Federal Budget Glossary

Glossary of common federal budget related terms

Actual Spending

Actual Spending is spending reported by the president after the end of a fiscal year. Actual spending is different from requested spending because it reflects changes to the president’s budget request made by Congress during the annual appropriations process.

Appropriated Amount

Appropriated Amount (or appropriation) refers to the budget authority granted by Congress.  (See also requested amount.)

Appropriation

Appropriation is a law that authorizes the expenditure of funds for a given purpose.

Appropriations Bill

A bill that specifies how much money can be spent on a given federal program. Reviewed by Appropriations subcommittees in both the House and Senate, appropriations bills must also be approved by the full House and Senate before being signed by the president to become law. 

Appropriations Committees

Appropriations Committees in both the House and the Senate are responsible for determining the precise levels of budget authority for all discretionary programs.

Appropriations Process

The annual process through which Congress creates the discretionary budget.

Appropriations Subcommittees

Appropriations Subcommittees in both the House and the Senate, Appropriations subcommittees are committees made up of members of the full Appropriations Committee. Each of these subcommittees has jurisdiction over funding for a different area of the federal government. In both the House and Senate there are 12 different Appropriations subcommittees with the following areas of jurisdiction:

Authorization Bill

An authorization bill gives a government agency the legal authority to fund and operate its programs. An authorization bill also sets maximum funding levels and includes policy guidelines. Government programs can be authorized on an annual, multi-year, or permanent basis. The specific amounts of money authorized in an authorization bill serve as limits on the amounts of money that subsequently may be appropriated by Congress, though lawmakers can choose to appropriate less than the amounts authorized.

Authorization Bill

Authorization Bill gives a government agency the legal authority to fund and operate its programs. An authorization bill also sets maximum funding levels and includes policy guidelines. Government programs can be authorized on an annual, multi-year, or permanent basis. The specific amounts of money authorized in an authorization bill serve as limits on the amounts of money that subsequently may be appropriated by Congress, though lawmakers can choose to appropriate less than the amounts authorized.

Balanced Budget

Balanced Budget is a budget in which revenues and spending are equal in a given year.

Balanced Budget Amendment

An amendment to the U.S. Constitution that would require the federal government to enact a budget where expenditures do not exceed revenues in any fiscal year.

Budget Authority

Budget Authority is the federal government’s legal authority to spend a given amount of money for a certain purpose, according to laws passed by Congress and signed by the president.

Budget Control Act of 2011

Budget Control Act of 2011 is legislation that passed in August 2011 and narrowly prevented a debt ceiling crisis. It raised the debt ceiling, placed caps on discretionary spending for 10 years, and set up an additional deficit reduction target to be achieved by a super committee or through sequestration.

Budget Resolution

A budget resolution is a non-binding resolution passed by both chambers of Congress that serves as a framework for budget decisions. It sets overall spending limits but does not decide funding for specific programs.

Chair's Mark

The first draft of legislation introduced by the chair of a committee or subcommittee that is then debated and amended by committee colleagues. This ability to decide the starting point for all further work on a piece of legislation is an important part of the chair’s power.

Citizens United v. Federal Election Commission

A Supreme Court case in which the court ruled that corporations and unions have the right under the First Amendment to express political views. This decision opened the door to a vast new role for private entities to influence elections, with no limits on the amount of money they spend to do so.

Conference

Conference refers to members of the House and Senate coming together to reconcile their two different versions of a given piece of legislation.

Conference Committee

Members of the House and Senate who work together to reconcile differences in their respective versions of a bill. Both the House and Senate must pass identical versions of any legislation before it can be signed into law by the President.

Conference Report

The final product of conference committee work, the report documents the changes made by conferees (i.e. what is taken out of which bill, etc).

Congressional Aide

Congressional aides are support staff for members of Congress. They perform a variety of tasks from administrative duties to keeping track of specific policy issues.

Congressional Budget Office (CBO)

Congressional Budget Office is the non-partisan branch of Congress that provides analysis and materials related to the federal budget process, and objective analyses needed for economic and budgetary decisions related to programs covered by the federal budget.

Continuing Resolution (CR)

Continuing Resolution is a piece of legislation that extends funding for federal agencies – typically at the same rate that they had been previously funded – until new appropriations bills become law.

Debt

Debt is money owed. Also see Federal Debt.

Debt Ceiling

The debt ceiling is the limit on the amount of debt the federal government allows itself to hold. Congress has the authority to raise the debt ceiling.

Debt Held by Federal Accounts

Debt Held by Federal Accounts is money the federal government borrows from itself.  It results from the Treasury using surpluses from some accounts – for instance, Social Security – to buy Treasury bonds, and thus finance current government spending. Borrowed funds ultimately need to be repaid to the original account, with interest.

