# Manual on the Federal Budget Process

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URL: https://www.frixlaw.com/law-library/documents/crs%3A98-720

## Record

- **Collection:** Congressional research report
- **Document type:** CRS Report
- **Published:** August 28, 1998
- **Citation:** 98-720

## Text

Order Code 98-720 GOV

CRS Report for Congress
Received through the CRS Web

Manual on the Federal Budget Process

August 28, 1998

Robert Keith
Specialist in American National Government
Government Division
Allen Schick
Consultant

Congressional Research Service ˜ The Library of Congress

ABSTRACT
This manual provides a comprehensive explanation of the federal budget process, including
an overview and separate chapters on the framework for budget enforcement; the President's
budget; the congressional budget resolution and reconciliation; revenues and borrowing;
authorizations and direct spending; annual appropriations; and the implementation of spending
laws. It is intended to assist users of federal budget information in understanding how the
process works and how data are to be interpreted. Excerpts from legislation, standard forms,
and other documentation developed at each stage of the budget process are exhibited.
Appended material includes a listing of milestones in the federal budget process, citations to
major budgetary laws, and a glossary of budgetary terms. The manual is not expected to be
updated. (A much shorter explanation of the federal budget process—28 pages—is provided
in CRS Report 98-721, Introduction to the Federal Budget Process.)

Manual on the Federal Budget Process
Summary
Budgeting for the federal government is an enormously complex process. It
entails dozens of subprocesses, countless rules and procedures, the efforts of tens of
thousands of staff persons in the executive and legislative branches, millions of work
hours each year, and the active participation of the President and congressional
leaders, as well as other Members of Congress and executive officials.
The enforcement of budgetary decisions involves a complex web of procedures
that encompasses both congressional and executive actions. These procedures are
rooted principally in two statutes—the Congressional Budget Act of 1974 and the
Budget Enforcement Act (BEA). The 1974 act established a congressional budget
process in which budget policies are enforced by Congress during the consideration
of individual measures. The BEA is the current embodiment of additional
enforcement procedures, first established in the Balanced Budget and Emergency
Deficit Control Act of 1985 and renewed with substantial modification in 1990 and
1997, that are used mainly by the Executive to enforce budget policies after
congressional action for a session has ended.
The President’s budget, officially referred to as the Budget of the United States
Government, is required by law to be submitted to Congress early in the legislative
session. The President’s budget is only a request to Congress. Nevertheless, the
power to formulate and submit the budget is a vital tool in the President’s direction
of the executive branch and of national policy. The President’s proposals often
influence congressional revenue and spending decisions, though the extent of the
influence varies from year to year and depends more on political and fiscal conditions
than on the legal status of the budget.
The Congressional Budget Act of 1974 establishes the congressional budget
process as the means by which Congress coordinates the various budget-related
actions (such as the consideration of appropriations and revenue measures) taken by
it during the course of the year. The process is centered around an annual concurrent
resolution on the budget that sets aggregate budget policies and functional spending
priorities for at least the next five fiscal years. Because a concurrent resolution is not
a law—it cannot be signed or vetoed by the President—the budget resolution does
not have statutory effect; no money can be raised or spent pursuant to it. Revenue
and spending amounts set in the budget resolution establish the basis for the
enforcement of congressional budget policies through points of order.
Congress implements budget resolution policies through action on individual
revenue and debt-limit measures, annual appropriations acts, and direct spending
legislation. In some years, Congress considers reconciliation legislation pursuant to
reconciliation instructions in the budget resolution.
The federal government has a decentralized system of expenditure management.
The Office of Management and Budget has year-round responsibility in overseeing the
expenditure of funds, but agencies have primary responsibility to ensure the legality
and propriety of expenditure.

Contents
Chapter 1. Overview of the Federal Budget Process . . . . . . . . . . . . . . . . . . . . . 1
The Evolution of Federal Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Budget Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Roles of the Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Basic Concepts of Federal Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
The Budget and the Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Chapter 2. The Framework for Budget Enforcement . . . . . . . . . . . . . . . . . . . . 23
Deficit Reduction and the Rules of Congressional Budgeting . . . . . . . . . . 23
Budgeting for Discretionary and Direct Spending . . . . . . . . . . . . . . . . . . . 26
The Chain of Discretionary Spending Control . . . . . . . . . . . . . . . . . . . . . 30
Deficit Targets, Discretionary Spending Limits, and the
PAYGO Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Baseline Budget Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Budgeting for Direct and Guaranteed Loans . . . . . . . . . . . . . . . . . . . . . . . 39
Chapter 3. The President’s Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Formulation and Content of the President’s Budget . . . . . . . . . . . . . . . . . 48
The Economic Forecast and Projections . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Information in the President’s Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Chapter 4. The Congressional Budget Resolution and Reconciliation . . . . . . . 63
The Congressional Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
The Reconciliation Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Chapter 5. Revenues and Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Revenue Legislation in Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Pay-As-You-Go (PAYGO) Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Tax Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Offsetting Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Chapter 6. Authorizations and Direct Spending . . . . . . . . . . . . . . . . . . . . . . . 99
The Authorization Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Direct Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Chapter 7. Annual Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Types of Appropriations Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Appropriations Procedures in Congress . . . . . . . . . . . . . . . . . . . . . . . . . 117
Continuing Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Interpreting Appropriations Measures . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Chapter 8. Implementation of Spending Laws . . . . . . . . . . . . . . . . . . . . . . . . 139
Implementation of Spending Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Financial Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Appendix A. How to Obtain Publications Exhibited in the Manual . . . . . . . . 165

Appendix B. Milestones in the Federal Budget Process . . . . . . . . . . . . . . . . . 167
Appendix C. Citations to Major Budgetary Laws . . . . . . . . . . . . . . . . . . . . . 171
Appendix D. Glossary of Budgetary Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 173

List of Figures
Box 1-A. Congress’s “Power of the Purse” . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Box 1-B. Key Budgetary Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Box 1-C. Major Laws Affecting Congressional Budgeting: 1974-1998 . . . . . . . 6
Box 1-D. Principal Budgetary Entities of the Executive Branch . . . . . . . . . . . . 12
Box 1-E. Principal Budgetary Functions of Congressional Committees . . . . . . 13
Box 1-F. Principal Budgetary Functions of Congressional Support Agencies . . 14
Box 2-A. Differences Between Discretionary and Direct Spending . . . . . . . . . . 28
Box 2-B. The Chain of Discretionary Spending Control . . . . . . . . . . . . . . . . . . 31
Box 2-C. Sequestration Process Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Box 2-D. Credit Reform Account Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Box 3-A. An Illustration of the Stages in Budget Formulation: The
Department of Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Box 3-B. OMB Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Box 3-C. Confidentiality of Budgetary Information . . . . . . . . . . . . . . . . . . . . . 51
Box 3-D. Volumes in the President’s Annual Budget Submission . . . . . . . . . . . 52
Box 4-A. Congressional Budget Process Timetable . . . . . . . . . . . . . . . . . . . . . 64
Box 4-B. Functional Classifications of the Budget . . . . . . . . . . . . . . . . . . . . . . 67
Box 4-C. Deficit Neutrality of Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Box 4-D. The Senate’s “Byrd Rule” on Extraneous Matter . . . . . . . . . . . . . . . 84
Box 5-A. Bar Against Revenue Provisions in Non-Revenue Measures:
House Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Box 5-B. Joint Committee on Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Box 6-A. House and Senate Rules on Authorizing Legislation . . . . . . . . . . . . 102
Box 7-A. Appropriations Jurisdiction: House and Senate Rules . . . . . . . . . . 114
Box 8-A. Major Financial Management Roles and Responsibilities . . . . . . . . . 140
Box 8-B. Restrictions on the Use of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Box 8-C. Evidence of Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Box 8-D. Major Federal Laws Affecting Financial Management . . . . . . . . . . . 152
Box 8-E. Major Features of the Government Performance and Results
Act of 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Box 8-F. Statements of Federal Financial Accounting Standards . . . . . . . . . . 156

List of Tables
Exhibit 1-A.
Exhibit 1-B.
Exhibit 1-C.
Exhibit 2-A.
Exhibit 2-B.
Exhibit 2-C.
Exhibit 2-D.
Exhibit 2-E.
Exhibit 2-F.
Exhibit 2-G.
Exhibit 3-A.
Exhibit 3-B.
Exhibit 3-C.
Exhibit 3-D.
Exhibit 3-E.
Exhibit 3-F.
Exhibit 3-G.
Exhibit 4-A.
Exhibit 4-B.

Outlays and Revenues as a Percentage of GDP: Fiscal
Years 1962-2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Relation of Budget Authority to Outlays . . . . . . . . . . . . . . . . . . 17
Sensitivity of Budget Projections to Changes in Economic
Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Alternative Measurements of the Deficit/Surplus . . . . . . . . . . . . 24
Outlays for Mandatory Spending and Net Interest:
FY1970-1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Discretionary Spending Limits . . . . . . . . . . . . . . . . . . . . . . . . . 34
The PAYGO Scorecard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Hypothetical Baseline Projections and Policy Changes . . . . . . . 40
Relation of Subsidy Rates, Budget Authority, and Loan
Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Calculation of Subsidy Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
CBO Reestimates of the President’s Budget . . . . . . . . . . . . . . . 54
Economic Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Appropriations Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Program Description and Workload Data . . . . . . . . . . . . . . . . . 59
Program and Financing Schedule: Obligations by
Program Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Program and Financing Schedule: New Budget
Authority and Outlays . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Object Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Exhibit 4-C.
Exhibit 4-D.
Exhibit 4-E.
Exhibit 4-F.
Exhibit 4-G.
Exhibit 4-H.
Exhibit 4-I.
Exhibit 4-J.
Exhibit 4-K.

Budget Resolution Aggregates: Revenues . . . . . . . . . . . . . . . . 65
Budget Resolution Aggregates: Spending, Deficit, and
Public Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Views and Estimates of Committees . . . . . . . . . . . . . . . . . . . . . 68
Committee Report Accompanying a Budget Resolution . . . . . . 70
Section 302(a) Allocations to House Committees . . . . . . . . . . . 73
Section 302(a) Allocations to Senate Committees . . . . . . . . . . . 74
Section 302(b) Subdivisions by Appropriations Committees . . . 75
CBO Cost Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Scoring Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
House Reconciliation Directives . . . . . . . . . . . . . . . . . . . . . . . . 80
Senate Reconciliation Directives . . . . . . . . . . . . . . . . . . . . . . . . 81

Exhibit 5-A.
Exhibit 5-B.
Exhibit 5-C.
Exhibit 5-D.
Exhibit 5-E.

Sources of Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Revenue Effects of Major Enacted Legislation . . . . . . . . . . . . . 89
Tax Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Offsetting Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Increases in the Statutory Debt Limit During the 1990s . . . . . . 97

Exhibit 6-A.
Exhibit 6-B.
Exhibit 6-C.
Exhibit 6-D.
Exhibit 6-E.
Exhibit 6-F.

Basic Purposes of Authorizations Acts . . . . . . . . . . . . . . . . . . 100
Types of Discretionary Authorizations . . . . . . . . . . . . . . . . . . 104
Reauthorization Requirements . . . . . . . . . . . . . . . . . . . . . . . . 105
Earmarking and Other Features of Authorizations . . . . . . . . . . 107
Borrowing and Contract Authority . . . . . . . . . . . . . . . . . . . . . 109
Entitlement Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

Exhibit 7-A.
Exhibit 7-B.
Exhibit 7-C.
Exhibit 7-D.
Exhibit 7-E.
Exhibit 7-F.
Exhibit 7-G.
Exhibit 7-H.
Exhibit 7-I.
Exhibit 7-J.
Exhibit 7-K.
Exhibit 7-L.
Exhibit 7-M.
Exhibit 7-N.
Exhibit 7-O.
Exhibit 7-P.
Exhibit 7-Q.
Exhibit 7-R.

