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The Budget Process: How does it work?

Each year, the Congress is supposed to pass a concurrent budget resolution setting out aggregate spending, revenue, and deficit targets for at least the next five years. "Concurrent" means that the resolution lacks the force of law and does not require the president’s signature-which, of course, implies that the president cannot veto it either.

  • The budget resolution divides total spending among the main functions of government, such as defense, transportation, and health. Spending allocations are provided to individual Congressional committees and the House and Senate appropriations committees further divide their spending allocation among their subcommittees.
  • The budget resolution leaves it up to individual congressional committees to decide the details of the budget, program by program, consistent with the aggregate targets. In practice, however, the general debate over the budget resolution often ends up discussing the budgets for individual programs and their implications.
  • The Congressional Budget Office (CBO) was created to provide technical advice to the Congress on budget matters in a nonpartisan manner. Every bill reported to the floor by the Senate and House committees must attach a CBO cost estimate that covers at least five years, to show that the proposed spending is consistent with the budget resolution’s targets.
 
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