Federal Budget Process Term Paper

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Federal Budget Process

Every year the federal administration is involved with a total revenue and expenditure of about 1.5 trillion USD as a matter of fiscal practice. (Keith, 1996) The budgetary strategy of the federal administration is an integration of the guidelines that the policy makers, legislator, bureaucrats apply for designing, continuing, regulating and accounting fro the expenditure and revenue strategy. Normally the budgetary strategy involves formulation of the budget of the President by the administrative section; the budget strategy of the Congress has its base on the resolution moved by the Congress. In some of the years the authorization and appropriation strategies, implementation and impoundments of the budgetary law, the prescribed guideline under the Congressional Budget Act of 1974 in respect of deferring or rescinding of the funds appropriated, and the policy of financial managements are taken into account while formulation of the Congressional budget, particularly in case of the reconciliation legislation. (Holtz-Eakin, 2004)

In accordance with the Budget and Accounting Act of 1921, it is customary that the President presents the budgetary proposals on the first Monday of February every year. The Congressional Budget Act of 1974 requires the adoption of the annual budget resolution by April 15. It acts as an outline for the Congressional policy in isolated niches of expenditure and revenue collection. Additionally, the total expenditure and revenue and allocations to the Congressional committees in this respect authorized by the resolution are to be implemented by the allowing the Members of Congress to raise point of orders so as to enhance the individual expenditure or revenue with due consideration by the House or Senate. It has been laid down that the legislation deserves no further consideration if the point of order raised under the Congress Budget Act is accepted. (Holtz-Eakin, 2004)

The budget resolution may direct the Committees of the Congress to resort to reconciliation legislation with a view to make the levels set out in the resolution in consonance with the guidelines of expenditure and revenue legislations. The prevailing budgetary strategy extends enough scope for the policy formulators to institute and implement major modifications in the budgetary strategy. The strategy since long is being considered as the outline for major policy proposals and budgetary linkage over the period of time that is applied in the legislation process intended to implement the reconciliation instructions in budgetary resolutions. However, the continuance of the strategy has been obstructed due to want of general consensus on the policy. (Holtz-Eakin, 2004) We shall look into the functioning of the Federal Budget process and the barriers involved in its working.

Discussion

The budgetary strategy is required to present the budgetary alternatives unequivocally and also required to be an effective outline for arriving at and continuing with the budgetary strategies and also required to indicate the budgetary guidelines that is capable of reviewing the effective implementation of the policies. The prevailing budgetary procedures extends necessary assistance to the policymakers and to institute and implement the complete budgetary strategies and assessed to be functionally the best when general agreement on the attainment of the fiscal objectives are ascertained. (Holtz-Eakin, 2004)

As is with any complicated strategy, the federal budgeting can also be split up into its basic standards of activity and measurement. The expenditure process involves three different stages of budget authorization, obligation and outlays. The Budget authority is bestowed by the Congress and President within the legal framework. It generates the legal base for federal units to make the financial responsibilities enforceable in terms of the obligations. The activities of the federal agencies in form of executing contracts, appointment of personnel and executing orders for goods and services give rise to generation of such obligations. The outlays follow when the obligations are settled down. The outlays are normally in shape of the checks, electronic fund transfers and other payments effected to by the Treasury Branch. The budget authorities mostly are provided to the agencies every year being excerpted from the legislations made during the previous Congresses. The funds are provided without the legislation by the Congress. (Keith, 1996)

The other budgetary authorizations are provided to the agencies from the prevailing enactments particularly in shape steps on annual appropriations. Most of the agencies have automatically achieved the additional budget authority legislated in the previous year and that has been brought forwarded with the remaining unspent balances. The income of the federal administration indicated by revenues or receipts attributes to various means. The income taxes in respect of the individuals as well as the corporate sector constitute about fifty percent of the total revenue of the federal government; however, the social insurance taxes are emerging to be the significant source of revenues.

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Besides, more money also flows to government from different excise taxes, customs duties, gifts and other miscellaneous revenues. Revenue of the government from various commercial undertakings and activities like sale of electricity from federal power administration is indicated by the offsetting collection. (Keith, 1996)

It is pertinent to note that these collections are to be offset or actually to be subtracted from the federal expenditure rather than added to the revenue. In the case of annual budgetary processes, to illustrate, each of the account normally attributes to the different captions in the legislations. The funds allotted to each of accounts are again split up in terms of programs, projects, activities and units of spending associated with the account. At the time of placing the budget the accounts are generally clubbed together under the organizational head like department or agency that controls them. However, some accounts like credit financing accounts are though counted within the budget estimates yet are used only for the accounting purposes; however, they do not actually involve any budgetary dealings. (Keith, 1996)

The budgets of the federal government are based on a group of economic hypotheses. To illustrate, a president commits the programs embodies as 'favorable for the economy' basing on the hypothesis like higher economic growth, enhanced inflation, lower unemployment in comparison to that of the preceding years. The hypotheses are considered sometimes more positive than the private economic forecasters agrees upon. The Congress is similarly at its own liberty to think of its own economic hypothesis while formulating the budget of resolution of the Congress. The hypotheses have profound impact on the levels of receipts, entitlement expenditure, and also fiscal deficits. The positive hypotheses afford to make the budgets balance and the scale of expenditure cuts and collection of revenues, essential to make so, to the minimum. The Presidential budget of late 1980s were commented upon for applying the 'rosy-scenario' too optimistic economic hypotheses so as to make the programs appear to arrive at a balanced budget. Variations in the economic and technical hypotheses are seen year after year. Such variations influence the attitude towards the budgetary concerns and have a profound impact on the sensitivity of the federal government. (Davis, 1999)

The federal budgeting involves the crucial process of baselines and scorekeeping, entailing the Congress and President a broad outline of formulating and implementing the budgetary decisions. The baseline is considered as the yardstick for formulating the federal budgetary decisions. Variation in creation of baselines is seen in the formulations by the Office of Management and Budget-OMB and the Congressional Budget Office-CBO. However, the project federal expenditure, receipts, budgetary surplus or deficit baselines occur with the prevailing the budgetary policy remaining constant. The measurement of the influence of the budget and the budgetary policies is made through scorekeeping. It helps the Congress and the President in formulation and implementation of the budgetary policies. (Heniff, 1998)

The means of formulating revenue and expenditure legislations by the Congress are guided by a set of specific measures enshrined in the Congressional Budget Act of 1974. Significantly, the Budget Act represents the annual development of the 'budget resolution' of the Congress. The resolution categorically demarcates the comprehensive confinements on expenditure and revenue cuts that are applicable to the legislation made by the individual committees - inclusive of the appropriation committees, tax writing committees and other committees that have the authority to exert control over certain expenditure policies - along with the modifications advanced to such legislations on the House or Senate. The budgetary proposals placed by the President give rise to strong deliberations every year. The comprehensive budgetary proposal for the coming financial year starting from October 1 is presented to the Congress by the President on or before the first Monday in February. (The Federal Budget Process-Resolution, Reconciliation, Authorizations, and Appropriations)

The Congress is empowered to approve or disapprove any of the proposals of the President in the subsequent resolution that exerts overall control over the revenue and expenditure and allocation of the constraints on the groups of programs and activities. The various Budget Committees existing in the House and Senate are responsible for preparation of their respective budget resolutions and suggest them to the floor for a vote. The Budget Resolution Conference Committee is formed by the Congress after the resolution is passed through the chambers for….....

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