Types of Appropriations Measures . . . . . . . . . . . . . . . . . . . . . 116
Sequence of an Appropriations Act Through Congress . . . . . . 118
Sequence of House Actions on Appropriations Measures . . . . 120
Special Rules on Appropriations Bills . . . . . . . . . . . . . . . . . . . 121
Statement of Administration Policy . . . . . . . . . . . . . . . . . . . . . 122
Sequence of Senate Action on Appropriations Measures . . . . . 123
Unanimous Consent Agreements on Appropriations Bills . . . . 124
Numbered Senate Amendments . . . . . . . . . . . . . . . . . . . . . . . 125
Conference Action on Appropriations Measures . . . . . . . . . . . 127
Continuing Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Structure of a Regular Appropriations Act . . . . . . . . . . . . . . . 130
Structure of an Appropriations Account . . . . . . . . . . . . . . . . . 131
Other Types of Appropriations Accounts . . . . . . . . . . . . . . . . 132
Availability of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Limitations on Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Limitations on Use of Appropriated Funds . . . . . . . . . . . . . . . 136
Committee Report: Account and Program Amounts . . . . . . . 137
Committee Report: Directives to Agencies . . . . . . . . . . . . . . 138

Exhibit 8-A.
Exhibit 8-B.
Exhibit 8-C.
Exhibit 8-D.
Exhibit 8-E.
Exhibit 8-F.
Exhibit 8-G.
Exhibit 8-H.
Exhibit 8-I.

Apportionment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
GAO Decisions on the Legality of Expenditure . . . . . . . . . . . . 143
Reprogramming Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Presidential Impoundment Messages . . . . . . . . . . . . . . . . . . . . 149
GAO Review of Impoundment Messages . . . . . . . . . . . . . . . . 150
Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Agency Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 157
Flow of Financial Transactions . . . . . . . . . . . . . . . . . . . . . . . . 159
Management Accountability and Control . . . . . . . . . . . . . . . . 161

Manual on the Federal Budget Process
Chapter 1. Overview of the Federal Budget Process
Budgeting for the federal government is an enormously complex process. It
entails dozens of subprocesses, countless rules and procedures, the efforts of tens of
thousands of staff persons in the executive and legislative branches, millions of work
hours each year, and the active participation of the President and congressional
leaders, as well as other Members of Congress and executive officials. It could hardly
be otherwise, because so much is at stake when budget decisions are made.
Since 1962, as Exhibit 1-A shows, federal spending—as measured in
outlays—has amounted to between 17% and 24% of the Gross Domestic Product
(GDP) of the United States. Federal revenues have hovered between 17% and 20%
of GDP during the same period. The deficit, which has resulted from the imbalance
between revenues and spending, accounts for the largest single source of borrowing
in capital markets. Although the deficit declined markedly during most of this decade
and surpluses are projected for the near term, federal outlays and revenues as a share
of GDP will remain significant. The deficit is expected to recur, and rise sharply, in
a couple of decades as retirement and health costs for the “baby-boomer” generation
escalate.
The trend of federal revenues and spending relative to GDP is only one of the
ways of measuring the impact of the budget. Trends also can be measured in terms
of real spending (i.e., inflation-adjusted spending), or in terms of the shares of the
budget allocated to major national priorities, such as defense, aid to state and local
governments, and health care. One of the useful ways of measuring trends is to
examine how the composition of federal spending has changed over time. Exhibit 2B, which is discussed later, reveals the growth in the share of the budget spent on
various entitlement programs. This exhibit suggests still another perspective: the
growth in the numbers of persons receiving various types of federal payments.
The budget is, however, much more than a matter of numbers. It finances
federal programs and assists many households in meeting basic expenses. It provides
a safety net for persons facing illness or old age. It is the means by which the United
States invests in its future through both physical improvements, such as highway
construction, and human improvements, such as training and education. The budget
pays for national defense and signals to allies and adversaries the role of the United
States on the world scene. It is one of the principal instruments available to the
federal government for regulating economic activity and for stabilizing household
incomes.

CRS-2

Exhibit 1-A.
Outlays and Revenues as a Percentage of GDP:
Fiscal Years 1962-2006

(1)

During the period from FY1962-2006, actual and projected revenues
(shown by the solid line) fluctuate within a narrow range, from 17.0% to
19.9% of Gross Domestic Product (GDP).

(2)

Actual and projected outlays (shown by the dashed line) fluctuate within a
wider range during the same period, from 17.2% to 23.2% of GDP.

(3)

The actual deficit reached a high of 6.1% of GDP in FY1983.

(4)

In January 1998, CBO projected (as shown here) that favorable economic
developments, the enactment of deficit-reduction legislation, and other
factors would cause the deficit to be eliminated by FY2001. Within a
couple of months, CBO projected that a surplus would occur as early as
FY1998.

(5)

The percentages shown here are on a “total budget” basis; they include the
transactions of the off-budget entities, which are the Social Security trust
funds and the Postal Service fund.

Source: Chart prepared by the Congressional Research Service based on
data in: Congressional Budget Office, The Economic and Budget Outlook:
Fiscal Years 1999-2008, January 1998, Summary Table 2, page xviii, and Table
E-5, page 113.

CRS-3
With so much at stake, it should not be surprising that budgeting often is a
difficult and contentious process. Allocating over a trillion-and-a-half dollars is
anything but a routine task, for as big as the budget is, there is never enough money
to satisfy all the claims on it. To budget is to fight over money. The conflict sprawls
between the two parties and between the executive and legislative branches. There
often is friction among congressional committees and between those who make tax
policy and those who control spending. The scope of conflict has expanded as the
size of the budget has grown and become even more prominent in the economic life
of the country.
The procedures described in this manual are the means devised over the years
to channel conflict in ways that enable the numerous participants to work their way
toward agreement each year. In this sense, the rules affect outcomes. How much is
taxed and spent and who gets what depend in substantial measure on the rules and
procedures of federal budgeting. In studying the budget process, therefore, one gains
an understanding not only of the roles of participants and the many steps that they
must take each year, but also of the interaction between budgetary procedures and
policy. (Appendix A explains how to obtain publications cited in this report.)

The Evolution of Federal Budgeting
The “power of the purse” is a legislative power. The Constitution lists the power
to lay and collect taxes and the power to borrow as powers of Congress; further, it
provides that funds may be drawn from the Treasury only pursuant to appropriations
made by law (see Box 1-A). The Constitution does not state how these legislative
powers are to be exercised, nor does it expressly provide for the President to have a
role in the management of the nation’s finances. During the nation’s early years, the
House and Senate devised
procedures for the enactment of
Box 1-A.
spending and revenue
Congress’s “Power of the Purse”
legislation. As these procedures
U.S. Constitution
evolved during the 19th century
th
and the first decades of the 20
Article I, Section 8
century, they led to highly
fragmented legislative actions.
The Congress shall have Power
In the course of each session,
To lay and collect Taxes, Duties,
Congress passed many separate
Imposts, and Excises ...
appropriations bills and other
To borrow Money on the credit of
measures affecting the financial
the United States ...
condition of the federal
government.
Neither the
Article I, Section 9
Constitution nor the procedures
adopted by the House and
No Money shall be drawn from the
Senate provided for a budget
Treasury, but in Consequence of
system (that is, for a
Appropriations made by Law ...
coordinated set of actions
covering all federal spending
and revenues). As long as the
federal government was small and its spending and revenues were stable, such a
budget system was not considered necessary.

CRS-4
Legislative fragmentation was mirrored by fragmentation in the executive branch.
The President had a limited role in overseeing financial operations, and most agencies
submitted their spending estimates to relevant congressional committees without
having their requests reviewed by the President. Early in this century, however, the
incessant rise in federal spending and the recurrence of deficits (spending exceeded
revenues in half of the 20 years preceding FY1920) led Congress to seek a more
coordinated means of making financial decisions. The key legislation was the Budget
and Accounting Act of 1921, which established the executive budget process.
The 1921 Budget and Accounting Act did not directly alter the procedures by
which Congress makes revenue and spending decisions. The main impact was in the
executive branch. The President was required to submit his budget recommendations
to Congress each year, and the Bureau of the Budget—renamed the Office of
Management and Budget (OMB) in 1970—was created to assist him in carrying out
his budgetary responsibilities (see Box 1-B for an identification of key budgetary
agencies). Congress, it was expected, would be able to coordinate its revenue and
spending decisions if it received comprehensive budget recommendations from the
President. In line with this expectation, the House and Senate changed their rules to
consolidate the jurisdiction of the Appropriations Committees over spending. The
1921 act also established the General Accounting Office (GAO), headed by the
comptroller general, and made it the principal auditing arm of the federal government.
The 1921 act, as amended, remains the statutory basis for the presidential budget
system.
Box 1-B.
Key Budgetary Agencies
Congressional Budget Office (CBO)
Created by the 1974 Congressional
Budget Act, CBO serves as Congress’s
independent, nonpartisan agency for
budgetary information and analysis.
General Accounting Office (GAO)
Created by the 1921 Budget and
Accounting Act, GAO conducts audits
and evaluations of federal programs for
Congress, as well as many other types of
budgetary activity.
Office of Management and Budget (OMB)
Established by the 1921 Budget and
Accounting Act as the Bureau of the
Budget, and renamed in 1970, OMB
coordinates the preparation and
implementation of the President’s
budget.

After World War II, the
belief that the presidential budget
sufficed to maintain fiscal control
gave way to the view that
Congress needed its own budget
process. Some Members of
Congress feared that dependence
on the executive budget had
bolstered the President’s fiscal
powers at the expense of
Congress’s; others felt that as
long as its financial decisions
were fragmented, Congress
could not effectively control
expenditures. Some efforts were
made in the late 1940s to create
a congressional budget, but it
was not until the 1970s that a
durable process was established.

The Congressional Budget
and Impoundment Control Act
of 1974 established a
congressional budget process
centered around a concurrent resolution on the budget, scheduled for adoption prior
to legislative consideration of revenue or spending bills. The congressional budget

CRS-5
process initiated in the 1970s did not replace the preexisting revenue and spending
processes. Instead, it provided an overall legislative framework within which the
many separate measures affecting the budget would be considered. The central
purpose of the budget process established by the 1974 act is to coordinate the various
revenue and spending decisions that are made in separate revenue, appropriations, and
other budgetary measures. To assist Congress in making budget decisions, the 1974
act established the Congressional Budget Office (CBO) and directed it to provide data
on and analyses of the federal budget.
During the years that the congressional budget process has been in operation, its
procedures have been adapted by Congress to changing circumstances. Following a
decade of experience with the 1974 Congressional Budget Act, Congress made
further changes in the budget process by enacting the Balanced Budget and
Emergency Deficit Control Act in 1985 (also known as the Gramm-Rudman-Hollings
Act), the Budget Enforcement Act in 1990, and the Line Item Veto Act in 1996,
among other laws.
The 1985 act prescribed declining deficit targets intended to achieve balance in
FY1991; the targets were enforced by sequestration, a process involving automatic,
across-the-board cuts in nonexempt spending programs if the targets were expected
to be exceeded. The 1990 act replaced the deficit targets with caps on discretionary
spending and a pay-as-you-go requirement for revenue and direct spending legislation;
sequestration was retained as the means of enforcing the two new mechanisms.
Finally, the 1996 act authorized the President to cancel discretionary spending in
appropriation acts, as well as new direct spending and limited tax benefits in other
legislation, subject to expedited legislative procedures by which Congress could
overturn the cancellations. (The Supreme Court struck down the Line Item Veto Act
in June 1998 as unconstitutional.) Other, less extensive changes have been made from
time to time. The various modifications made by these and other laws are discussed
in appropriate sections of the manual.
Box 1-C identifies some of the major laws affecting the congressional budget
process in the last quarter century. Appendix B summarizes the major milestones in
the development of the federal budget process. Appendix C provides citations to
major budgetary laws.

