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The Federal Budget

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Advance appropriation: Appropriations of new budget authority that become available one or more fiscal years beyond the fiscal year for which the appropriation act was passed.
Source: The White House.

Advance funding: Appropriations of budget authority provided in an appropriations act to be used, if necessary, to cover obligations incurred late in the fiscal year for benefit payments above the amount specifically appropriated in the act for that year; the budget authority is charged to the program’s appropriation for the fiscal year following the fiscal year for which the appropriations act is passed.
Source: The White House.

Allowance: A lump sum included in the budget to represent certain transactions that are expected to increase or decrease budget authority, outlays, or receipts but that are not, for various reasons, reflected in the program details.
Source: The White House.

Appropriation act: A law or legislation under the jurisdiction of the House and Senate Committees on Appropriations that provides authority for federal programs or agencies to incur obligations and make payments from the Treasury. Each year, Congress considers regular appropriation acts, which fund the operations of the federal government for the upcoming fiscal year. Congress may also consider supplemental, deficiency, or continuing appropriation acts (joint resolutions that provide budget authority for a fiscal year until the regular appropriation for that year is enacted). (See budget authority, fiscal year, and obligation.)
Source: CBO.

Authorization act: A law or legislation under the jurisdiction of a committee other than the House and Senate committees on Appropriations that establishes or continues the operation of a federal program or agency, either indefinitely or for a specified period. An authorization act may suggest a level of budget authority needed to fund the program or agency, which is then provided in a future appropriation act. For some programs, however, the authorization itself may provide the budget authority. (See budget authority.)
Source: CBO.


Balances of budget authority: The amounts of budget authority provided in previous years that have not been spent as outlays.
Source: The White House.

Baseline: A benchmark for measuring the budgetary effects of proposed changes in federal revenues or spending. By law, the baseline budget prepared by the Congressional Budget Office projects current-year levels of spending, revenues, and the deficit or surplus into the budget year and out years based on current laws and policies.
Source: CBO.

Baseline: An estimate of the receipts, outlays, and deficit or surplus that would result from continuing current law through the period covered by the budget.
Source: The White House.

Budget: The budget of the United States Government, which sets forth the president’s comprehensive financial plan for allocating resources and indicates the president’s priorities for the federal government.
Source: The White House.

Budget authority: Authority provided by law to incur financial obligations that will result in immediate or future outlays of federal government funds. Budget authority may be provided in an appropriation act or authorization act and may take the form of borrowing authority, contract authority, entitlement authority, or authority to obligate and expend offsetting collections or receipts. Offsetting collections and receipts are classified as negative budget authority. (See appropriation act, authorization act, contract authority, offsetting collections, offsetting receipts, and outlays.)
Source: CBO.

Budgetary resources: All sources of authority provided to federal agencies that permit them to incur financial obligations, including new budget authority, unobligated balances, direct spending authority, and obligation limitations.
Source: CBO.

Budget scoring: The process of estimating the budgetary effects of pending and enacted legislation and comparing them with limits set in the budget resolution or legislation. (See also scorekeeping.)
Source: The Urban Institute.

Budget Totals The totals included in the budget for budget authority, outlays, and receipts. Some presentations in the budget distinguish on-budget totals from off-budget totals. On-budget totals reflect the transactions of all federal government entities except those excluded from the budget totals by law. The off-budget totals reflect the transactions of government entities that are excluded from the on-budget totals by law. Under current law, the off-budget totals include the Social Security trust funds (Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds) and the Postal Service Fund. The budget combines the on- and off-budget totals to derive unified or consolidated totals for federal activity.
Source: The White House.


Cap: The legal limits for each fiscal year under the Budget Enforcement Act on the budget authority and outlays provided by discretionary appropriations.
Source: The White House.

Cash-equivalent transaction: A transaction in which the government makes outlays or receives collections in a form other than cash or the cash does not accurately measure the cost of the transaction.
Source: The White House.

Collections: Money collected by the government that the budget records as either a receipt, an offsetting collection, or an offsetting receipt.
Source: The White House.

