Federal budget of the United States

Federal budget of the United States
Congressional Budget Office · Public domain · source
Name	Federal budget of the United States
Jurisdiction	United States
Formed	1789
Budget year	Fiscal Year
Annual budget	Federal receipts and outlays

Contents

Federal budget of the United States The federal budget of the United States is the annual plan for federal receipts and outlays prepared by the President of the United States and enacted by the United States Congress. It sets funding levels for agencies such as the Department of Defense, Department of Health and Human Services, and Internal Revenue Service, and authorizes programs including Social Security, Medicare, and Medicaid. The budget interacts with institutions like the Office of Management and Budget and the Congressional Budget Office, and influences macroeconomic indicators monitored by the Federal Reserve System and reported by the Bureau of Economic Analysis.

Overview and Purpose

The federal budget allocates public funds among priorities such as national defense managed by the United States Department of Defense, public health administered via the Centers for Disease Control and Prevention, and infrastructure projects funded through the Department of Transportation. It reflects commitments under statutes like the Social Security Act and the Patient Protection and Affordable Care Act while implementing appropriations passed by the United States Senate and the United States House of Representatives. The process balances revenue collected by the Internal Revenue Service against spending obligations and borrowing authorized by the United States Treasury and overseen by the Government Accountability Office.

The President submits a budget proposal each spring prepared by the Office of Management and Budget; Congress then uses that proposal alongside analyses from the Congressional Budget Office to draft budget resolutions and appropriations bills. Committees such as the House Committee on Appropriations and Senate Committee on Appropriations mark up spending measures during a fiscal calendar that begins on October 1, with continuing resolutions sometimes extending funding when regular bills lapse. When impasses occur, disputes have led to events like the 2013 United States federal government shutdown and the 2018–2019 United States federal government shutdown, resolved through negotiation among leaders including the Speaker of the House and the Senate Majority Leader.

Federal revenue is primarily raised through taxation administered by the Internal Revenue Service, including levies on individuals and corporations under statutes like the Internal Revenue Code. Major revenue sources include individual income taxes, corporate income tax, payroll taxes funding Social Security and Medicare, and excise taxes applied to goods such as those regulated by the Alcohol and Tobacco Tax and Trade Bureau. Tax policy debates involve actors such as the Treasury Department, think tanks like the Brookings Institution and American Enterprise Institute, advocates including the Tax Policy Center, and landmark legislation such as the Tax Cuts and Jobs Act of 2017.

The budget distinguishes between mandatory spending for entitlement programs like Social Security, Medicare, and Medicaid created by statutes such as the Social Security Act, and discretionary spending allocated annually through appropriations for agencies including the Department of Defense and the National Aeronautics and Space Administration. Mandatory programs are governed by eligibility rules set by laws enacted by the United States Congress and interpreted by courts like the Supreme Court of the United States in relevant cases, while discretionary appropriations are subject to negotiation in the House Committee on the Budget and the Senate Committee on the Budget.

When outlays exceed receipts, the United States Department of the Treasury issues debt instruments such as United States Treasury securities purchased by investors including the Federal Reserve System, foreign holders like the People's Republic of China and Japan, and domestic institutions. The national debt has implications for credit ratings assessed by agencies like Standard & Poor's and economic policy debated by actors including the Council of Economic Advisers and the International Monetary Fund. Episodes of rising deficits have prompted legislative responses such as the Budget Control Act of 2011 and discussions about long-term sustainability of programs like Medicare and Social Security.

Mechanisms to enforce fiscal rules include discretionary caps established under laws such as the Budget Control Act of 2011, sequestration triggers, and pay-as-you-go rules in statutes like the Statutory Pay-As-You-Go Act of 2010. Policy instruments affecting the budget include tax expenditures created by the Internal Revenue Code, regulatory actions by agencies such as the Environmental Protection Agency, and macroeconomic tools deployed by the Federal Reserve System and implemented alongside fiscal policy by the Department of the Treasury. Oversight comes from bodies including the Government Accountability Office and review by the Congressional Budget Office.

Major reforms and trends include the establishment of the modern budget process under the Budget and Accounting Act of 1921, program expansions during the Great Society under Lyndon B. Johnson, the growth of entitlement spending originating with the Social Security Act and later Medicare enacted under Lyndon B. Johnson, and tax reforms such as the Revenue Act of 1924 and the Tax Reform Act of 1986 championed by Ronald Reagan. Fiscal crises and responses—like the Great Recession stimulus measures under Barack Obama and bipartisan agreements such as the Bipartisan Budget Act of 2018—have reshaped allocations. Debates over reforms continue among parties including the Democratic Party and Republican Party, institutions like the Heritage Foundation and Center on Budget and Policy Priorities, and global organizations such as the Organisation for Economic Co-operation and Development.