The Budget Cycle
Federal budgeting is a cyclical activity that begins with the formulation of the
President’s annual budget and concludes with the audit and review of expenditures.
The process spreads over a multi-year period. The main stages are formulation of the
President’s budget, congressional budget actions, implementation of the budget, and
audit and review. While the basic steps continue from year to year, particular
procedures often vary in accord with the style of the President, the economic and
political considerations under which the budget is prepared and implemented, and
other factors.

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Box 1-C.
Major Laws Affecting Congressional Budgeting: 1974-1998
Congressional Budget and Impoundment Control Act of 1974
Established the congressional budget process, including the budget
resolution and reconciliation, created House and Senate Budget Committees
and CBO, and set forth impoundment control procedures.
Balanced Budget and Emergency Deficit Control Act of 1985
(Gramm-Rudman-Hollings Act)
Established declining deficit targets, leading to balance in FY1991, and the
sequestration process; also, modified the congressional budget process
extensively.
Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987
Placed the sequester “trigger” in the hands of the OMB director and revised
and extended the deficit targets, aiming at balance in FY1993.
Budget Enforcement Act of 1990
Replaced deficit targets with discretionary spending limits and a pay-as-yougo (PAYGO) process through FY1995, both enforced by sequestration; also,
modified the congressional budget process extensively. Included the Federal
Credit Reform Act of 1990.
Omnibus Budget Reconciliation Act of 1993
Extended the discretionary spending limits and PAYGO process through
FY1998.
Line Item Veto Act (1996)
Granted the President special authority from 1997 through 2004 to cancel
discretionary spending, new direct spending, or limited tax benefits in
legislation. (Struck down by the Supreme Court in June 1998.)
Budget Enforcement Act of 1997
Extended the discretionary spending limits and PAYGO process through
FY2002 and made changes (mostly minor or technical) in the congressional
budget process.
The activities related to a single fiscal year usually stretch over a period of twoand-a-half calendar years (or longer). As the budget is being considered, federal
agencies must deal with three different fiscal years at the same time: implementing
the budget for the current fiscal year; seeking funds from Congress for the next fiscal
year; and planning for the fiscal year after that.
Formulation of the President’s Budget. No later than early February of
each year, the President must submit to Congress a budget for the fiscal year starting
on October 1. Preparation of the President’s budget begins in the spring of the
preceding year, about ten months before it is submitted to Congress. At the time the

CRS-7
budget is being considered, federal agencies must deal concurrently with three fiscal
years: they are implementing the budget for the current fiscal year, seeking funds
from Congress for the fiscal year starting on October 1 (the budget year), and
preparing for the fiscal year after that. Understandably, therefore, budgets are
formulated with a great deal of uncertainty about the conditions to which they will
apply.
Before it examines detailed spending and program requests, OMB reviews the
major policy issues for the next budget and updates the long-term forecast of revenues
and spending. Together with the Council of Economic Advisers (CEA), it reviews
the economic outlook and presents the President with a projection of future economic
conditions. The President often issues (through OMB) policy directives and planning
guidelines to be used by agencies in preparing their budget requests. The extent to
which these guidelines limit the amounts that agencies may request varies from year
to year.
The summer months and the early fall are an intensive period for preparation of
detailed budget requests by federal agencies. These requests are reviewed by OMB,
which notifies agencies of the spending levels recommended by it for their programs.
Agencies have a brief period during which they may appeal to the President for higher
levels than were recommended by OMB. Some recent Presidents (particularly Nixon,
Reagan, and Bush) delegated much of the “appeals” function to senior White House
staff; others (such as Ford, Carter, and Clinton) had a more direct role in resolving
budget appeals. The appeals often involve policy issues as well as budget levels.
After the appeals have been decided, budget preparation is completed, but changes
may be made right up to the deadline for printing the budget.
The budget submitted by the President contains a report for the upcoming fiscal
year, indicating whether the President’s recommendations are consistent with the
discretionary spending limits and pay-as-you-go requirement established under the
Budget Enforcement Act of 1990, as amended.
Congressional Action on the Budget. Congressional budget actions may
be classified according to three distinct types of measures involved: (1) adoption of
a budget resolution; the steps associated with this action commonly are referred to as
the “congressional budget process”; (2) passage of the annual appropriations bills,
including regular, supplemental, and continuing appropriations measures; and (3)
passage of other legislation affecting the federal budget, such as authorizing
legislation, reconciliation bills, and measures changing tax law, modifying entitlement
programs, or adjusting the debt limit. The budget resolution is Congress’s main
procedure for linking these different types of measures.
The Budget Resolution. The congressional budget process begins early
each year after the President submits his annual budget. Congress is not bound by the
President’s recommendations. When it develops a budget resolution, Congress may
use different policy, economic, and technical assumptions than those presented in the
executive budget. When it enacts legislation to carry out the budget plan, it may
provide more or less funds than the President has requested for particular programs,
or make different changes in tax laws than the President has recommended.

CRS-8
Under the 1974 Congressional Budget Act, each House and Senate committee
is required to issue a “views and estimates” report on the budget matters in its
jurisdiction within six weeks after the President submits his budget. The Budget
Committees use these reports, along with CBO analyses, to prepare the budget
resolution for the coming fiscal year. The Budget Committees use baseline
projections of revenues, spending, and the surplus or deficit to estimate the impact of
proposed policy changes.
The budget resolution, which is supposed to be adopted by April 15, contains
total revenue and spending levels for at least five fiscal years. These totals generally
are binding for the first year and the sum of all five years. Because it is a concurrent
resolution (which is not presented to the President for his signature or veto), the
budget resolution does not have statutory effect. No taxes can be levied or funds
spent pursuant to a budget resolution.
The budget resolution consists of three main sections: aggregates, functional
allocations of spending, and (optionally) reconciliation instructions. The aggregates
include total revenues, and the amount by which total revenues should be changed;
total new budget authority; total outlays; the surplus or deficit; and the debt limit.
The new budget authority and outlay levels are allocated among 20 functional
categories, such as National Defense, International Affairs, Energy, or Agriculture.
Reconciliation instructions direct designated House and Senate committees to report
legislation conforming spending, revenue, or debt-limit levels under existing law to
current budget policies. These instructions are included when Congress seeks to
make changes in revenue or direct spending laws.
The budget resolution does not mention specific programs or accounts, but the
aggregates, functional allocations, and reconciliation instructions typically are
predicated on assumptions about particular programs. These assumptions sometimes
are set forth in the reports of the Budget Committees accompanying the budget
resolution, but they are not binding on Congress when it considers revenue or
spending legislation.
To ensure that the budget resolution serves as a guideline for subsequent action
on budget-related measures, Congress is supposed to adopt it before turning to the
consideration of revenue, spending, or debt-limit measures for the next fiscal year.
However, Congress often fails to adopt the budget resolution by the April 15 deadline
specified in the 1974 Congressional Budget Act. The rules of the House permit it to
consider regular appropriations bills after May 15 even if the budget resolution has
not yet been adopted.
Annual Appropriations Measures. The rules of the House and (to a lesser
extent) the Senate require that agencies and programs be authorized in law before an
appropriation is made for them. An authorizing act is a law that: (1) establishes a
program or agency and the terms and conditions under which it operates; and (2)
authorizes the enactment of appropriations for that program or agency. Authorizing
legislation may originate in either the House or the Senate and may be considered any
time during the year. Many agencies and programs have temporary authorizations
that have to be renewed annually or every few years.

CRS-9
Action on appropriations measures sometimes is delayed by the failure of
Congress to enact necessary authorizing legislation. The House and Senate often
waive or disregard their rules against unauthorized appropriations for ongoing
programs that have not yet been reauthorized.
The budgetary impact of authorizing legislation depends on whether it contains
only discretionary authorizations (for which funding is provided in annual
appropriations acts) or direct spending, which itself enables an agency to enter into
obligations.
Annual appropriations are provided in 13 regular appropriations bills, each one
under the jurisdiction of parallel House and Senate Appropriations subcommittees that
recommend spending levels to the full committees. These bills come to the House and
Senate individually as do other measures (such as revenue and entitlement legislation)
affecting overall budget levels. When Congress fails to enact all of the regular
appropriations bills by the start of the fiscal year, it provides interim funding in
continuing resolutions. In some years, these measures have provided appropriations
for the full fiscal year, not just for a month or two. Congress also enacts supplemental
appropriations measures to provide additional funding to federal agencies or programs
or to finance spending not covered in the regular appropriations bills.
Regular, continuing, and supplemental appropriations measures (as well as other
spending legislation) are linked to the budget resolution through the “Section 302”
procedures established in those sections of the 1974 Congressional Budget Act. After
a budget resolution has been adopted, the spending totals are allocated to the House
and Senate Appropriations Committees (and to other committees with spending
jurisdiction). The Appropriations Committees then subdivide their spending amounts
among their 13 subcommittees. When an appropriations measure is considered by the
House or Senate, the spending provided in it is compared to the amount subdivided
to the pertinent subcommittee. In some circumstances, consideration of an
appropriations measure may be barred by a point order on the grounds that budget
resolution levels or the Section 302 amounts would be breached. In most instances,
however, the appropriations bill is consistent with the Section 302 subdivision.
Reconciliation Bills and Other Measures Affecting the Budget.
Annual appropriations are enacted for only about half of total federal spending; the
remainder is determined largely by permanent appropriations and other funding
devices that do not require annual action by Congress. In addition, the amount of
revenue generated each year is determined principally by existing law. This means
that Congress cannot enforce its budget decisions merely by comparing the amounts
in new legislation with its budgeted levels. The portions of the budget governed by
existing law are controlled primarily through the reconciliation procedures mentioned
earlier. These procedures are triggered by reconciliation instructions in the budget
resolution that direct designated committees to change revenue or spending laws by
specified amounts. In most instances, committees subject to reconciliation
instructions are given a deadline by which they are to report changes in existing laws.
The recommendations of the instructed committees usually are consolidated into an
omnibus reconciliation bill.

CRS-10
Congressional committees also can report legislation changing revenue or
spending laws (such as entitlements) on their own initiative. When they do so, the
amounts of revenue or spending estimated to result from enactment of the measure
are compared to the budget resolution or the Section 302 allocations. Under some
circumstances, variance from the budgeted levels can lead to a point of order barring
consideration of the legislation.
Implementation of the Budget. Although they are bound by congressional
decisions, agencies typically have some spending discretion because appropriations
are made in broad categories. Agencies generally conform to the financial and
program plans they submit to congressional committees, but they sometimes
reprogram funds (shift them from one use to another within an account) or use other
devices to meet unanticipated needs or changing conditions. Some reprogrammings
require approval by the Appropriations Committees or legislative committees.
Agencies cannot spend appropriations until OMB apportions those funds. The
Antideficiency Act requires that OMB apportion funds to prevent the necessity for
deficiency or supplemental appropriations or to achieve the most effective and
economical use of funds. OMB apportions available funds among time periods (such
as quarters or months) or projects, then agencies allot their apportioned funds among
their administrative units. Agencies generally are not permitted to spend in excess of
their apportionments.
When the President or another executive official withholds funds provided by
Congress, he uses the procedures set forth in the Impoundment Control Act of 1974.
If the President wants to delay obligations or expenditures, he proposes a deferral, but
may do so only for the reasons authorized in the Antideficiency Act. He cannot defer
funds for policy reasons. If the President wants to cancel an appropriation, he must
propose a rescission. If Congress fails to rescind the funds within a 45-day waiting
period, the President must release the funds. The comptroller general oversees
compliance with the Impoundment Control Act.
In 1996, Congress gave the President special authority for 1997-2004 to cancel
discretionary spending, items of new direct spending, and limited tax benefits under
the Line Item Veto Act. President Clinton exercised this authority in 1997 in the case
of two reconciliation acts and nine regular appropriations acts for FY1998. However,
the Supreme Court struck down the act in June 1998.
The final phase of the budget process is review and audit. Under the principle
of internal control, agencies have the primary responsibility for ensuring the propriety
and efficiency of their expenditures. Agencies are required to maintain accounting
systems and to audit their expenditures in accordance with standards promulgated by
GAO. Two laws passed in recent years, the Chief Financial Officers Act of 1990 and
the Government Performance and Results Act of 1993, seek to strengthen financial
management and reporting in the federal government.