Continuing resolution: Appropriations legislation enacted by Congress to provide temporary budget authority for federal agencies to keep them in operation when their regular appropriation bill has not been enacted by the start of the fiscal year. A continuing resolution (CR) is a joint resolution, which has the same legal status as a bill. A CR frequently specifies a maximum rate at which obligations may be incurred, based on the rate of the prior year, the president's budget request, or an appropriation bill passed by either or both chambers of Congress. In some instances, however, Congress has used a CR as an omnibus measure to enact a number of appropriation bills.
Source: U.S. Senate.

Contract authority: Authority in law to enter into contracts or incur other obligations in advance of, or in excess of, funds available for that purpose. Although it is a form of budget authority, contract authority does not provide the funds to make payments. Those funds must be provided later, usually in a subsequent appropriation act (called a "liquidating appropriation"). Contract authority differs from a federal agency’s inherent authority to enter into contracts, which may be exercised only within the limits of available appropriations. (See appropriation act, budget authority, and obligation.)
Source: CBO.

Corporate income tax: A tax levied on corporate profits. A corporation's taxable income is its total income minus allowable expenses and capital depreciation.
Source: The Urban Institute.

Credit program account: A budget account that receives and obligates appropriations to cover the subsidy cost of a direct loan or loan guarantee and disburses the subsidy cost to a financing account.
Source: The White House.

Current services estimate: see baseline.


Debt: The total value of outstanding notes, bonds, bills, and other debt instruments issued by the federal government is referred to as federal debt or gross debt. It has two components?debt held by the public (federal debt held by nonfederal investors, including the Federal Reserve System) and debt held by government accounts (federal debt held by federal government trust funds, deposit insurance funds, and other federal accounts). Debt subject to limit is federal debt that is subject to a statutory limit on its issuance. The limit applies to federal debt, excluding a small portion of the debt issued by the Department of the Treasury and all the small amount of debt issued by other federal agencies (primarily the Tennessee Valley Authority and the Postal Service).
Source: CBO.

Deficit: The amount by which outlays exceed receipts in a fiscal year. It may refer to the on-budget, off-budget, or unified budget deficit.
Source: The White House.

Deficit-neutral: A term applied to legislative bills or proposals that pay for themselves over some budget period - for instance, a proposal that includes tax increases to fully offset the value of proposed expenditure increases. (See also revenue-neutral.)
Source: The Urban Institute.

Direct Spending: see mandatory spending.

Discretionary spending: Budgetary resources (except those provided to fund mandatory spending programs) provided in appropriations acts.
Source: The White House.

Dynamic scoring: One approach to projecting the budgetary impact of legislation. For virtually every bill reported out of committee, the Congressional Budget Office or the Joint Committee on Taxation provides Congress an estimate of the legislation’s budgetary impact, assuming that the overall size of the economy is fixed. Those estimates serve as the bill’s official "score" in the congressional budget process and project the bill’s year-by-year effects on revenues or outlays (excluding interest). Under dynamic scoring, the indirect macroeconomic effects of legislation on tax revenues are included in the estimates.
Source: Cordes, Ebel, and Gravelle (2006).


Earmark: Currently, there is no formal definition of "earmark," nor an informal definition accepted by all practitioners and observers of federal budgeting. Broadly, "earmark" may refer to provisions associated with legislation (appropriations or general legislation) that specify certain congressional spending priorities or in revenue bills that apply to a very limited number of individuals or entities. Earmarks may appear in either the legislative text or report language (committee reports accompanying reported bills and joint explanatory statement accompanying a conference report). Recent legislation in both houses of Congress requires public disclosure of earmarks to identify their sponsors and beneficiaries. (See tariff suspension.)
Source: CRS.

Emergency appropriation: An appropriation that the president and the Congress have designated as an emergency requirement. Such spending is not subject to the limits on discretionary spending, if it is discretionary spending, or the pay-as-you-go (PAYGO) rules, if it is mandatory.
Source: The White House.

Entitlements: Payments to individuals, governments, or businesses that, under law, must be made to all those eligible and for which funds do not have to be appropriated in advance. Social Security, Medicare, Medicaid, and TANF are among the entitlement programs.
Source: The Urban Institute.

