Making Sense of the Federal Budget Process

4 minute read

For a second year, the Trump administration’s budget request calls for drastic cuts to many federal departments, bureaus, and programs, including the Department of State and international exchange programs. The FY19 proposal suggests cutting the Bureau of Educational and Cultural Affairs (ECA) and State Department exchange programs by a harsh 75% (even more than last year’s suggested 55% cut).

Though InterExchange does not receive federal funding for our exchange programs, many of our fellow international exchange organizations do. We agree with the Alliance for International Exchange’s assessment that “the proposed cuts to ECA’s budget recommended by the Administration, if enacted, would greatly harm our nation’s public diplomacy efforts and, ultimately, our national security and economy.”

All of this discussion not only puts the debate of national funding priorities front and center, but also highlights the question: how does the federal budget process work? Why does the Alliance say “if enacted” in its statement? The President’s budget submission is just the first step in a long and complicated appropriations process. Ultimately, Congress has the power of the purse, and will determine and finalize government spending. The federal budget process is complex, but here’s a primer on how it works.

The President’s Budget Request

Every February or March, the federal government budget process kicks off with the president’s budget request for the next fiscal year (which runs from October 1 to September 30). The president’s budget request is just that: a request, a set of recommendations to Congress. In submitting the request, the administration is indicating to Congress its priorities for consideration in the budget process.

The Budget Resolution

The House and Senate Budget Committees are then tasked with creating a budget resolution, which serves as a blueprint for the appropriations process, a guide to crafting the full budget. These resolutions often incorporate ideas from the president’s budget, but they don’t have to. Congress is not required to pass a resolution; in several recent years, it has not.

The Work of Congressional Appropriations Committees

Next, the House and Senate Appropriations Committees both mark up their own budgets - meaning, they create full, detailed federal budgets of their own, outlining their own priorities and recommendations for funding. The committees are free to accept or ignore the president’s various funding requests.

This work is divvied up among the 12 Appropriations Subcommittees in both the House and the Senate. Each subcommittee focuses on funding for a specific area of government programs, such as state/foreign operations, defense, homeland security, labor, energy, and others.

Once the Appropriations Subcommittees finalize their budgets, the full House and full Senate each vote to pass their respective 12 appropriations bills. When those are passed, a conference committee meets to reconcile differences between the House and Senate budgets and negotiate one final budget. That final budget might have accepted some of the president’s initial budget requests, but rejected others. One recent exchange program-related example of this: in 2014, the Obama administration proposed funding State Department exchanges robustly, but cutting the Fulbright Program by $30 million. In the end, the House and Senate declined to accept this Fulbright proposal. Instead, they fully funded all exchange programs, including Fulbright, in the final fiscal year 2015 budget.

The Full Congress Votes on a Final Budget

After the conference committee finishes its work, the House and Senate vote again on the same, final version of the budget. After passing both the House and Senate, the 12 appropriations bills go to the president to be signed into law. This needs to happen before the end of the current fiscal year (midnight on September 30) in order to prevent a government shutdown.

But as we know, very often this process doesn’t happen (the government shut down twice this year for very short periods, and for 16 days in 2013 when Congress couldn’t agree on a budget for FY14). But other than a shutdown, what’s to be done when Congress can’t finish or agree on a budget by September 30?

Kicking the Can with a CR

Congress can avoid a shutdown by kicking the can down the road via a continuing resolution, or CR. A CR essentially continues to fund the government at current levels and will have an expiration date attached to it. Congress must either pass the next year’s budget by that deadline, or pass yet another CR to give it more time. Congress can do as many CRs as it likes.

CRs have happened a lot in recent years. Congress has passed one or multiple CRs in each of the last 20 years; the last time Congress and the president agreed to a year-long budget was in 1997. In fact, the government is currently being funded by the fifth continuing resolution of the fiscal year. This CR has an expiration date of March 23.

Another method for funding the government is through an omnibus. In the normal process, Congress would consider, debate, and vote on all 12 appropriations bills - which means 12 individual votes by Congress. This process can be lengthy and politically contentious. So instead, committee and party leaders sometimes decide to package all 12 appropriations bills into one big bill – an omnibus. This way, the full federal budget can be passed via one Congressional vote, instead of 12. The FY16 budget was ultimately passed via an omnibus bill.

All of this is to say, the Trump Administration’s FY19 budget request is just the first step in a long, annual process. There are likely to be many twists and turns along the way, and what next year’s federal budget will look like in the end remains to be seen.