CRS-11

Roles of the Participants
Budgeting cannot be an isolated activity, conducted solely by a small number of
financial experts. Because the stakes in budgeting radiate to all sectors of public
policy, the participants come from all parts of the federal government. Some
budget-makers are program specialists; others are fiscal experts. Some occupy central
roles in government; some participate from the limited perspective of a particular
program or organization. The division of budgetary labor is essentially political in
character: there are program advocates and fiscal guardians, legislative controllers
and executive bargainers, presidential agents and agency managers.
The existence of parallel legislative and executive processes adds significantly to
the number and diversity of budget participants. The executive branch has its own
budget experts; so too does Congress. There are program experts in all executive
agencies as well as in most congressional committees. Congress, in exercise of its
budgetary independence, has developed its own databases, so as to avoid undue
dependence on executive sources.
There is much greater budgetary heterogeneity in Congress than in the executive
branch, however. As an institution that represents a diversity of interests and
perspectives, Congress has diversified its budgetary processes to allow a multiplicity
of participants. When it comes to public money, no one in Congress is fully in charge,
but just about every Member and committee has some role in shaping revenue or
spending legislation.
The principal roles and functions of the participants in the budget process are
summarized in the next three boxes and discussed in more detail below.
Executive Roles. There are three main participants in executive budgeting;
arrayed in hierarchical order, they are the President, OMB, and the executive agencies
(see Box 1-D). In addition to these, various executive units have specialized roles.
The Treasury Department maintains governmentwide accounts, manages federal cash
and debt, issues periodic statements on the condition of the budget, and has the lead
role (on the executive side) in tax policy. The Council of Economic Advisers prepares
the annual Economic Report, forecasts economic trends, and advises the President
(along with others) on economic policy, and the National Economic Council
coordinates policy advice for the White House.
Budget roles cannot be considered independently of the participants. As the
interests, skills, and relationships among participants change, so too do the roles they
play. Some presidents take an active interest in budget policy; but few of them get
involved in specific budget decisions.
The manner in which the President uses OMB (and its director) varies from
administration to administration. In some years, OMB has the dominant role in budget
policy; in other seasons, it faces tough competition from other presidential agencies
and advisors.
Yet there must be a measure of stability to budgetary roles, if only because of the
urgent need to produce a budget each year. If some participants were to behave

CRS-12
Box 1-D.
Principal Budgetary Entities of the Executive Branch

President
Establishes executive
budget policy and
submits budget to
Congress.
Submits supplemental
requests, budget
amendments, and updates
to Congress.

Office of Management
and Budget (OMB)
Operates executive
budget system and
advises President.

Submit budget requests to
OMB; appeal to
President for more funds.

Issues budget targets and
“passbacks” to agencies.

Justify President’s budget
recommendations before
congressional
committees.

Prepares budget options
and recommendations for
President.

Signs (or vetoes) revenue,
appropriation, and other
budget-related measures
passed by Congress.

Issues sequestration
reports.

Notifies Congress of
proposed rescissions and
deferrals.

Reviews proposed
legislation and testimony
to determine whether it
conforms to the
President’s policies.

Issues sequestration
orders to cancel
budgetary resources.

Federal agencies

Request apportionment
from OMB and allot
funds among subunits.
Maintain accounting
systems and systems of
internal control.
Obligate funds and preaudit expenditures.

Apportions funds and
oversees execution of the
budget.

Carry out the activities
for which funds were
provided.

Conducts management
activities to improve
efficiency of federal
expenditures.

Develop strategic plans,
performance measures,
and other material on
program objectives and
results.

Scores the budgetary
impact of enacted
legislation.

differently each year, others might not know what to expect of them or how to adjust
their own roles. Budgeting is a process that depends on reciprocal expectations. It
is expected that agencies will seek more funds for programs in their jurisdiction and
that OMB will seek to constrain budgetary growth. It is expected that the President
will try to push his budget through Congress and that legislators will try to exercise
some independence in budget policy, but it is also expected that both sides will
compose their differences without going to the brink. When one side is more adamant
than usual, this pattern of expectations can break down, leading to protracted conflict,
as happened in the mid-1990s.

CRS-13
Box 1-E.
Principal Budgetary Functions of Congressional Committees
Authorizing
Committees

Appropriations
Committees

Revenue
Committees

Report authorizing
and direct
spending
legislation.

Report regular,
supplemental, and
continuing
appropriation bills.

Report revenue
legislation.

Report budget
resolutions.

Oversee executive
agencies.

Review proposed
rescissions and
deferrals.

Report legislation
on public debt
limit, Social
Security, and
certain other
entitlements.

Draft
reconciliation
instructions and
compile
reconciliation bill.

Submit views and
estimates to
Budget
Committees on
matters in their
jurisdiction.
Recommend
changes in laws
pursuant to
reconciliation
instructions.
Include CBO cost
estimates in
reports on their
legislation.

Submit views and
estimates to
Budget
Committees on
federal spending.
Provide guidance,
directives, and
earmarks in
reports
accompanying the
appropriation bills.
Establish rules for
reprogramming.

Submit views and
estimates to
Budget
Committees on
matters in their
jurisdiction.
Recommend
changes in laws
pursuant to
reconciliation
instructions.

Budget
Committees

Allocate new
budget authority
and outlays to
committees.
Monitor budget
and advise
Congress on its
status.
Score the
budgetary impact
of revenue and
direct spending
legislation.

Establish account
structure for
federal agencies.

Legislative Roles. Legislative roles encompass the activities of congressional
leaders, House and Senate committees (see Box 1-E), and congressional support
agencies (see Box 1-F). In recent years, legislative budgetary roles have been less
stable than in the past. Several explanations can be offered for this, beginning with the
fact, already noted, that there is considerable diversity in legislative budgetary roles.
However, the congressional budget process, other changes in budgetary procedure,
and political differences between the two branches have been of greater importance.
The 1974 Congressional Budget Act introduced new participants in the
legislative process, but it also retained the old ones. On paper, the roles of the
revenue, authorizing, and appropriating committees were hardly changed, but the
establishment of the Budget Committees inevitably altered expectations and behavior.

CRS-14
Even before the budget process was established, Congress was experiencing
considerable budgetary turbulence. As many authorizing committees moved from
permanent to periodic authorizations, they became more active in proposing spending
levels for specific programs. Moreover, entitlements (as well as other forms of direct
spending) became more prevalent. These changes affected the jurisdiction and role
of the Appropriations Committees.
Box 1-F.
Principal Budgetary Functions of Congressional Support Agencies
Congressional
Budget Office

General Accounting
Office

Congressional
Research Service

Issues reports on budget
and economy, including 5year projections.

Reviews agency
accounting and financial
management systems.

Analyzes legislative issues
and proposals affecting
agency and program
operations.

Analyzes federal
programs and options for
dealing with selected
problems.

Reviews deferrals and
rescissions to determine
whether they have been
properly reported, and
whether funds have been
released as required.

Reestimates the
President’s budget using
its own economic and
technical assumptions.
Estimates 5-year costs of
reported bills.
Estimates costs of
unfunded mandates in
reported bills.
Issues advisory
sequestration reports.
Maintains databases for
scorekeeping.
Prepares baseline budget
projections.

Audits operations of
certain federal agencies.
Issues legal opinions
concerning the use of
funds.

Prepares legislative
histories of particular
legislation and programs.
Analyzes proposals to
change the federal budget
process.
Assists committees and
Members by providing
data and analyses relevant
to their legislative
responsibilities.

Settles claims and debt
collection issues involving
appeals of agency actions
and certain questions of
law.
Evaluates programs and
develops methods for
assessing the effectiveness
of expenditures.

Assists the budget, tax,
appropriations, and other
committees.

Despite the fact that the congressional budget process has been in operation for
more than two decades, role changes continue to unfold in Congress. Reconciliation
has altered legislative roles and relationships. In each year since 1975, the
congressional budget process has been implemented differently. Multi-year budgeting

CRS-15
was introduced one year, credit budgeting another. In some years party leaders have
been active in shaping the budget; in other years they have remained on the sidelines.
Relationships between Congress and the White House have varied from year to year
and have contributed to role uncertainty on Capitol Hill. The 1985 Balanced Budget
Act and deficit pressures also have influenced legislative roles and behavior.
The budgetary roles and relationships of the President and congressional
participants have been greatly affected by reliance on budget summit negotiations
between the executive and legislative branches. A summit agreement in 1987
established overall budget policy for FY1988 and FY1989; a 1989 summit agreement
set overall policy for FY1990; a summit agreement in 1990 established the budget
framework for FY1991-1995; and a summit agreement in 1997 set the path for a
balanced budget by FY2002.
The increased reliance on summit negotiations has been due to two factors—split
political control of the executive and legislative branches, and the drive to reduce or
eliminate the budget deficit. In 18 of the 24 years since Congress established its own
budget process, the presidency has been controlled by one party, and one or both
houses of Congress by the other. During this period, Republicans and Democrats
often have disagreed on budget policy, and each party has had sufficient strength to
block the other’s initiatives. Moreover, as concern over deficit spending mounted,
both parties faced difficult and often controversial decisions on taxing and spending.
Negotiated budgets have been the principal means by which the two parties have
bridged their differences and agreed on policies to reduce the deficit.
The importance of budget summitry was demonstrated by the budget deadlock
and government shutdown in 1995. During that year, each party proceeded on its
own. The President submitted a budget that was unacceptable to congressional
Republicans, who adopted a budget resolution that diverged significantly from
President Clinton’s proposals. When Congress tried to implement its budget strategy
in reconciliation legislation, President Clinton vetoed the bill. In the ensuing impasse,
Congress and the President were unable to agree on major appropriations bills,
leading to the lengthiest shutdown of federal agencies in U.S. history.
The 1995 stalemate shows that the outcomes of budget summits generally are
uncertain because they depend on the willingness of the two branches to enter into
negotiations and to set aside major differences in budget policy. Two of the summit
negotiations mentioned above took place in the spring, the other two occurred in the
fall. The first agreement covered two fiscal years, the next applied to only a single
fiscal year, and the most recent ones covered five fiscal years. If summit negotiations
guide budget making in the future, one result is likely to be greater uncertainty about
the budgetary behavior of participants.

Basic Concepts of Federal Budgeting
The federal budget is a compilation of numbers about the revenues, spending,
and borrowing and debt of the government. Revenues come largely from taxes, but
stem from other sources as well (such as duties, fines, licenses, and gifts). Spending
involves such concepts as budget authority, obligations, outlays, and offsetting
collections. The numbers are computed according to rules and conventions that have

CRS-16
accumulated over the years; they do not always conform to the way revenues and
spending are accounted for in other processes. Some of the rules are not recognized
in law, but they are nonetheless used by the various participants in federal budgeting.
Appendix D provides a glossary of terms used in the federal budget process.
Budget Authority and Outlays. When Congress appropriates money, it
provides budget authority, that is, authority to enter into obligations. Budget
authority also may be provided in legislation that does not go through the
appropriations process (direct spending legislation). The key congressional spending
decisions relate to the obligations that agencies are authorized to incur during a fiscal
year, not to the outlays made during the year. (Obligations occur when agencies
enter into contracts, submit purchase orders, employ personnel, and so forth; outlays
occur when obligations are liquidated, primarily through the issuance of checks,
electronic fund transfers, or the disbursement of cash.)
Budget authority that first becomes available for a fiscal year is counted as new
budget authority. In programs that have permanent appropriations, new budget
authority becomes available each year without congressional action. Under law, the
income of the Social Security trust funds and certain other trust funds is automatically
available for obligation; hence, the annual receipts of these funds are counted as new
budget authority.
The provision of budget authority is the key point at which Congress exercises
control over federal spending, although the outlay level often receives greater public
attention because of its bearing on the deficit. Congress does not directly control
outlays; each year’s outlays derive in part from new budget authority and in part from
“carryover” budget authority provided in prior years. For example, President
Clinton’s budget for FY1999 estimated that outlays would total $1,733 billion. As
shown in Exhibit 1-B (taken from the President’s FY1999 budget), approximately
$1,365 billion of this amount was estimated to come from new budget authority for
the fiscal year, while the remainder ($368 billion) was estimated to come from budget
authority enacted in prior years.
Budget authority and outlays can be thought of as akin to deposits and
withdrawals in a bank account. When Congress provides budget authority, whether
by appropriating funds or otherwise enacting legislation that enables an agency to
incur obligations, its actions have the effect of making a deposit into an agency
account. That is, the budget authority augments the financial resources available to
the agency. When bills are paid and outlays occur, resources are withdrawn from the
agency’s account.
The relation of budget authority to outlays varies from program to program and
depends on spendout rates, the rates at which funds provided by Congress are
obligated and payments disbursed. In a program with a high spendout rate, most new
budget authority is expended during the fiscal year; if the spendout rate is low,
however, most of the outlays occur in later years.

