Washington — On February 13, President Obama released his blueprint for how the federal government should spend its money in fiscal year 2013, which begins October 1, 2012.
When he sends Congress The Budget of the United States Government, he fulfills a mandate in a 1921 federal law, the Budget and Accounting Act, which requires the president to prepare and submit such a document “no earlier than the first Monday in January, and no later than the first Monday in February.”
Historically, presidents have exhibited some flexibility with regard to that deadline. Global and domestic events as well as challenges within the federal government affect the exact timing of the proposal’s submission.
The budget reflects the administration’s spending priorities and offers specifics to support some of the goals laid out by Obama in his January 24 State of the Union address, such as increasing American manufacturing jobs, strengthening educational systems, encouraging entrepreneurship and developing clean energy sources.
Even though the president’s proposed budget will total trillions of dollars, the figure is a fairly low one relative to the nation’s overall economic output. Annual spending by the U.S. federal government during the past decade has hovered around 16 percent of the nation’s gross domestic product (GDP). Total government spending, including state and local governments, accounts for about 28 percent of GDP in the United States, a level that is one of the lowest among industrialized nations. In many countries in Western Europe, government spending accounts for half the GDP.
U.S. government spending provides for the public good — services needed by society that benefit all, but which the private sector has little or no incentive to provide. Such services include the national defense, public safety, education and the management of natural resources. Government activities also include issuing currency, collecting taxes, borrowing money and maintaining economic order.
The U.S. budget is a valuable financial tool, but it is also a powerful way for the president to communicate to Congress and to the citizens the priorities of his administration.
This process is mirrored at the state level, as governors present budget proposals that highlight their priorities to state legislatures for consideration. In state governments, the entire funding process sometimes is concluded within weeks. At the federal level, the process stretches out over many months.
FIRST STEP ON A VERY LONG ROAD
The submission of the president’s budget is the starting point for setting federal spending priorities for the fiscal year that begins October 1. Because the Constitution reserves the authority to raise and spend money for the federal government to Congress — the power of the purse — the president’s budget is simply a recommendation. The actual spending, or appropriations, will be hammered out over several months in a series of actions in Congress and negotiations between Congress and the White House.
The president’s budget process was established in 1921 to increase coordination within the federal government and restrain spending. Previously, individual government agencies had petitioned Congress for funds directly. The shift to a consolidated funding request increased the president’s influence over the budget.
The White House prepares the annual budget after consultation with all federal government entities, soliciting information from the various departments and independent agencies to create a funding request that will support government functions effectively and help implement the president’s policies, both domestic and international.
The Office of Management and Budget, an agency within the executive branch, is in charge of compiling and analyzing budget data for the White House. It generates the actual budget document, traditionally issued as a multivolume set of large, softcover books, and serves as an advocate for the president’s spending policies. President George W. Bush made history in 2008 by releasing his proposed budget for 2009 in electronic formats.
Following the president’s submission, Congress gets to work on drafting a dozen separate appropriation bills to fund various categories of spending, such as agriculture, defense or natural resources. These bills include provisions to fund federal government activities and also allocate money to run programs at the state and local level. Appropriation bills can spark fierce debates between Democrats and Republicans, and between senators and representatives. The spending measures most energetically promoted by a member of Congress generally are tied closely to regional, demographic or economic factors in his or her home state.
Additional information on the president’s proposed budget for fiscal year 2013 will be made available on the White House website.