What’s the Budget Law?

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The Budget Act is any number of pieces of legislation enacted by the United States Congress intended to standardize the process by which the federal government establishes the national budget. The framework for the process was first established in 1921 and was then changed again in 1874. Under the mandate of the legislation, many different offices are included in the process, including the President, the House and Senate Budget Committees and the Congressional Budget Office.

Each year, the Office of Management and Budget in the executive branch helps the President establish a budget request proposal. This request includes all financial needs for federal executive offices and independent agencies within government. According to the Budget and Accounting Act of 1921, this must occur between the first Monday in January and the first Monday in February each year. To outline the needs of the proposal, the budget request includes various research documents and statements detailing the needs for the next fiscal year.

This proposal is then forwarded to the legislative branch where the House and Senate Budget Committees accept the requests and modify them as they please. Known as the annual budget resolution, each committee must submit amended legislation to both house plans in early April. Constitutionally, the budget process is considered a concurrent resolution in which the President does not have to sign off on the finished product. It simply binds Congress to legislation, requiring it to allocate the necessary funds for each expenditure. Each house passes its own version of the budget resolution, which then requires a conference report reconciling the differences.

The budget law is amended periodically to address challenges with defining the annual spending process. A major overhaul took place with the Congressional Budget Act of 1974, which created the Congressional Budget Office and gave the Senate the ability to expedite the budget process. Another major change occurred in 1990 with the establishment of pay-as-you-go (PAYGO) legislation requiring all new spending to be paid for by new taxes or cuts from existing programs. This has helped keep the deficit and overall federal debt low.

Unlike most other Senate legislation, the budget reconciliation process cannot be stonewalling. Normally, a filibuster requires a three-fifths vote to close the floor debate, without which the legislative process is essentially stalled. This led to many unrelated bills, known as knighthoods, being attached to the budget. In response, the Budget Act imposed the Byrd Rule. This rule allows senators to remove provisions that are considered extraneous and have nothing to do with the budget.

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