Estate and gift tax: A tax levied on the value of assets held at the time of death above a certain threshold. The threshold is $2 million in 2007. Deductions are allowed for transfers to a spouse, gifts to charity, and expenses, and the federal tax is reduced by the amount of most state taxes levied. Gifts before death greater than $12,000 in 2007 are also subject to a gift tax, which is deductible against the estate tax at time of death. Source: The Urban Institute.

Excise tax: Tax on specific goods and services, levied at federal, state, and local levels. The most common excise taxes are on gasoline, cigarettes, and alcohol.
Source: The Urban Institute.


Federal funds group: The moneys collected and spent by the government through accounts other than those designated as trust funds. Federal funds include general, special, public enterprise, and intragovernmental funds.
Source: The White House.

Financing account: A nonbudgetary account (its transactions are excluded from the budget totals) that records all the cash flows resulting from post-1991 direct loan obligations or loan guarantee commitments. At least one financing account is associated with each credit program account. For programs that make both direct loans and loan guarantees, there are separate financing accounts for the direct loans and the loan guarantees. (See also liquidating account.)
Source: The White House.

Fiscal Year: A yearly accounting period. The federal government’s fiscal year begins October 1 and ends September 30. Fiscal years are designated by the calendar years in which they end - for example, fiscal year 2007 began on October 1, 2006, and will end on September 30, 2007. The budget year is the fiscal year for which the budget is being considered; in relation to a session of Congress, it is the fiscal year that starts on October 1 of the calendar year in which that session of Congress begins. An outyear is a fiscal year following the budget year. The current year is the fiscal year in progress.
Source: CBO.

Forward funding: Appropriations of budget authority that are made for obligation in the last quarter of the fiscal year for the financing of ongoing grant programs during the next fiscal year.
Source: The White House.


General fund: The accounts for receipts not earmarked by law for a specific purpose, the proceeds of general borrowing, and the expenditure of these moneys. (See also revolving fund.)
Source: The White House.


Liquidating account: A budget account that records all cash flows to and from the government resulting from pre-1992 direct loan obligations or loan guarantee commitments. (See also financing account.)
Source: The White House.

Loan guarantee Any guarantee, insurance, or other pledge concerning the payment of all or a part of the principal or interest on any debt obligation of a nonfederal borrower to a nonfederal lender. The term does not include the insurance of deposits, shares, or other withdraw-able accounts in financial institutions. (See also direct loan.)
Source: The White House.


Mandatory spending: Spending controlled by laws other than appropriations acts (including spending for entitlement programs) and spending for the Food Stamp Program. Although the Budget Enforcement Act uses the term "direct spending," mandatory spending is commonly used instead. (See also discretionary spending.)
Source: The White House.

Means of financing: Borrowing, the change in cash balances, and certain other transactions involved in financing a deficit. The term is also used to refer to the debt repayment, the change in cash balances, and certain other transactions involved in using a surplus. By definition, the means of financing are not treated as receipts or outlays.
Source: The White House.


National saving: Total saving by all sectors of the economy - personal saving, business saving (corporate after-tax profits not paid as dividends), and government saving (the budget surplus). National saving represents all income not consumed, publicly or privately, during a given period. (See also net national saving.)
Source: CBO.

Net interest: In the federal budget, net interest comprises the government’s interest payments on debt held by the public (as recorded in budget function 900) offset by interest income that the government receives on loans and cash balances and by earnings of the National Railroad Retirement Investment Trust.
Source: CBO.

Net national saving: National saving minus depreciation of physical capital.
Source: CBO.


Obligated balance: The cumulative amount of budget authority that has been obligated but not yet spent as outlays. (See also unobligated balance.)
Source: The White House.

Obligation: A binding agreement that will result in outlays, immediately or in the future. Budgetary resources must be available before obligations can be incurred legally.
Source: The White House.

Off-budget: Spending or revenues excluded from the budget totals by law. The revenues and outlays of the two Social Security trust funds (the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund) and the transactions of the Postal Service are off-budget. As a result, they are excluded from the totals and other amounts in the budget.
Source: CBO.

