain items in the budget cannot be changed, such as  entitlements and the interest that must be paid on the national debt. The Congressional Budget Office (CBO) carefully evaluates the president’s budget for the House and Senate. The House and Senate Budget Committees review the budget, reconcile differences between their two versions of the budget, and make sure the budget aligns with the Budgetary Enforcement Act of 1990. After the budget is approved, the House passes an appropriations bill, officially setting aside money for expenditures. When the government spends more than it collects in taxes, causing a budget deficit. The budget deficit is the amount that the government borrows for a given year. The national debt is the total amount of debt for the federal government. Each year’s budget deficit adds to the national debt.

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