Financial Goal Setting

The federal government's budget process is really three processes in one. The president develops and proposes the executive budget, also known as the budget request. In Congress, the House Budget committee and the Senate budget committee pass a budget resolution that identifies the main spending policies and targets for the Congressional side of the budget. The budget resolution allocates budget authority, or the power to incur spending obligations, and budget outlays, or the amount of cash that will flow from the Treasury to a federal agency. Most budget authority must be re-authorized each year, even though many programs and services call for budget outlays that will span multiple years. It's not uncommon for a project to receive budget authority but not receive adequate budget outlays

The third part of the process is that the House Ways and Means committee and the Senate appropriations committee pass a series of appropriations bills that allow the rest of the government to spend money. Once the appropriations bills are passed, usually following a lengthy conference committee process, and the President signs them, those bills become the federal budget.

The basic timeline for the federal budget process was outlined in the Congressional Budget Act of 1974. That process is as follows, with the goal of passing the new budget prior to the end of the federal fiscal year on September 30:

• November/December (shortly after passage of the current fiscal year's budget): President's Office of Management and Budget  works with executive agencies to develop their budget requests for the coming fiscal year. Executive agencies includes all the cabinet-level agencies like the Departments of State, Treasury, Justice, Education, etc., as well as the federal judiciary, independent regulatory agencies, and several other parts of the federal government.
• February: President submits the budget request, usually concurrent with the State of the Union address. House and Senate Budget committees, and House and Senate appropriation committees, working through their subcommittees, hold hearings and develop appropriation bills that provide funds for agency operations.
• March/April: Budget committees prepare a budget resolution. This resolution is an act of Congress, therefore does not require the President's signature. Because the budget resolution does not go to the President, it cannot enact spending or tax law. Instead, it sets targets for other congressional committees than can propose legislation directly providing or changing spending and taxes.
• April/May: House-Senate conference committee negotiates the final budget resolution. Congress adopts that resolution.
• May/June: House and Senate appropriations committees make their 302(b) allocations. These allocations establish the spending cap for each of the appropriations subcommittees
• June/July: House and Senate committees prepare reconciliation bills. These are bills that implement changes in authorizing legislation, or the laws that determine spending on entitlement programs, required by the budget resolution. Most resolution measures are related to entitlement spending like Medicare or to changes in tax law, namely tax cuts. Meanwhile, the appropriations committees debate and prepare appropriations bills.
• July/August: House and Senate pass their appropriations and reconciliation bills.
• September: Conference committees resolve differences in the final appropriations and reconciliation bills. President signs those bills.
• October 1: Fiscal year begins

The Congressional Budget Act of 1974 established the formal rules of the federal budgeting game. However, in the last few decades, the formal budgeting process explains less and less of how the federal government actually spends money. Consider the following:

• If the appropriations bills are not signed into law by Oct. 1 Congress must pass a continuing resolution. This is a temporary measure that extends the existing appropriations bills for a short time, usually 30 to 60 days. For 16 of the past 20 years, Congress has passed at least one continuing resolution. In some years, the government operated on continuing resolutions for most of the next fiscal year.
• For most of the past 20 years Congress has not passed a budget resolution. Without a resolution, the House and Senate usually pass different substitute versions of the budget targets that would otherwise appear in the budget resolution. Those substitute or deeming authorization bills are advisory, rather than binding on the appropriations committees.
• At any point during the fiscal year Congress can impose a rescission that cancels existing budget authority. In fact, the threat of rescission, and in some cases the actual use of it, has become a way to enforce de facto budget priorities that were never written into the budget resolution or appropriations bills. The best recent example is Congress' persistent attempts to strip funding for the Affordable Care Act (ACA, more commonly referred to as "Obamacare").
• In 2011 Congress passed the Budget Control Act (BCA). This law established that unless Congress can reduce the annual budget deficit by a predetermined target, then automatic cuts in discretionary and selected entitlement – known broadly as the sequester – will take effect. Unless amended, BCA extends the sequester through 2021. Neither the Budget Act, nor any other piece of federal budget legislation makes mention of anything like the sequester. BCA was the latest of many statutory budget caps designed to automatically limit federal government spending. Those caps are not part of the existing budget process framework laid out in the Congressional Budget Act.
• Many of the federal government's most expensive activities are now paid for outside of the budget process. The best recent example is the wars in Iraq and Afghanistan. By some estimates, those engagement have cost $1-3 trillion, or somewhere between $2,000 and $10,000 for every US taxpayer. Congress appropriated around $50 billion for "The Surge" of US troops into Iraq as part of the FY2006 Defense Department Appropriations bill. But otherwise, the vast majority of the funding for that war was allocated through supplemental appropriations and budget amendments. Supplemental appropriations are an appropriations bill that adds to an existing appropriation. They are designed to provide resources for unexpected emergencies, such as disaster relief after a hurricane or earthquake. Budget amendments are changes to budget outlays to that same effect. Most of these supplemental/emergency appropriations were financed with debt.
• Since roughly 1990, Congress has used budget reconciliation to pass several major pieces of legislation, including the "Bush tax cuts," the Medicare prescription drug benefit ("Part D"), and the Affordable Care Act. Reconciliation is a powerful tool because by Senate rules, reconciliation bills are not subject to filibuster. A filibuster is when an individual Senator kills a proposed bill by "talking it to death," taking advantage of Senate rules that allow for unlimited debate. To end a filibuster, the Senate must invoke cloture with a two-thirds majority vote of all Senators. Given the highly partisan character of the Senate throughout the past few decades, the threat of a filibuster is always present, which imposes a de facto two-thirds majority to approve virtually every piece of legislation proposed in the Senate.