Offsetting collections: Collections that, by law, are credited directly to expenditure accounts and deducted from gross budget authority and outlays of the expenditure account, rather than added to receipts. Usually, they are authorized to be spent for the purposes of the account without further action by Congress. They result from business-like transactions or market-oriented activities with the public and other government accounts. The authority to spend offsetting collections is a form of budget authority. (See also receipts and offsetting receipts.)
Source: The White House.

Offsetting receipts: Collections that are credited to offsetting receipt accounts and deducted from gross budget authority and outlays, rather than added to receipts. They are not authorized to be credited to expenditure accounts. The legislation that authorizes the offsetting receipts may earmark them for a specific purpose and either appropriate them for expenditure for that purpose or require them to be appropriated in annual appropriation acts before they can be spent. Like offsetting collections, they result from businesslike transactions or market-oriented activities with the public and other government accounts. (See also receipts, undistributed offsetting receipts, and offsetting collections.)
Source: The White House.

On-budget: see budget totals.

Outlays: Payments to liquidate an obligation (other than the repayment of debt principal). Generally equal to cash disbursements, outlays also are recorded for cash-equivalent transactions, such as the issuance of debentures to pay insurance claims. In a few cases, outlays are recorded on an accrual basis, such as interest on public issues of the public debt. Outlays are the measure of government spending.
Source: The White House.

Outyear estimates: Estimates presented in the budget for the years beyond the budget year (usually four) of budget authority, outlays, receipts, and other items (such as debt). Source: The White House.


Pay-as-you-go (PAYGO): A procedure established in the Budget Enforcement Act of 1990 that was intended to ensure that all laws enacted before September 30, 2002, that affected direct spending and revenues were budget-neutral. The budgetary effect of each direct spending and revenue law was estimated over a five-year period and entered on the PAYGO scorecard. If, in any budget year, the deficit increased as a result of the total budgetary effects of laws on that scorecard, a PAYGO sequestration - a cancellation of budgetary resources available for direct spending programs - would be triggered. PAYGO and its sequestration procedure were rendered ineffective on December 2, 2002, when Public Law 107-312 reduced all PAYGO balances to zero. See Balanced Budget and Emergency Deficit Control Act of 1985, direct spending, fiscal year, revenues, and sequestration.
Source: CBO.

Payroll taxes: Tax imposed on some of or all workers' earnings that can be imposed on employers, employees, or both. Employers and employees each pay Social Security taxes that equal 6.2 percent of all employee earnings up to a cap and pay Medicare taxes of 1.45 percent, with no cap. Payroll taxes are also known as FICA (Federal Insurance Contributions Act) taxes or SECA (Self-Employment Contributions Act), if self-employed. (See also social insurance taxes.)
Source: The Urban Institute.

Personal Income Taxes: Taxes on income earned by individuals, including income from wages, interest, and nonwage income.
Source: GAO, (2005), appendix III.

Personal saving: Saving by households. Personal saving consumption and interest payments. The personal saving rate is personal saving as a percentage of disposable personal income. (BEA) See consumption, disposable personal income, and private saving. (See also private saving.)
Source: CBO.

Private saving: Saving by households and businesses. Private saving is equal to personal saving plus after-tax corporate profits minus dividends paid. (See also personal saving.)
Source: CBO.

Public enterprise fund: see revolving fund.


Receipts: Collections that result from the government’s exercise of its sovereign power to tax or otherwise compel payment and gifts of money to the government. They are compared to outlays in calculating a surplus or deficit. (See also offsetting collections and offsetting receipts.)
Source: The White House.

Rescission: The withdrawal of authority to incur financial obligations that was previously provided by law and has not yet expired. (See also budget authority and obligation.)
Source: CBO.

Revenues: Funds collected from the public that arise from the government’s exercise of its sovereign or governmental powers. Federal revenues come from various sources, including individual and corporate income taxes, excise taxes, customs duties, estate and gift taxes, fees and fines, contributions for social insurance programs, and miscellaneous receipts (such as earnings of the Federal Reserve System, donations, and bequests). Federal revenues are also known as federal governmental receipts. Compare with offsetting collections and offsetting receipts.
Source: CBO.

