The Congressional Budget Process: A Brief Overview

Prepared for Members and Committees of Congress

The term “budget process,” when applied to the federal government, actually refers to a number
of processes that have evolved separately and that occur with varying degrees of coordination.
This overview, and the accompanying flow chart, are intended to describe in brief each of the
parts of the budget process that involve Congress, clarify the role played by each, and explain
how they operate together. They include the President’s budget submission, the budget resolution,
reconciliation, sequestration, authorizations, and appropriations. This report will be updated to
reflect any changes in the budget process.

The Constitution grants the “power of the purse” to Congress,1 but does not establish any specific
procedure for the consideration of budgetary legislation. Instead, a number of laws and
congressional rules contribute to the federal budget process, with two statutes in particular
forming the basic framework.
The Budget and Accounting Act of 1921, as codified in Title 31 of the United States Code,
established the statutory basis for an executive budget process by requiring the President to
submit to Congress annually a proposed budget for the federal government. It also created the
Bureau of the Budget (reorganized as the Office of Management and Budget (OMB) in 1970) to
assist him in carrying out his responsibilities, and the General Accounting Office (GAO, renamed
the Government Accountability Office in 2004) to assist Congress as the principal auditing
agency of the federal government.
The Congressional Budget and Impoundment Control Act of 1974 (P.L. 93-344, 88 Stat. 297)
established the statutory basis for a congressional budget process, and provided for the annual
adoption of a concurrent resolution on the budget as a mechanism for facilitating congressional
budgetary decision making. It also established the House and Senate Budget Committees, and
created the Congressional Budget Office (CBO) to provide budgetary information to Congress
independent of the executive branch.
The President is required to submit to Congress a proposed budget by the first Monday in
February. Although this budget does not have the force of law, it is a comprehensive examination
of federal revenues and spending, including any initiatives recommended by the President, and is
the start of extensive interaction with Congress.
Within six weeks of the President’s budget submission, congressional committees are required to
submit their “views and estimates” of spending and revenues within their respective jurisdictions
to the House and Senate Budget Committees. These views and estimates, along with information
from other sources, is then used by each Budget Committee in drafting and reporting a concurrent
resolution on the budget to its respective house. Other information is gathered by the Budget
Committees in reports and hearing testimony. That information includes budget and economic
projections, programmatic information, and budget priorities, and comes from a variety of
sources, such as CBO, OMB, the Federal Reserve, executive branch agencies, and congressional
Although it also does not have the force of law, the budget resolution is a central part of the
budget process in Congress. As a concurrent resolution, it represents an agreement between the
House and Senate that establishes budget priorities, and defines the parameters for all subsequent
budgetary actions. The spending, revenue, and public debt legislation necessary to implement
decisions agreed to in the budget resolution are subsequently enacted separately.

1 Article I, Section 8 provides that The Congress shall have Power To lay and collect Taxes, Duties, Imposts and
Excises, and Section 9 provides thatNo Money shall be drawn from the Treasury, but in Consequence of
Appropriations made by Law.