Deficit

Deficit is the amount by which government expenditures are greater than tax collections in a given year. 

Direct Spending

See Mandatory Spending.

Disbursements

Actual payments made by the U.S. Treasury to recipients of a federal agency's Obligations. Also see Outlays.

Discretionary Spending

Discretionary Spending is the portion of the budget that the president requests and Congress appropriates every year. It represents less than one-third of the total federal budget, while mandatory spending accounts for around two-thirds.

Earmarks

Earmarks are provisions added to legislation to designate money for a particular project, company, or organization, usually in the congressional district of the lawmaker who sponsored it.

Effective Tax Rate

Effective Tax Rate is the percentage of income an individual or corporation actually pays in taxes. Effective tax rates often differ from official (also known as statutory or “marginal”) tax rates as a result of tax credits, deductions, or other provisions of the tax code.

Entitlement Programs

A term that refers to a certain kind of federal program in which all people who are eligible for the program’s benefits, according to eligibility rules written into law, must by law receive benefits if they apply for them. The Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, is an example of an entitlement program; anyone who qualifies and applies for benefits receives food stamps.

Estate Taxes

Estate Taxes are taxes paid on an inheritance.

Excise Taxes

Excise Taxes are taxes placed on the sale of (usually) luxury items but also on specific consumer items like cigarettes, liquor, and gasoline. 

Federal Debt

Federal Debt is the total of all past federal budget deficits, minus what the federal government has repaid.

Federal Funds

Federal Funds refers to tax revenue collected by the federal government for general purposes. These are distinct from trust funds, which are collected by the federal government for specific purposes, such as Social Security.

Federal Securities

Federal Securities are financial obligations, such as Treasury bonds, taken on by the federal government that require repayment at some point in the future.

Fiscal Policy

Fiscal Policy refers to decisions made by the federal government regarding government spending and taxation.

Fiscal Year

The federal fiscal year runs from Oct. 1 through Sept. 30. Thus, fiscal year 2015 runs from Oct. 1, 2014, through Sept. 30, 2015.

Gift Taxes

Gift Taxes are taxes imposed on any transfer of property that occurs without payment.

Government Accountability Office (GAO)

Government Accountability Office is an independent, nonpartisan agency that works for Congress. GAO operates as an auditor of the federal government, and investigates how the federal government spends taxpayer dollars. The head of GAO is the Comptroller General of the United States.

Gross Domestic Product (GDP)

Gross Domestic Product is a way of measuring the size of a nation’s economy. It’s the total value of all final goods and services produced in an economy in a given year. “Final” means the value of goods and services purchased by the final consumer, as opposed to the value of raw materials purchased by a factory.

House Committee on the Budget

House Committee on the Budget is the committee in the U.S. House of Representatives that is responsible for writing a budget resolution, among other responsibilities. It became a standing committee with the passage of the Congressional Budget and Impoundment Control Act of 1974.

Income Security & Labor

Refers to programs like job training, disability, retirement, unemployment insurance and Social Security that promote employment and income security.

Inflation

Inflation is an increase in prices. Inflation occurs when the average price level across the economy – not just for a few goods – increases. So if the annual rate of inflation is 3 percent, then something you buy for $10 this year might cost $10.30 next year.

Interest on Debt

Interest on Debt is the interest payments the federal government makes on its accumulated debt, minus interest income received by the government for assets it owns.

Lobbying

Lobbying is the act of trying to influence lawmakers.

Mandatory Spending

Mandatory Spending is federal spending that is spent based on existing laws rather than the budgeting process. For instance, spending for Social Security is based on the eligibility rules for that program. Mandatory spending is not part of the annual appropriations process.

Marginal Tax Rate

Marginal Tax Rate is the rate at which your last dollar of income is taxed. So, for example, if you are single and you make $22,000 per year, then your first $8,500 of income is taxed at a rate of 10 percent, and the rest of your income is taxed at 15 percent. In that case, 15 percent is your marginal tax rate.

Medicare

Medicare is a federal program that provides health care coverage for senior citizens and the disabled. It is funded through payroll taxes.

Monetary Policy

Monetary Policy refers to actions by the Federal Reserve to influence the supply of money in the economy as well as interest rates. 

Multiplier Effect

Multiplier Effect is an economics term for an increase in overall economic activity that is greater than the initial increase in spending that caused it. For example, if the government builds a new bridge in a small town, the increased incomes of those who work on the bridge will boost their spending at local stores, and the owners of those stores will then also see an increase in income as a result.