Revenue-neutral: A term applied to tax proposals that have no net cost - in other words, proposals in which provisions that raise revenues offset in equal value provisions that lose revenues. (See also deficit-neutral.)
Source: The Urban Institute.

Revolving fund: A fund that conducts continuing cycles of businesslike activity, in which the fund charges for the sale of products or services and uses the proceeds to finance its spending, usually without requirement for annual appropriations. There are two types of revolving funds: public enterprise funds, which conduct businesslike operations mainly with the public; and intragovernmental revolving funds, which conduct businesslike operations mainly within and between government agencies.
Source: The White House.


Scorekeeping: Measuring the budget effects of legislation, generally in terms of budget authority, receipts, and outlays for purposes of the Budget Enforcement Act.
Source: CBO.

Seigniorage: The gain to the government from the difference between the face value of minted coins put into circulation and the cost of producing them (including the cost of the metal used in the coins). Seigniorage is considered a means of financing and is not included in the budget totals. (See also means of financing.)
Source: The White House.

Sequestration: The cancellation of budgetary resources provided by discretionary appropriations or mandatory spending legislation, following various procedures prescribed by the Budget Enforcement Act. A sequestration may occur in response to a discretionary appropriation that causes discretionary spending to exceed the discretionary spending caps set by the Budget Enforcement Act or in response to net costs resulting from the combined result of legislation affecting mandatory spending or receipts (referred to as a "pay-as-you go" sequestration).
Source: The White House.

Social insurance taxes: Tax payments to the federal government for Social Security, Medicare, and unemployment compensation. While employees and employers pay equal amounts in social insurance taxes, economists generally agree that employees bear the entire burden of social insurance taxes in the form of reduced wages. (See also payroll taxes.)
Source: GAO (2005), appendix III.

Special fund: A federal fund account for receipts or offsetting receipts earmarked for specific purposes and the expenditure of these receipts. (See also trust funds.)
Source: The White House.

Supplemental appropriation: An appropriation enacted subsequent to a regular annual appropriations act, when the need for funds is too urgent to be postponed until the next regular annual appropriations act.
Source: The White House.

Surplus: The amount by which the federal government’s total revenues exceed its total outlays in a given period, typically a fiscal year. The primary surplus is that total surplus excluding net interest.
Source: CBO.


Tariff suspension: Temporary reduction or removal of a tariff that allows individual companies to avoid paying import taxes on a narrow range of products brought into the United States. Recent legislation in both the Senate and the House of Representatives would label such tariff measures as congressional earmarks and would require the same disclosures now mandated for earmarks. (See earmark.)
Source: Tax Policy Center.

Tax expenditures: Revenue loss attributable to a provision of federal tax laws that allows special exclusion, exemption, or deduction from gross income or provides a special credit, preferential tax rate, or deferral of tax liability.
Source: The Urban Institute.

Trust funds: In the federal accounting structure, trust funds are accounts designated by law as trust funds (regardless of any other meaning of that term). Trust funds record the revenues, offsetting receipts, or offsetting collections earmarked for the purpose of the fund, and budget authority and outlays of that fund financed by those revenues or receipts. The federal government has more than 200 trust funds. The largest and best known finance major benefit programs (including Social Security and Medicare) and infrastructure spending (the Highway and the Airport and Airway Trust funds). (See also special fund and revolving fund.)
Source: CBO.

Trust funds group: The moneys collected and spent by the government through trust fund accounts. (See also federal funds group.)
Source: The White House.


Undistributed offsetting receipts: Offsetting receipts that are deducted from the government-wide totals for budget authority and outlays instead of offset against a specific agency and function. (See also offsetting receipts.)
Source: The White House.

Unobligated balance: The cumulative amount of budget authority that is not obligated and that remains available for obligation under law.
Source: The White House.

User fee: Money charged by the federal government for federal services, or for the sale or use of federal goods or resources, that generally provide benefits to the recipients beyond those that may accrue to the general public. The amount of the fee is related to the cost of the service provided or the value of the good or resource used. In the federal budget, user fees can be classified as offsetting collections, offsetting receipts, or revenues. (See also offsetting collections, offsetting receipts, and revenues.)
Source: CBO.



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