CRS-17

Exhibit 1-B.
Relation of Budget Authority to Outlays
(dollars in billions)

(1)

This exhibit shows the relationship of budget authority to outlays in the
FY1999 budget. It shows that: (a) not all budget authority becomes
outlays in the year for which it is provided; and (b) a portion of each year’s
outlays derives from budget authority provided in prior years. The flow of
outlays from budget authority is measured by the spendout rate, sometimes
called the outlay rate.

(2)

Total new budget authority typically exceeds total outlays for a fiscal year
because in programs with long lead times, such as construction, it may take
years for the resources provided by Congress to be spent.

(3)

The outlays set forth in the budget are only estimates of the amount to be
spent. Actual outlays for a fiscal year may vary significantly from the
estimate. However, congressional budget procedures, such as Section 302
allocations, control annual appropriations acts and other legislation in
terms of the volume of outlays in a fiscal year.

(4)

Unspent budget authority carried over into future years consists of both
obligated and unobligated balances. Most of the obligated balances are
for contracts entered into in prior years; most of the unobligated balances
are in trust funds.

Source: Office of Management and Budget, Budget of the United States
Government, Fiscal Year 1999, Analytical Perspectives, February 1998, Chart
20-1, page 352.

CRS-18
Regardless of the spendout rate, the outlays in the budget are merely estimates
of the amounts that will be disbursed during the year. If payments turn out to be
higher than the budget estimate, outlays will be above the budgeted level. The
President and Congress control outlays indirectly by deciding on the amount of
budget authority to be provided or by limiting the amount of obligations to be
incurred.
Budget reforms enacted since 1985 have increased the prominence of outlay
estimates and controls in federal budgeting. Under these procedures, outlay estimates
are essential in enforcing the discretionary spending limits and the pay-as-you-go
requirement. This process is outlined in the next chapter.
Certain receipts of the federal government are accounted for as “offsets” against
outlays rather than as revenues. Various fees collected by government agencies are
deducted from outlays; similarly, income from the sale of certain assets are treated as
offsetting receipts. Most such receipts are offset against the outlays of the agencies
that collect the money, but in the case of offshore oil leases and certain other
activities, the revenues are deducted from the total outlays of the government.
Scope of the Budget. The budget consists of two main groups of funds:
federal funds and trust funds. Federal funds—which comprise mainly the general
fund—largely derive from the general exercise of the taxing power and general
borrowing and for the most part are not earmarked by law to any specific program or
agency. One component of federal funds, called special funds, are earmarked as to
source and purpose. The use of federal funds is determined largely by appropriations
acts.
Trust funds are established, under the terms of statutes that designate them as
trust funds, to account for funds earmarked by specific sources and purposes. The
Social Security funds are the largest of the trust funds; revenues are collected under
a Social Security payroll tax and are used to pay for Social Security benefits and
related purposes. The unified budget includes both the federal funds and the trust
funds. The balances in the trust funds are borrowed by the federal government; they
are counted, therefore, in the federal debt. Because these balances offset a budget
deficit but are included in the federal debt, the annual increase in the debt invariably
exceeds the amount of the budget deficit. For the same reason, it is possible that the
federal debt will rise even when the federal government has a budget surplus.
Capital and operating expenses are not segregated in the budget. Hence, monies
used for the operations of government agencies as well as for the acquisition of
long-life assets (such as buildings, roads, and weapons systems) are reported as
budget outlays. Proposals have been made from time to time to divide the budget into
capital and operating accounts. While these proposals have not been adopted, the
budget contains various tables showing the investment and operating outlays of the
government.
The budget totals do not include all the financial transactions of the federal
government. The main exclusions fall into two categories—off-budget entities and
government-sponsored enterprises. In addition, the budget includes direct and

CRS-19
guaranteed loans on the basis of the accounting rules established by the Federal Credit
Reform Act of 1990, which are discussed more fully in the next chapter.
Off-budget entities are excluded by law from the budget totals. The receipts and
disbursements of the Social Security trust funds (the Old-Age and Survivors
Insurance Fund and the Disability Insurance Fund), as well as spending for the Postal
Service Fund, are excluded from the budget totals. These transactions are shown
separately in the budget. Thus, the budget now reports two deficit or surplus
amounts—one excluding the Social Security trust funds and the Postal Service Fund,
and the other (on a “total” or “consolidated” basis) including these entities. The latter
is the main focus of discussion in both the President’s budget and the congressional
budget process. The official policy adopted by the President and Congress to achieve
a balanced budget early in the near term uses a consolidated basis, which includes
Social Security.
The transactions of government-owned corporations (excluding the Postal
Service), as well as revolving funds, are included in the budget on a net basis. That
is, the amount shown in the budget is the difference between receipts and outlays, not
the total activity of the enterprise or revolving fund. If, for example, a revolving fund
has annual income of $150 million and disbursements of $200 million, the budget
would report $50 million as net outlays.
Government-sponsored enterprises (GSEs) are excluded from the budget
because they are deemed to be private rather than public entities. The federal
government does not own any equity in these enterprises, most of which receive their
financing from private sources. Although they were established by the federal
government, their budgets are not reviewed by the President or Congress in the same
manner as other programs. Most of these enterprises engage in credit activities. They
borrow funds in capital markets and lend money to homeowners, farmers, and others.
In total, these enterprises have assets and liabilities in excess of one trillion dollars.
At this writing, the government-sponsored enterprises are:
! the Student Loan Marketing Association (Sallie Mae);
! the College Construction Loan Insurance Association (Connie Lee);
! the Federal National Mortgage Association (Fannie Mae);
! the Federal Home Loan Mortgage Corporation;
! the Banks for Cooperatives;
! the Farm Credit Banks;
! the Federal Agricultural Mortgage Corporation;
! the Federal Home Loan Banks;
! the Financing Corporation; and
! the Resolution Funding Corporation.

Financial statements of the government-sponsored enterprises are published in
the President’s budget.
Functional Categories of the Budget. Budget authority and outlays are
classified into 20 functional categories that represent the major objectives and
operations of the federal government. Each of the functions is divided into a number
of subfunctions. (See Box 4-B for a list of budget functions.)

CRS-20
Although the functional classification has diminished in importance in recent
years, it is used for a number of purposes in the federal budget process. First, the
functional classification brings together in a single category the various programs and
activities serving a common objective, regardless of the agency responsible for them.
For example, the “National Defense” function includes most of the programs and
expenditures of the Defense Department, as well as defense-related activities of the
Energy Department and other federal agencies.
Second, the functional classification shows the various types of resources spent
on the same objective. Thus, the budget presents the budget authority, outlays, tax
expenditures, and credit authority associated with each function.
Third, the functional classification may be used to explain the President’s budget
policies and is used to present budgetary data.
Finally, the functional classification is used in establishing congressional budget
priorities. Each budget resolution contains a functional allocation of new budget
authority and outlays for at least the next five fiscal years.

The Budget and the Economy
A key purpose of the federal budget is to allocate public funds among
government agencies and programs. Viewed from this perspective, the budget is an
internal management tool of government. Much of the budget process entails
relationships among federal agencies and between the agencies and Congress.
The budget, however, serves another role which transcends the internal
operations of the government. It is a prime means of influencing the condition of the
economy. The size of the budget (and especially the deficit), the shape of tax policy,
and the pattern of federal spending help determine the rate of economic growth,
employment trends, interest rates, and price changes. When they make budget
decisions, therefore, the President and Congress are guided in part by concern about
the impact of their policies on economic performance.
The relation of the budget and the economy is bilateral. Not only does the
budget influence the economy, but the reverse also is true: the condition of the
economy shapes budget outcomes. When the President and Congress formulate their
budgets for the next fiscal year or beyond, they must make assumptions about future
economic conditions. They typically make assumptions about real and nominal
growth, the Gross Domestic Product, short- and long-term interest rates, and inflation
and unemployment rates. Differences in the assumptions used by the two branches
of government often account for sizeable differences in their planned budget levels.
Because the budget is predicated on assumptions about future economic
conditions, the extent to which the President’s or Congress’s budget policies
materialize depends, in substantial measure, on whether the assumptions prove to be
accurate. Any major discrepancy between assumed and actual economic conditions
will translate into variances between expected and actual budget results.

CRS-21
Exhibit 1-C reveals that the budget is highly sensitive to changes in economic
conditions. Deviations of the economy from the assumed path will lead to higher or
lower revenues, outlays, and deficits. Revenues are particularly sensitive to the rate
of economic growth; outlays are particularly sensitive to the interest rate paid on
government debt. Moreover, as the exhibit indicates, the impact of these economic
conditions on the budget compounds with each passing year.
According to the information presented in Exhibit 1-C, one tenth of one
percentage point lower economic growth would subtract an estimated $1 billion from
federal revenues in the first year and $9 billion in the fifth year; a one percentage point
rise in inflation would add $6 billion to outlays in the first year and $62 billion in the
fifth year.
The relation of the budget and the economy is a matter of considerable dispute.
Controversy rages over the appropriate size of the surplus or deficit, the assumptions
to be used in making budget projections, and the extent to which federal government
policy should affect the supply of, or the demand for, goods and services.

CRS-22

Exhibit 1-C.
Sensitivity of Budget Projections to Changes in Economic Conditions
1998

1999

2000

2001

2002

2003

2004

Real Rate of Growth is 0.1 Percentage Point a Year Lower
Beginning in January 1998
Change in Revenues
Change in Outlays
Net interest (Debt service)
Mandatory spending
Change in Deficit or Surplusb

-1

-3

-5

-7

-9

-12

-15

a
a
-1

a
a
-3

a
a
-5

1
a
-8

1
a
-11

2
a
-14

3
a
-18

Inflation Rate is 1 Percentage Point a Year Higher
Beginning in January 1998
Change in Revenues
Change in Outlays
Net interest
Higher rates
Debt Service
Discretionary spending
Mandatory spending
Total
Change in Deficit or Surplusb

9

26

45

65

87

111

139

5
a
0
1
6
3

15
a
0
8
22
4

20
-1
0
17
37
8

23
-1
0
28
50
15

25
-3
0
40
62
24

27
-4
6
53
81
30

27
-7
12
67
99
40

a. Less than $500 million
b. A minus sign indicates an increase in the deficit or a decrease in the surplus.

(1)

Revenues and outlays, and therefore the surplus or deficit as well, are
sensitive to changes in economic conditions, particularly the rate of real
growth, unemployment and inflation levels, and interest rates. This exhibit
displays the estimated effects on the budget of changes in economic
assumptions for two of these factors—real growth and inflation. Real
growth refers to the change in the Gross Domestic Product after
adjustment for price changes.

