Federal Budget Glossary

Appropriations Bill: This bill allocates the funds approved by an authorization bill to individual federal agencies. It specifies how much money can be spent on a given program, and grants the government authority to enter into legal obligations that are later paid in outlays. Reviewed by the corresponding subcommittees of the Appropriations committees in both the House and Senate, appropriations bills must also be approved by the full House and Senate before being signed by the President
Appropriations Process: The annual process through which Congress creates the discretionary budget.
Authorization Bill: This bill gives a government agency the legal authority to fund and operate its programs, sets maximum funding levels, and includes policy guidelines. The bill must be adopted by the full House and Senate before being signed by the President. Government programs can be authorized on an annual, multi-year, or permanent basis. Specific amounts authorized are ceilings on the amounts that subsequently may be appropriated in an appropriations bill, but not as minimums; either the House or Senate may recommend appropriating lower amounts or nothing at all.
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. Several versions have been offered in recent years, and most allow waivers when both houses of Congress agree by votes larger than a simple majority. Most versions also require the President to submit balanced budgets to Congress each year.
Budget Authority: The legal power given to a federal agency to spend money through “obligations” (I.e. enter into a binding contract).
Budget Control Act of 2011: The agreement reached by President Obama and Congress in August 2011 to raise the federal debt ceiling. See also “Sequestration” and “Super Committee.”
Budget Resolution: A resolution passed by each house of Congress that serves as a framework for budget decisions. It sets overall spending limits but does not decide funding for specific programs.
Chairman's Mark: The first draft of legislation introduced by the chairman 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.
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 Budget Office (CBO): CBO 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): Legislation that permits a government agency to continue to operate at existing funding levels if a new appropriations bill to fund its operations has not been adopted by the start of the fiscal year (October 1st).
Debt: Accumulated total of annual deficits and surpluses over the years.
Debt Ceiling: The legal (statutory) limit set by Congress on the amount of total debt that the federal government can assume. If the debt amount exceeds the debt ceiling limit, the government is unable to borrow additional funds to support continued operations, triggering a government shutdown and default on existing loans. Congress has the legal authority to raise the debt ceiling limit as needed.
Deficit: When spending exceeds revenues in a given year.
Direct Spending: Also referred to as mandatory or entitlement spending, Direct Spending is directly controlled through eligibility requirements and benefit payments mandated in laws other than appropriations bills. Unlike discretionary spending, direct spending can occur without the annual approval of Congress and the White House. Examples include Social Security and the food stamp program.
Disbursements: Actual payments made by the U.S. Treasury to recipients of a federal agency's Obligations.
Discretionary Spending: Spending that is newly appropriated each year through Congress's annual appropriations process. This spending makes up roughly one-third of the federal budget
Entitlement Programs: Programs such as Social Security and the Special Nutrition Assistance Program (SNAP) that pay benefits to anyone who applies for benefits and meets the eligibility requirements for that specific program.
Excise, Estate and Gift Taxes: Specific revenue sources that are related to specific activities. Excise taxes are taxes placed on the sale of (usually) luxury items but also on specific consumer items like cigarettes, liquor, and gasoline. Estate taxes are taxes paid on your inheritance (primarily from relatives). Gift taxes are taxes imposed on any transfer of property that occurs without payment.
Federal Funds: All government funds besides trust funds. Federal funds include money from individual and corporate income taxes and accounts for roughly two-thirds of all federal expenditures.
Federal Securities: Federal Securities represent financial obligations taken on by the federal government – like treasury bills and savings bonds – that require repayment at some point in the future.
Government Accountability Office (GAO): 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): The combined dollar value of all the spending by individuals, businesses, and government along with the value of products exported to foreign countries, while subtracting the value of all of the products imported from other countries.
Gross Federal Debt: Includes only debt owed by the federal government; the nation’s actual debt (as opposed to “Net Federal Debt”)
Income Security & Labor: Refers to programs like job training, disability, retirement, unemployment insurance and Social Security that promote employment and income security.
Mandatory Spending: Spending that is essentially automatic, and therefore bypasses the annual appropriations process. It includes entitlement programs like Social Security, Medicare, and the Supplemental Nutrition Assistance Program (SNAP) – formerly the Food Stamp Program – where benefits are received by those who meet specific eligibility requirements. (e.g. if you're over 65, you can collect Social Security). Spending levels can fluctuate up or down depending on the number of people eligible for payment under these programs. Mandatory spending accounts for roughly two-thirds of the federal budget
Multiplier Effect: When an increase in spending leads to an even larger increase in economic activity.
Net Federal Debt: Includes both debt and assets, and therefore appears smaller than the actual “Gross” debt.
Obligations: The result of an agency's Budget Authority, Obligations are awards in the form of grants, contracts or loans made by a federal agency to specific recipients. An obligation means that although the government may not have actually cut a check yet, the funds are committed and can't be spent elsewhere
Office of Management and Budget (OMB): Part of the Executive Branch, OMB gives guidelines to federal agencies instructing them how to prepare their strategic plans and budgets. It also serves as the President's “accounting firm.”
Outlays: Actual money spent in a given fiscal year. Outlays can come from three sources: new budget authority, multi-year budget authority, or funds obligated in a previous year but not yet spent
President's Budget: The annual spending proposal released by the White House each February which contains the Administration’s priorities as reflected in the specific funding requests of various federal agencies. It is the starting point for the annual Congressional budget process
Progressive: A system designed so that individuals with higher incomes pay a larger percentage in taxes than those with lower incomes
Receipts: See “Revenues.”
Regressive: A system where those with lower incomes pay a larger percentage of their income in taxes than those with higher incomes.
Revenues: 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).
Sequestration: A series of automatic federal spending cuts that occur when the government fails to achieve a set of pre-determined goals. In the current context, sequestration refers to the set of automatic across-the-board cuts mandated by the Budget Control Act of 2011 that will go into effect if Congress fails to enact $1.2 trillion in deficit reduction initiatives by December 23, 2011
Social Insurance: Payments made by the government for programs such as Social Security and Medicare
Super Committee: The Joint Select Committee on Deficit Reduction, known as the "Super Committee," was created by the Budget Control Act of 2011. The Super Committee is comprised of six Senators and six House members evenly divided between Democrats and Republicans. They are tasked with finding a minimum of $1.2 trillion in additional cuts over ten years. If the Super Committee fails to meet this target by November 23, 2011, or if Congress fails to enact the Super Committee proposal by December 23, 2011, then it triggers “sequestration.”
Surplus: When revenues exceed spending in a given year
Trust Funds: Pots of money that are earmarked for specific purposes and which generally have a dedicated revenue source. There are over 200 trust funds, the largest of which is Social Security and include Medicare and railroad retirees’ pensions