Making The US Federal Budget: Process And Hazards

The federal budget makes up roughly half of all public spending in the US, with the rest spent at state and local level. The United States (US) Congress, comprising the House of Representatives and the Senate, is responsible for passing the legislation that constitutes the budget, but the President also plays an important role, both in launching the process through a formal budget proposal and in bringing into an end by signing appropriations, revenue and entitlement bills into law.

While the budget process is formally set out in legislation, budget-making in practice can be quite different. The Constitution grants the ‘power of the purse’ to Congress, but it is ultimately the President who signs bills into law. This de facto division of powers between President and Congress, and within Congress between the House of Representatives and the Senate, poses specific challenges – not least when the House, the Senate and the Presidency are controlled by different parties.

Because of these challenges, at times the key players have been unable to reach agreement, cutting off funding from parts of the government and putting the US at risk of a sovereign default.

Written by Matthew Parry.