(2)

Inflation increases both revenues and outlays in roughly equal degrees,
which lessens its net effect on the surplus or deficit.

(3)

Under these projections, a rise in inflation has a much greater impact on
interest payments and mandatory spending during the first five years than
it does on discretionary spending because the latter is assumed to be
capped by statutory limits in effect through FY2002. The effect on interest
payments occurs more quickly but levels off after a few years; the effect on
mandatory spending builds more slowly but continues to increase year
after year. After FY2002, when the caps on discretionary spending are
assumed to expire, such spending begins to rise steadily.

Source: Congressional Budget Office, The Economic and Budget Outlook:
Fiscal Years 1999-2008, January 1998, Table C-1, page 98.

CRS-23
2. The Framework for Budget Enforcement
The enforcement of budgetary decisions involves a complex web of procedures
that encompasses both congressional and executive actions. These procedures are
rooted principally in two statutes—the Congressional Budget Act of 1974 and the
Budget Enforcement Act (BEA). The 1974 act established a congressional budget
process, as discussed in Chapter 4, in which budget policies are enforced by Congress
during the consideration of individual measures. The BEA is the current embodiment
of additional enforcement procedures, first established in the Balanced Budget and
Emergency Deficit Control Act of 1985 and renewed with modification in 1990 and
1997, that are used mainly by the executive to enforce budget policies after
congressional action for a session has ended.
These twin sets of enforcement procedures are separate and distinct, but they
have common elements and are linked in various ways. One important common
element is the emphasis placed on reducing the deficit in past years and, currently, on
maintaining a surplus. Another is the distinction drawn between the treatment of
discretionary spending on the one hand and direct spending and revenues on the other.
Congress enforces budget decisions in two ways. One is by guarding against
actions that would cause budget outcomes to deviate from a desired course; the other
is by ensuring that the House and Senate (and their committees) abide by the budget
decisions taken in the congressional budget resolution. This chapter deals with
enforcing budget outcomes; Chapter 4 deals with enforcing congressional budget
decisions. In addition, this chapter addresses two other elements of the framework
for budget enforcement—budget baselines and the new rules for the treatment of
federal credit activities.

Deficit Reduction and the Rules of Congressional Budgeting
Between the early 1980s and the late 1990s, annual consideration of the budget
was dominated by concern about the budget deficit. The reason for this concern is
evident from Exhibit 2-A, which displays the budget deficit at 4-year intervals since
FY1982. In the mid-1980s, the deficit exceeded $200 billion and amounted to almost
six percent of GDP. High deficits persisted in the early 1990s.
The size of the deficit depends on how it is measured. The “total” or
“consolidated” deficit combines all on-budget federal funds and trust funds with the
off-budget entities (the Social Security trust funds and the Postal Service Fund). The
total deficit generally is regarded as the most comprehensive measure of the impact
of the budget on the economy.

CRS-24

Exhibit 2-A.
Alternative Measurements of the Deficit/Surplus

(1)

This table, taken from President Clinton’s initial budget submission for
FY1999 (in February 1998), displays three alternative measures of the
deficit or surplus: (a) on a total or consolidated basis; (b) on an on-budget
basis (which excludes the Social Security trust funds and the Postal Service
Fund); and (c) on a federal-funds basis (which excludes all trust funds).
Depending on the basis for the measurement, the estimate for FY2002
ranged from a deficit of $111 billion to a surplus of $90 billion.

(2)

The total deficit incorporates both on-budget and off-budget transactions,
but it does not include the finances of government-sponsored enterprises.

(3)

The Social Security trust funds ran an $8 billion deficit in FY1982, but
since then they have run a steadily increasing surplus (amounting to about
$100 billion by the end of the 1990s). With the Social Security trust funds
excluded, the reported deficit (after FY1982) is much higher because the
annual surplus in these funds does not offset the deficit in the rest of the
budget.

(4)

The federal funds deficit excludes all trust funds, whether they are onbudget or off-budget.

Source: Chart prepared by the Congressional Research Service based on
data in: Office of Management and Budget, Budget of the United States
Government, Fiscal Year 1999, Historical Tables, February 1998, Table 1.1,
pages 19-20, and Table 1.4, pages 25-26.

CRS-25
A narrower measure of the deficit—the on-budget deficit—is derived by
excluding the Social Security trust funds and the Postal Service Fund from the totals.
As noted, this exclusion is mandated by law, although Social Security and the Postal
Service Fund are counted in the budget in reports on the deficit. In 1983, Congress
enacted legislation revising the financing of the Social Security trust funds in order to
bring about increasing annual surpluses for the next several decades. As Exhibit 2-A
discusses, the Social Security trust funds ran a small deficit in FY1982; thereafter, the
trust funds have run steadily increasing surpluses (amounting to about $100 billion by
the end of the 1990s). Therefore, excluding Social Security from computations of the
deficit or surplus results in higher deficit or lower surplus figures. (The accumulated
balance credited to these funds is much higher than the annual surplus; it now
amounts to hundreds of billions of dollars and is projected to amount to trillions of
dollars in the early decades of the next century.)
A still narrower measure of the deficit—the federal funds deficit—would exclude
all trust funds from deficit computations. As is the case with Social Security,
the other trust funds in the net incur an annual surplus. Exhibit 2-A shows that the
federal funds deficit exceeded $300 billion in the early 1990s.
Regardless of the measure used, it is evident that the deficit was unusually high
for an extended period of time. This chronic deficit prompted Congress to enact the
Balanced Budget and Emergency Deficit Control Act of 1985. The original 1985
Balanced Budget Act established deficit targets for each year through FY1991, when
the budget was to be balanced, and a sequestration process under which budgetary
resources would be canceled automatically if the estimated deficit exceeded the
amount allowed under the act.
Even with the targets, the actual deficit for the covered years was above the
targeted level. The 1985 act, as originally framed, did not require that the actual
deficit be within the target; it required only that the deficit projected at the start of the
fiscal year be within that amount. Thus, any increase in the deficit during the fiscal
year, whether because of changes in economic conditions, policy changes, or other
factors, did not activate the sequestration process for that fiscal year.
Failure to achieve the deficit targets, and other problems, led Congress to revise
the process in the Budget Enforcement Act (BEA) of 1990. Sequestration
procedures were retained, but the fixed deficit targets were replaced by adjustable
ones (which expired at the end of FY1995), adjustable limits were imposed on
discretionary spending, and a pay-as-you-go (PAYGO) process was established for
revenues and direct spending. The discretionary spending limits and PAYGO process
were extended in 1993 (through FY1998) and again in 1997 (through FY2002).
Different categories of discretionary spending are used for different periods.
Under the 1997 changes, discretionary spending limits apply separately to defense and
nondefense spending for FY1998-1999 and to violent crime reduction spending for
FY1998-2000; for the remaining fiscal years, all discretionary spending is merged into
a single category. In 1998, as part of the Transportation Equity Act for the 21st
Century, Congress added separate categories for highway and mass transit spending.

CRS-26
The PAYGO process requires that legislation enacted during a session affecting
revenues or direct spending not increase the deficit or reduce the surplus. Legislation
reducing revenues or increasing direct spending must be fully offset (in the same or
other legislation) by revenue increases or reductions in direct spending.
Violations of the discretionary spending limits or the PAYGO requirement are
enforced by sequestration. Sequestration has not been used in recent years.

Budgeting for Discretionary and Direct Spending
The distinction drawn by the BEA between discretionary spending (which is
controlled through the annual appropriations process) and direct spending (which is
provided outside of the annual appropriations process) recognizes that the federal
government has somewhat different, though overlapping, means of dealing with these
two types of spending. One set of procedures pertains to discretionary spending,
another to direct spending.
Most of the direct spending subject to the PAYGO process under the BEA
involves entitlement programs; the rest consists of other forms of mandatory spending
provided through authorizing legislation and interest payments. In fact, entitlements
now account for about half of total federal spending (all direct spending, including net
interest, accounts for about two-thirds of the total). Their recent growth is shown in
Exhibit 2-B, which also shows the rise in the number of recipients of these payments.
The impressive feature of this trend is that most of the growth in spending and in the
number of recipients has been built into existing law; for the most part, it has not been
the result of new legislation. Indeed, the increase has occurred despite a number of
legislative enactments to curtail entitlement programs.
The procedures for discretionary and direct spending converge at two critical
points in federal budgeting: formulation of the President’s budget and formulation of
the congressional budget resolution. Both of these policy statements encompass
discretionary and direct spending. But as Box 2-A indicates, the procedures used in
budgeting for these types of expenditure differ greatly. The distinctions drawn in this
box have some notable exceptions. Some procedures associated with direct spending
are applied to particular types of discretionary programs, and vice versa.
Nevertheless, the generalizations presented here help to explain the complications of
the budget process and explain how decisions are made. The paragraphs below
correspond to the entries in Box 2-A.
(1) Budgetary Impact of Authorizing Legislation. An authorization for a
discretionary spending program is only a license to enact an appropriation. The
amount of budgetary resources available for spending is determined in annual
appropriations acts. For direct spending programs (principally entitlements), on the
other hand, the authorizing legislation either provides, or effectively mandates the
appropriation of, budget authority. In those entitlement programs that are subject to
annual appropriation, the Appropriations Committees have little or no discretion as
to the amounts they provide.

CRS-27

Exhibit 2-B.
Outlays for Mandatory Spending and Net Interest: FY1970-1996

(in billions of dollars)
1970

1980

1990

1996

75.5
(39%)

314.9
(53%)

752.9
(60%)

1,026.7
(66%)

Outlays for selected major
entitlements:
Social Security (OASDI)
Medicare
Medicaid
Unemployment assistance
Federal retirement
Food/nutrition assistance

30
6
3
3
6
1

118
31
14
17
27
13

245
96
41
17
52
21

344
171
92
23
68
34

Recipients of selected major
entitlements (in millions of persons):
Social Security (OASDI)
Food Stamps (and predecessors)
Medicare Hospital Insurance
Medicaid

26
9
20
15

35
19
28
22

39
19
33
25

43
26
38
34

Outlays for mandatory spending and
net interest (and as a percent of
total outlays)

(1)

This exhibit consists of three sections. The first section shows total outlays
for mandatory programs and net interest, and such spending as a
percentage of total federal outlays; the second part shows outlays for
selected major entitlement programs; and the third part shows trends in the
number of recipients of selected major entitlement programs.

(2)

Mandatory and net interest spending grew almost 15-fold between FY1970
and FY1996, claiming an increasingly greater share of the budget. As a
percentage of total federal outlays, mandatory and net interest spending
increased from 39% in FY1970 to 66% in FY1996.

(3)

Most mandatory or direct spending is for entitlements, which primarily
involve retirement and disability programs (such as Social Security) and
health programs (such as Medicare and Medicaid).

(4)

Because most entitlement spending stems from permanent law, spending
automatically increases over time as more people receive benefits.
Entitlement spending also increases because of inflation.

Source: Office of Management and Budget, Budget of the United States
Government, Fiscal Year 1999, Historical Tables, February 1998, Table 3.1
(pages 42-49), Table 8.1 (page 117), and Table 8.5 (pages 121-125).

CRS-28
Box 2-A.
Differences Between Discretionary and Direct Spending

Feature

Discretionary
Spending

Direct Spending

(1) Budgetary impact of
authorizing legislation.

No direct impact;
authorizes consideration
of appropriations bills.

Direct impact; provides
budgetary resources.

(2) Committees which
provide or mandate
budget authority.

Appropriations
Committees.

Authorizing committees.

(3) Frequency of
decision-making.

Annual.

Periodic.

(4) Means of enforcing
the budget resolution.

Section 302 allocations
and suballocations.

Reconciliation process.

(5) Budget Enforcement
Act controls.

Discretionary spending
limits.

Pay-as-you-go (PAYGO)
requirement.

(6) Basis of computing
budget impact.

Current year’s spending
and President’s request.

Baseline budget
projections.