Discretionary spending,2 in the form of appropriation bills, involves annual actions that must be 3
completed before the beginning of a new fiscal year on October 1. Changes in direct spending or
revenue laws may also be a part of budgetary actions in any given year. When these changes are
directly tied to implementing the fiscal policies in the budget resolution for that year, the
reconciliation process may be used. Reconciliation typically follows a timetable established in the
budget resolution. Other budgetary legislation, such as changes in direct spending or revenue
laws separate from the reconciliation process, changes in the public debt limit, or authorizing
legislation, are not tied directly to the annual budget cycle. However, such legislation may be a
necessary part of budgetary actions in any given year.
The Balanced Budget and Emergency Deficit Control Act of 1985 (P.L. 99-177, 99 Stat. 1037) 4
established the sequester as a means to enforce statutory budget limits. Amendments to this act
were designed to use sequesters to control direct spending and revenues (through the pay-as-you-
go, or PAYGO, process) and discretionary spending (through spending caps). Under these
mechanisms, the budgetary impact of all legislation was scored by OMB, and reported three times
each year (a preview with the President’s budget submission, an update with the Mid-Session
Review of the Budget, and a final report 15 days after Congress adjourned). If the final report on
either the PAYGO or spending caps mechanism indicated that the statutory limitations within that
category had been violated, the President was required to issue an order making across-the-board
cuts of nonexempt spending programs within that category. Those mechanisms expired October 5
1, 2002. Currently, both the House and Senate have rules, commonly referred to as PAYGO
rules, that limit the consideration of direct spending and revenue legislation, however they are 6
enforced through points of order rather than a presidential sequester order.
The budget resolution represents an agreement between the House and Senate concerning the
overall size of the federal budget, and the general composition of the budget in terms of
functional categories. The amounts in functional categories are translated into allocations to each
committee with jurisdiction over spending in a process called “crosswalking” under Section
302(a) of the Congressional Budget Act. Legislation considered by the House and Senate must be
consistent with these allocations, as well as with the aggregate levels of spending and revenues.
Both the allocations and aggregates are enforceable through points of order that may be made
during House or Senate floor consideration of such legislation. These allocations are
supplemented by nonbinding assumptions concerning the substance of possible budgetary
legislation that are included in the reports from the Budget Committees that accompany the
budget resolution in each house.

2 Discretionary spending is that spending not mandated by existing law, and therefore is made available in such
amounts as Congress chooses through the appropriations process.
3 Direct spending, also referred to as mandatory or entitlement spending, is that spending directly controlled through
eligibility requirements and benefit payments mandated in laws other than appropriations.
4 A sequester was an executive order canceling budgetary resources in accordance with the provisions of the Balanced
Budget and Emergency Deficit Control Act of 1985, as amended.
5 These mechanisms were first established under the Budget Enforcement Act of 1990 (Title XIII of P.L. 101-508,
Omnibus Budget Reconciliation Act of 1990). Originally enacted with a sunset date of FY1995, they were extended
twice, through FY1998 (Title XIV of P.L. 103-66, Omnibus Budget Reconciliation Act of 1993) and through FY2002
(Budget Enforcement Act of 1997, Title X of P.L. 105-33, Balanced Budget Act of 1997).
6 CRS Report RL34300, Pay-As-You-Go Procedures for Budget Enforcement, by Robert Keith.

In some years, the budget resolution includes reconciliation instructions. Reconciliation
instructions identify the committees that must recommend changes in laws affecting revenues or
direct spending programs within their jurisdiction in order to implement the priorities agreed to in
the budget resolution. All committees receiving such instructions must submit recommended
legislative language to the Budget Committee in their respective chamber, which packages the
recommended language as an omnibus measure and reports the measure without substantive
revision. A reconciliation bill would then be considered, and possibly amended, by the full House
or Senate. In the House, reconciliation bills are typically considered under the terms of a special
rule. In the Senate, reconciliation bills are considered under limitations imposed by Section 305,
310, and 313 of the Congressional Budget Act. These sections limit debate on a reconciliation bill
to 20 hours, and limit the types of amendments that may be considered.
The annual appropriations process provides funding for discretionary spending programs through
regular annual appropriations bills. Congress must enact these measures prior to the beginning of
each fiscal year (October 1) or provide interim funding for the affected programs through a
“continuing resolution.” By custom, appropriations bills originate in the House, but may be
amended by the Senate, as other legislation.
The House and Senate Appropriations Committees are organized into subcommittees, each of
which is responsible for developing an appropriations bill. Appropriations bills are constrained in
terms of both their purpose and the amount of funding they provide. Appropriations are
constrained in terms of purpose because the rules of both the House (Rule XXI) and the Senate
(Rule XVI) generally require authorization prior to consideration of appropriations for an agency 7
or program.
Constraints in terms of the amount of funding exist on several levels. For individual items or
programs, funding may be limited to the level recommended in authorizing legislation. Also,
between FY1991 and FY2002, the discretionary spending provided in appropriations acts were
limited by discretionary spending caps (these spending caps are described below). Finally, the
allocations from the budget resolution made to the Appropriations Committees under Section
302(a) of the Budget Act provide limits that may be enforced procedurally through points of order
in the House and Senate during consideration of the legislation. In the absence of a final
agreement on a concurrent resolution on the budget, the House or Senate may adopt a “deeming 8
resolution” to establish provisional enforcement levels.
Section 302(b) of the Budget Act further requires the House and Senate Appropriations
Committees to subdivide the amounts allocated to them under the budget resolution among their
subcommittees. These suballocations are to be made “as soon as practicable after a concurrent
resolution on the budget is agreed to.” Because each subcommittee is responsible for developing
a single general appropriations bill, the process of making suballocations effectively determines