Net Federal Debt

Includes both debt and assets, and therefore appears smaller than the actual “Gross” debt.

Nominal

A nominal dollar amount is one that is not adjusted for inflation; it is the cost or value of something expressed as its price in the year it was purchased. For example, if in 1989 you paid $5 for a movie ticket, then the ticket's nominal price is $5. Also see real.

Obligations

Obligations are binding financial agreements entered into by the federal government. Examples of obligations include contracts and the hiring of federal workers. Obligations are part of the process of federal spending. The federal budget creates budget authority to spend money for certain programs; then those programs enter into obligations to spend that money; and finally the Treasury spends the money, which is known as outlays.

Office of Management and Budget (OMB)

Office of Management and Budget is part of the executive branch of government. OMB gives guidelines to federal agencies instructing them how to prepare their strategic plans and budgets. It also serves as the president's accounting office.

Opportunity Cost

Opportunity Cost is what you give up when making a decision, measured in terms of the next best alternative.

Outlays

Outlays are money paid out by the U.S. Treasury; they occur when obligations are actually paid off, primarily by issuing checks or making electronic fund transfers.

Payroll Taxes

Payroll Taxes are taxes paid jointly by employers and employees to fund the Social Security and Medicare programs.

Per Capita

Per Capita means “per person.” For example, per capita GDP is GDP divided by population, which shows GDP on a per-person basis.

Poverty Line

Also called poverty level or the poverty threshold, the poverty line is determined by annual income. For example, the poverty line for a family of four was $22,113 in 2010; any family of four earning that amount or less was considered to be in poverty.

President's Budget

President's Budget is the annual spending proposal, also known as the budget request, released by the White House each February. It represents the administration’s priorities as reflected in the specific funding requests of various federal agencies. It is the starting point for the annual budget process.

Progressive

Progressive describes a tax system in which wealthier people pay a higher percentage of their income in taxes than lower-income people. Progressive also describes political ideology on the left side of the political spectrum.

Real

A real number is one that has been adjusted for inflation, whereas a nominal number has not.

Receipts

See Revenues.

Regressive

Regressive describes a tax system in which people earning lower incomes pay a higher percentage of their income in taxes than their wealthier counterparts.

Request

The annual budget request is the president’s budget proposal to Congress, which is due, by law, on the first Monday of February each year for the coming fiscal year, which begins on Oct. 1. See also President’s Budget.

Requested Amount

Requested Amount refers to the amount requested by the president as part of the annual budget request at the start of the budget process.

Revenues

Revenues are funds flowing into the U.S. Treasury from such things as individual and corporate income taxes, payroll taxes and user fees (also referred to as receipts).

Senate Committee on the Budget

Senate Committee on the Budget is the committee in the U.S. Senate that is responsible for writing a budget resolution, among other responsibilities. It became a standing committee with the passage of the Congressional Budget and Impoundment Control Act of 1974.

Sequestration

Sequestration is the term for automatic, across-the-board spending cuts triggered by legislation. Most recently, the Budget Control Act of 2011 included sequestration cuts that went into effect in 2013 and will continue through 2021 unless Congress passes new legislation to stop them.

Social Insurance

Social Insurance is made up of programs that help workers and their families replace part of income lost due to unemployment, disability, retirement, or death, as well as ensure access to adequate health care.

Social Security

Social Security, officially called the Old Age, Survivors, and Disability Insurance program, is a federal program that is meant to ensure that elderly and disabled people do not live in poverty. It is funded through payroll taxes.

Subsidy

Subsidy is direct assistance from the federal government to individuals or businesses for certain activities, which helps defray the costs of those activities.

Super Committee

The Joint Select Committee on Deficit Reduction, known widely as the super committee, was created by the Budget Control Act of 2011. The super committee was comprised of six senators and six representatives evenly divided between Democrats and Republicans. They were tasked with finding a minimum of $1.2 trillion in deficit reduction to be implemented over 10 years. Because the super committee failed to complete this task by the established deadline of Nov. 23, 2011, across-the-board cuts known as sequestration went into effect.

Supplemental Appropriation

Supplemental Appropriation is legislation that provides funding beyond what was appropriated in the regular budget process. Congress typically passes supplemental appropriations in response to emergencies like a natural disaster.

Surplus

Surplus is the amount by which revenues exceed expenditures in the federal budget. The federal government has only run a surplus in four years in the last half century, from 1998 to 2001.

Trust Funds

Trust Funds are funds collected by the federal government for specific purposes, as designated by law. For example, payroll taxes are trust funds collected by the federal government to pay for the Social Security and Medicare programs.