(7) Typical decision
facing Congress.

How much to increase.

How much to decrease.

(8) Impact of economic
changes.

Indirect, discretionary.

Direct, often automatic.

(2) Committees Which Provide or Mandate Budget Authority. The
Appropriations Committees have jurisdiction and effective control over discretionary
spending programs, while authorizing committees effectively control direct spending
programs (including those funded in annual appropriations acts). In fact, committee
jurisdiction determines whether a program is classified as discretionary or direct
spending. All spending under the effective control of the Appropriations Committees
is discretionary; everything else is direct spending. Accordingly, when legislation
establishes a program as discretionary or direct spending, it not only determines the
character of spending but the locus of congressional committee control as well.
(3) Frequency of Decision-Making. Discretionary appropriations are, with
few exceptions, made annually for the current or next fiscal year. Direct spending
programs typically are established in permanent law that continues in effect until such
time as it is revised or terminated by another law. The fact that many entitlements
have annual appropriations does not diminish the permanence of the laws governing
the amounts spent. It should be noted, however, that some direct spending programs,

CRS-29
such as Medicare, have been subject to frequent legislative changes. The purpose of
such legislation has been to modify existing law, not to provide annual funding.
(4) Means of Enforcing the Budget Resolution. The procedures used by
Congress to enforce the policies set forth in the annual budget resolution differ
somewhat for discretionary and direct spending programs. For both types of
spending, Congress relies on allocations made under Section 302 of the 1974
Congressional Budget Act to ensure that spending legislation reported by House and
Senate committees conforms to established budget policies. But although this
procedure is effective in controlling new legislation—both annual appropriations
measures and new entitlement legislation—it is not an effective control on the
spending that results from existing laws. Hence, Congress relies on reconciliation
procedures to enforce budget policies with respect to existing spending and revenue
laws. Reconciliation is not currently applied to discretionary programs funded in
annual appropriations measures.
(5) Budget Enforcement Act Controls. Discretionary programs are subject
to the spending limits set in the BEA. Direct spending is not capped, but operates
under the PAYGO process, which requires that direct spending and revenue
legislation enacted for a fiscal year not cause the deficit to rise or the surplus to
decrease. The lack of caps is due to the fact that most direct spending programs are
open-ended, with spending determined by eligibility rules and payment formulas in
existing law rather than by new legislation.
(6) Basis of Computing Budget Impact. The baseline projections discussed
earlier are applied to both discretionary and direct spending programs, but they are
much more prominently used in scoring changes for the latter. In recommending
funds for discretionary programs, the Appropriations Committees rely almost
exclusively on two other benchmarks: the appropriation for the current fiscal year and
the amount requested by the President for the upcoming fiscal year. These
committees regularly compare the amount recommended by them to each of these
benchmarks, but make no mention in their reports of baseline budget projections. In
the case of direct spending programs, however, the reconciliation instructions, the
budgetary impact of legislative changes made in reconciliation bills, and other claimed
savings (or increases) are computed in terms of the baseline projections.
(7) Typical Decision Facing Congress. Because discretionary spending is
determined in annual appropriations acts, the typical decision facing Congress for such
spending is the amount by which it should be changed from the current year’s level.
Direct spending is determined by permanent law and often is affected by exogenous
factors, such as price changes, so that decisions typically deal with the amount of
increases or decreases from baseline levels. In direct spending programs, increases
often are built into law; in discretionary spending programs, they are not.
(8) Impact of Economic Changes. When economic conditions—such as the
inflation or unemployment rate—change, there often is an automatic, reciprocal
change in direct spending. A price rise triggers cost-of-living adjustments (COLAs)
in various payment programs, as does a rise in the number of persons filing
unemployment claims or participating in the Food Stamps program. Discretionary

CRS-30
spending, by contrast, is largely insulated from such changes. When prices rise, for
example, Congress can opt to appropriate more discretionary funds or it can compel
the affected agency to absorb the increased costs.

The Chain of Discretionary Spending Control
The many pieces and procedures of the federal budget process have been
introduced in this and the preceding chapter. At this point, it would be useful to put
some of the pieces together to see how they create a chain of spending controls as
part of an integrated budget process (see Box 2-B). The controls traced in the exhibit
pertain most fully to discretionary spending. A somewhat different set of controls
would apply to other parts of the budget, such as direct spending and revenues,
though there are some common features. The discussion that follows is keyed to the
accompanying exhibit.
Before explaining the individual controls, two points should be noted. First, each
control (other than the first one) is based on “may not be exceeded” rules. That is,
the amount available under one step may not normally exceed the amount provided
in the previous step. These rules establish a chain relationship among the various
parts of the process. But the “may not be exceeded” rules do not always mean that
the controls produce the desired results. For one thing, there can be various
adjustments or exceptions, as will be explained below. For another, enforcement of
the “may not be exceeded” rules often depends on estimates and assumptions which
may prove to be erroneous as events unfold. Third, enforcement of those rules
pertaining to Congress sometimes may be set aside. Despite these caveats, the
sequence of controls generally are quite effective in keeping discretionary spending
within established limits.
The second point to be noted is that the chain of controls engages the
participation of virtually all executive and legislative participants in federal budgeting.
Note, however, that the chain does not begin with the President’s budget because (as
discussed earlier) it is only a set of recommendations. Congress does not have to
accept these recommendations in its own budget actions. Note also that the chain
does not include authorizing legislation because these measures do not always
determine the amount that may be appropriated.
(1) Discretionary Spending Limits. The limits set dollar caps on budget
authority and outlays, subject to adjustment by OMB for certain purposes prescribed
by law, on broad categories of discretionary spending through FY2002. The
President’s budget recommendations and the congressional budget resolution adhere
to these limits. At times, however, the President and CBO do not agree on how these
limits are to be applied, and CBO sometimes finds that the President has
recommended spending in excess of the discretionary spending caps.
(2) Budget Resolution Aggregates. The aggregates in the budget resolution
may be lower than, or the same amount as, the discretionary spending limits.
Legislation considered by Congress may not violate the aggregate spending levels
(total budget authority and total outlays) in the budget resolution and, by implication,
may not exceed the discretionary spending limits.

CRS-31
Box 2-B.
The Chain of Discretionary Spending Control
Control or
Limitation

Method of Control

(1)

Discretionary
spending limits

Caps on discretionary budget authority and outlays,
adjusted periodically as prescribed by law; they apply to
defense and nondefense categories for FY1998-1999
and a total category for FY2000-2002; also, violent
crime reduction (FY1998-2000) and highway and mass
transit (FY1999-2003) categories are used.

(2)

Budget resolution
aggregates

Ceilings on total budget authority and outlays which
guide the enactment of legislation; budget resolution
aggregates do not exceed discretionary spending limits.
Allocations of total budget authority and outlays in the
budget resolution to committees with spending
jurisdiction; total amounts allocated to committees may
not exceed the budget resolution aggregates.

(3)

Section 302(a)
allocations

(4)

Section 302(b)
subdivisions

(5)

Appropriation

(6)

Apportionments

(7)

Allotments

The distribution of apportioned resources by a
department or agency among its subunits; the amount
allotted may not exceed the amount apportioned.

(8)

Obligations

Actions taken by federal agencies that incur financial
liabilities of the federal government; an agency may not
obligate in excess of the resources available to it.

(9)

Outlays

Payments made by the Treasury Department to
liquidate obligations lawfully incurred by agencies;
outlays may not exceed obligations.

A committee’s subdivision of its spending allocations by
subcommittee (or by program); subdivisions made by a
committee may not exceed its allocations.
The amount of budget authority or outlays resulting
from an appropriations act may not exceed the Section
302(b) subdivision to the relevant Appropriations
subcommittee.
The distribution of enacted appropriations (or other
budgetary resources) for a fiscal year by OMB to
projects or fiscal year quarters within an account; the
total amount apportioned to an account may not exceed
the amount appropriated.

CRS-32
(3) Section 302(a) Allocations. After a budget resolution is adopted, the total
budget authority and outlays in it are allocated among House and Senate committees
with jurisdiction over discretionary or direct spending. Discretionary spending is
under the jurisdiction of the Appropriations Committees. The total amounts allocated
to committees may not exceed the budget resolution aggregates.
(4) Section 302(b) Subdivisions. The Appropriations Committees are
required to subdivide their allocations among their subcommittees. (The other House
and Senate committees are not required to subdivide their allocations.) The
subdivisions made by the subcommittees may not exceed the amounts allocated to the
full committee. The spending in each annual appropriations measure is compared to
the relevant subdivision made under Section 302(b). In some cases, a point of order
can be raised against an appropriations measure that exceeds the relevant subdivision.
(5) Apportionments. After the appropriations measures have been enacted,
OMB apportions funds to agencies by quarters of the fiscal year or by project. The
amounts apportioned during the fiscal year may not be more than the amount
appropriated. However, “deficiency” apportionments are permitted in some instances.
(6) Allotments. Each department and agency allots the amount apportioned to
it among its subunits. The amount allotted may not be more than the amount
apportioned. Some agencies (generally small ones) skip the allotment procedure.
(7) Obligations. An agency is not permitted to obligate (except under very
limited exceptions) in excess of the resources available to it or for purposes other than
those for which the funds were provided. The amount available for obligation in an
account may include—in addition to new appropriations—transfers from other
accounts, funds carried over from prior years, and (when authorized by law) certain
offsetting receipts collected by the agency.
(8) Outlays. This is the final step in the chain of spending control. The
Treasury Department makes payments to liquidate obligations lawfully incurred by
agencies. Outlays may not exceed obligations.

Deficit Targets, Discretionary Spending Limits, and the
PAYGO Process
Establishment of the Sequestration Process. The 1985 Balanced
Budget Act established a series of declining annual deficit targets and created an
automatic spending-reduction process (known as sequestration) intended to ensure
that the deficit targets were adhered to even if Congress and the President failed to
reduce the deficit sufficiently through legislative action. The Budget Enforcement Act
(BEA) of 1990 made major changes in conjunction with the enactment of a five-year
deficit-reduction accord covering FY1991-1995. In 1993, the BEA procedures were
extended through FY1998 as part of another comprehensive budget agreement
between the President and Congress. Most recently, the procedures were extended
through FY2002, with modifications, by the Budget Enforcement Act (BEA) of 1997,
as part of a plan to balance the budget by that fiscal year.

CRS-33
Sequestration involves the issuance of a presidential order that permanently
cancels budgetary resources, except for revolving funds, special funds, trust funds,
and certain offsetting collections. As originally framed, the purpose of sequestration
was to achieve a required amount of outlay savings to reduce the estimated deficit to
target levels. Once sequestration is triggered by an executive determination, spending
reductions are made automatically; this process, therefore, is regarded by many as
providing a strong incentive for Congress and the President to reach agreement on
legislation that would avoid a sequester.
Changes Made by the Budget Enforcement Acts of 1990 and 1997.
From its inception in 1985 until its revision by the BEA in 1990, the process was tied
solely to the enforcement of fixed deficit targets. The BEA changed the sequestration
process substantially. First, it effectively eliminated the deficit targets as a factor in
budget enforcement. Second, the BEA established adjustable limits on discretionary
spending funded in the annual appropriations process. Third, the BEA created
pay-as-you-go (PAYGO) procedures to require that increases in direct spending (i.e.,
spending controlled outside of the annual appropriations process) or decreases in
revenues due to legislative action are offset so that there is no net increase in the
deficit or reduction of the surplus.
The BEA established new sequestration procedures to enforce the discretionary
spending limits and the pay-as-you-go requirements. To the extent that any
sequesters must be made, they occur on the same day (which must be within 15
calendar days after Congress adjourns to end a session); sequestration of this type is
referred to as end-of-session sequestration. Further, one or more additional
sequesters may occur subsequently in the fiscal year to eliminate any breach in the
discretionary spending limits; this type of sequestration is referred to as within-session
sequestration.
Previously, the surpluses of the Social Security trust funds were included in the
deficit estimates made under the 1985 Balanced Budget Act but Social Security
spending (except for administrative expenses) was exempt from sequestration. Under
the BEA, Social Security spending still is exempt from sequestration, but the trust
fund surpluses are excluded from the deficit estimates.
The BEA established adjustable limits on discretionary spending. For
FY1991-1993, separate limits were set for new budget authority and outlays for three
different categories—defense, international, and domestic. For FY 1994-1998, limits
on new budget authority and outlays were established for a single category—total
discretionary spending. In 1994, the Violent Crime Control and Law Enforcement
Act of 1994 (P.L. 103-322) established separate but parallel sequestration procedures
for violent crime reduction programs through FY2000.
In 1997, the BEA limits for FY1998 were revised and new limits were
established through FY2002 (see Exhibit 2-C). The limits are established for the
following categories of discretionary spending: defense and nondefense, for FY19981999; discretionary (a single category), for FY2000-2002; and violent crime
reduction, for FY1998-2000. In 1998, as part of the Transportation Equity Act for

CRS-34
the 21st Century (P.L. 105-178), Congress created separate categories for highway
and mass transit spending for FY1999-2003.