7 Authorizations are legislation that establish, continue, or modify an agency or program, and authorize the enactment
of appropriations for that purpose. Authorizations may be temporary or permanent, and their provisions may be general
or specific, but they do not themselves provide funding in the absence of appropriations actions. Although House and
Senate rules generally prohibit unauthorized appropriations, both provide exceptions in their respective rules, and the
prohibition itself may be waived.
8 CRS Report RL31443, The “Deeming Resolution”: A Budget Enforcement Tool, by Robert Keith.

the spending level for each of the regular annual appropriations bills. Legislation (or
amendments) that would cause the suballocations made under 302(b) to be exceeded is subject to
a point of order. The Appropriations Committees can (and do) issue revised subdivisions over the
course of appropriations actions to reflect changes in spending priorities effected during floor
consideration or in conference.
The budget resolution provides a guideline for the overall level of revenues, but not for their
composition. Legislative language controlling revenues is reported by the committees of
jurisdiction (the House Ways and Means Committee and the Senate Finance Committee). The
revenue level agreed to in the budget resolution acts as a minimum, limiting consideration of
revenue legislation that would decrease revenue below that level. In addition, Article I, Section 7
of the Constitution requires that all revenue measures originate in the House of Representatives,
although the Senate may amend them, as other legislation. Revenue legislation may be considered
at any time, although revenue provisions are often included in reconciliation legislation. The
budget resolution also specifies an appropriate level for the public debt that reflects the budgetary
policies agreed to in the resolution. Any change in the authorized level of the public debt must be 9
implemented through a statutory enactment.
The statutory budget enforcement procedures of recent years were part of the Balanced Budget
and Emergency Deficit Control Act of 1985, as amended. Between 1990 and 2002, the act
provided two separate mechanisms: spending caps in Section 251, designed to limit discretionary
spending to a designated level; and the PAYGO process in Section 252, designed to limit changes
in the level of revenues and direct spending by new legislation. In both cases, the mechanism was
enforced by a presidential sequester order after the end of a congressional session. If legislation
were enacted that would violate the limits established under either of these mechanisms, the
President was required to issue an order for an across-the-board spending cut of nonexempt
spending programs within that category. Although formal enforcement of these mechanisms was
through a presidential order, by enforcing the allocations and aggregates for spending and
revenues provided in the budget resolution consistent with these limits, Congress was able to use
points of order to enforce them as well. Although these statutory limits expired at the end of
FY2002, Congress continues to use the concurrent resolution on the budget and points of order to
establish and enforce budgetary limits.
CRS Report 97-684, The Congressional Appropriations Process: An Introduction, by Sandy
CRS Report 98-721, Introduction to the Federal Budget Process, by Robert Keith.

9 CRS Report RS21519, Legislative Procedures for Adjusting the Public Debt Limit: A Brief Overview, by Bill Heniff

CRS Report 97-865, Points of Order in the Congressional Budget Process, by James V. Saturno.

Figure 1. The Congressional Budget Process: Timetable for Annual Action

James V. Saturno
Section Research Manager, 7-2381