CRS-35

Exhibit 2-C.
Discretionary Spending Limits
(in millions of dollars)
1998

1999

2000

Non-Defense Discretionary Spending
Budget Authority
Outlays

253,506
285,686

283,737
289,297

285,937
290,057

Violent Crime Reduction Spending
Budget Authority
Outlays

5,500
4,833

5,800
4,953

4,500
5,554

Defense Discretionary Spending
Budget Authority
Outlays

269,000
267,124

271,570
266,635

275,429
269,072

Total Discretionary Spending
Budget Authority
Outlays

528,006
557,643

561,107
560,885

565,866
564,683

(1)

The discretionary spending limits apply to funds provided in annual
appropriations acts (except for mandatory programs, such as Medicaid,
funded in such acts). Limits are set on both new budget authority and
outlays; a breach of either type of limit would cause a sequester.

(2)

The discretionary spending limits are divided into categories, which vary
by fiscal year. The BEA of 1997 established the following categories for
the five-year period covering FY1998-2002 (FY2001 and FY2002 are not
shown here): defense and nondefense for FY1998-1999; total discretionary
(a single category) for FY2000-2002; and violent crime reduction for
FY1998-2000. In 1998, the Transportation Equity Act for the 21st Century
established highway and mass transit categories beginning with FY1999.

(3)

Periodically, the OMB director adjusts the discretionary spending limits
for factors set forth in the BEA, including such things as changes in
concepts and definitions, emergency spending, and the enactment of
legislation in specified categories (such as for continuing disability reviews
and international arrearages).

(4)

Discretionary spending limits also are included in the budget resolution
and are enforced in the Senate (but not the House) by a point of order.

Source: Office of Management and Budget, Budget of the United States
Government, Fiscal Year 1999, Analytical Perspectives, February 1998, Table
14-2, pages 261-263.

CRS-36
Under the BEA, the discretionary spending limits must be adjusted periodically
by the President for various factors, including (among others), changes in concepts
and definitions, a special outlay allowance (to accommodate estimating differences
between OMB and CBO), and the enactment of legislation providing emergency
funding and funding for the International Monetary Fund, international arrearages, an
earned income tax credit compliance initiative, and other specially designated
purposes.
Enforcement of the spending limits is accomplished through a special
sequestration process that is triggered automatically, at the end of a congressional
session, if the applicable spending limit is breached through the enactment of
legislation. If the enactment of legislation causing a breach in the spending limits for
the current year occurs during the last quarter of the fiscal year (i.e., between July 1
and September 30), the appropriate discretionary spending limits for the next fiscal
year are reduced by the amount of the breach.
Under the PAYGO process created by the BEA, legislation increasing direct
spending or decreasing revenues must be offset so that the deficit is not increased or
the surplus reduced (see Exhibit 2-D). The PAYGO process does not require any
offsetting action when the spending increase or revenue decrease is due to the
operation of existing law, such as an increase in the number of persons participating
in the Medicare program. Direct spending consists largely of spending for entitlement
programs. Most direct spending and revenue programs are established under
permanent law, so there is not necessarily any need for recurring legislative action on
them (and the PAYGO process does not require such action).
Enforcement of the PAYGO process also is accomplished through a special
sequestration procedure. The PAYGO process does not preclude Congress from
enacting legislation to increase direct spending; it only requires that the increase be
offset by reductions in other direct spending programs (which could include increases
in offsetting receipts), by increases in revenues, or by a combination of the two in
order to avoid a sequester. If a sequester under this process is required, it would have
to offset the amount of any net deficit increase (or surplus reduction) for the fiscal
year caused by the enactment of legislation in the current and prior sessions of
Congress, and would be applied to nonexempt direct spending programs.
Spending for Social Security benefits and current federal deposit insurance
commitments, as well as emergency direct spending and revenue legislation (so
designated by both the President and by Congress), is exempted completely from the
PAYGO sequestration process. All remaining direct spending programs are covered
by the PAYGO process to the extent that legislation affecting their spending levels is
counted in determining whether a net increase or decrease in the deficit has occurred
for a fiscal year. If a PAYGO sequester occurs, however, many direct spending
programs would be exempt from reduction.
In 1997, coverage of the PAYGO requirement was extended to legislation
enacted through FY2002; however, the PAYGO process remains in effect through
FY2006 to deal with the outyear effects of such measures. Consequently, a PAYGO

CRS-37
sequester could occur in FY2003-2006 based on legislation enacted before the end
of FY2002.
Report
No.

Act
No.

Act Title

1998

1999

2000

2001

2002

2003

Legislation enacted in the 1st Session—Reports issued after 11/21/97 (not reflected in Final Report):
417

418

PL 105-85
H.R. 1119

P.L. 105-89
H.R. 867

National Defense
Authorization Act for Fiscal
Year 1998:
OMB estimate
CBO estimate
Adoption and Safe Families
Act of 1997
OMB estimate
CBO estimate

-156
-159

3
9

10
17

15
19

-4
-13

-24
-35

-1
-1

.....
.....

3
.....

11
.....

40
.....

76
7

-153
-156

11
68

16
95

14
96

10
22

9
-68

* * * * *
Total, new balances
(excluding Final Sequester
Report FY1998 amount):
OMB estimate
CBO estimate

Exhibit 2-D.
The PAYGO Scorecard
(1)

The budgetary impact of all direct spending and revenue legislation
enacted beginning with FY1991 is recorded on a multi-year PAYGO
“scorecard.” This exhibit shows an excerpt from a table in the
sequestration preview report for FY1999, issued in February 1998 as part
of the President’s budget. By this time, more than 400 separate PAYGO
measures had been enacted.

(2)

From time to time, Congress and the President have reset the PAYGO
balances to zero as part of a major deficit-reduction act in order that the
sizeable savings from the act not be available to offset future spending
increases or revenue reductions. This happened with the Balanced Budget
Act of 1997, which was enacted several months before this sequestration
preview report was issued.

(3)

This exhibit shows that the National Defense Authorization Act for FY1998
contained modest amounts of direct spending, ranging in one year from
savings of $156 million to increases of $15 million in another.

(4)

Although the PAYGO scorecard exhibited here shows a balance of $11
million for FY1999, no sequester would be required under these estimates
(assuming they remained unchanged during the session). This is because,
under a “look back” feature, the balance for the current year (-$153
million for FY1998) is added to the balance for the budget year. In this
case, the FY1998 “credit” more than offsets the FY1999 amount.

CRS-38

Source: Office of Management and Budget, Budget of the United States
Government, Fiscal Year 1999, Analytical Perspectives, February 1998, Table
14-5, pages 268-269.

CRS-39
As originally framed, the 1985 Balanced Budget Act provided for the automatic
issuance of a sequestration order by the President upon the submission of a report by
the comptroller general identifying a deficit excess. This feature of the act was
invalidated by a Supreme Court ruling (Bowsher v. Synar) in 1986 on the ground that
the constitutional separation-of-powers doctrine was violated because the comptroller
general is a legislative branch official. Congress subsequently revised the process in
the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 by
placing the triggering function in the hands of the OMB director, an executive branch
official.
The Timing of Sequestration Actions. The multiple sequestration
procedures established by the BEA in 1990 remain automatic and are triggered by a
report from the OMB director. For sequestration purposes generally, there is only
one triggering report issued each year (just after the end of the session). Additionally,
OMB reports triggering a sequester for discretionary spending may be issued during
the following session if legislative developments so warrant (i.e., the enactment of
supplemental appropriations). The CBO director must provide advisory sequestration
reports, shortly before the OMB director’s reports are due.
The timetable for the sequestration process is set forth in Box 2-C.
Early in the session, OMB and CBO issue sequestration preview reports. The
reports provide estimates of the discretionary spending limits, with the adjustments
prescribed by law. Also, the reports provide estimates of any net deficit increase or
decrease caused by the enactment of direct spending or revenue legislation subject to
the PAYGO process. In August, OMB and CBO issue sequestration update reports
to reflect the impact of legislation enacted during the interim. Finally, OMB and CBO
issue sequestration reports shortly after Congress adjourns to end the session. The
end-of-session reports must reflect any pertinent legislation enacted since the update
reports were issued and must indicate the baseline amount of budgetary resources and
the amount and percentage of the reduction for each account subject to sequestration.
In preparing its update and final sequestration reports, OMB must use the
economic and technical assumptions that were used in the earlier preview report.
During the course of the session, OMB must provide Congress with cost estimates
of budgetary legislation shortly after its enactment, so that compliance with the
discretionary spending limits and PAYGO requirements can be monitored. The cost
estimates must be based on the economic and technical assumptions used in the
President’s most recent budget.
Several other reports are associated with the sequestration process. For
example, within-session sequestration reports may be issued by CBO and OMB (no
later than July 10 and July 15, respectively) if supplemental appropriations or other
discretionary spending is enacted that causes a breach in a discretionary spending
limit. Also, the comptroller general issues a compliance report, if requested by either
the House or Senate Budget Committee, evaluating whether the OMB and CBO
reports and the presidential order comply with the requirements of the act.

CRS-40
Box 2-C.
Sequestration Process Timetable

Deadline

Action to be completed

5 days before the President’s
budget submission

CBO issues sequestration preview report.

Date of the President’s
budget submission

OMB issues sequestration preview report
(as part of the President’s budget).

August 10

President notifies Congress if he intends to
exempt military personnel accounts.

August 15

CBO issues sequestration update report.

August 20

OMB issues sequestration update report.

10 days after end of session

CBO issues final sequestration report.

15 days after end of session

OMB issues final sequestration report;
President issues any required sequestration
order.

Any sequestration order issued by the President must follow the OMB
sequestration report strictly.
Sequestration procedures may be suspended in the event a declaration of war is
enacted or if Congress enacts a special joint resolution triggered by the issuance of a
CBO report indicating “low growth” in the economy. Also, there are several special
procedures under the act by which the final sequestration order for a fiscal year may
be modified or the implementation of the order affected.

Baseline Budget Projections
Most appropriations are for a definite amount and the budget authority is
provided for a single fiscal year. The main task is to estimate the outlays that will
derive in the next year and beyond from the budget authority provided in the
appropriations bill. CBO and the Appropriations Committees base these estimates on
outlay (or spendout) rates—the percentage of budget authority that is spent in each
year. These outlay rates vary by account and are based on historical records. For
example, if $1 billion is appropriated to an account which has a spendout rate of 80%
in the first fiscal year that funds become available, the outlay estimate for that fiscal
year will be $800 million; the remaining $200 million will become outlays in
subsequent years.
Scoring is much more complex in enforcing the statutory PAYGO requirement.
For one thing, unlike appropriations, revenue and direct spending legislation usually
is open-ended; it does not specify the amou

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3A98-720. Public record. Not legal advice.