Budgeting Process

How does the budget go from an idea to a law?

Each February, the Office of Management and Budget, which is part of the White House, releases the President's budget requests for the next fiscal year, which starts October 1. The House of Representatives and the Senate subcommittees hold hearings, make changes, and send the final bills to the floor for a vote. Once each chamber has passed the appropriations bills, the President signs it into law and the budget officially takes effect on the first day of the next fiscal year. See our Federal Budget 101 materials for more detailed information.

What happened in Fiscal Year 2011?

Congress could not agree on a budget for this fiscal year, so it passed a series of continuing resolutions. These bills kept the government operating with the same amount of money they were given last year (FY2010). These measures are temporary and meant to allow federal offices to keep functioning until a real budget is passed. The budget passed for this year will only apply until September 30.

What's going to happen in Fiscal Year 2012?

President Obama proposes to spend $3.7 trillion between October 1, 2011 and September 30, 2012. For state level information on 33 selected programs provided by the Administration in its budget request, view our tables here.

Which programs and departments got more money?

The big beneficiary this year was infrastructure, which is money the government spends to fix roads, bridges, airports, and other structures that make our life possible. The Highway Planning and Construction Program gets $29 billion more than projected in 2011 (a 68% increase), the Airport Improvement Program gets $2.9 billion more (a 59% increase) , and the Federal Transit Formula Grants Program nets an additional $1.5 billion (a 17% increase).

Were programs cut?

The Low-Income Home Energy Assistance Program, which provides money to help people afford heating and cooling costs, will lose $2.5 billion under the President's budget (a 56% decrease). Two programs to provide clean drinking water and build water treatment plants surrender $2 billion combined (a 44% average decrease). Other programs were cut, but these experienced the largest percentage decreases.

Did any programs keep their funding?

The Social Services Block Grant, which provides services to the mentally ill and addicted, did not experience a change in funding. WIC and Adoption Assistance remained about even. The Obama Administration has proposed a 5-year spending cap on non-security discretionary funds like these. Remember, when a program's funds don't change, they actually erode a little because it becomes more expensive to purchase things over time (inflation).

The Budget and You

What's the big picture? What do we need to know?

Every budget has a story to tell. The President uses the annual request to tell the American people, and Congress, about his plans for the coming year. Here are some of the stories from this year's budget.

When the economy falters, the federal government spends more on programs like Medicaid, food stamps, and unemployment for the growing number of people who qualify. At the same time, fewer people working and fewer businesses selling means the government gets less revenue in the form of taxes. This is the major reason for the current deficit, which is the amount the government borrows to meet its needs.

Typically, the discretionary part of the budget (35% of the total), which is the money that gets decided each year, is split into defense and non-defense categories. This year, the President changed the categories to security and non-security; security includes more money for things like veteran's benefits and homeland security. He pledged to cap non-security spending (42% of discretionary spending), which has less of an impact than capping non-defense spending (58% of discretionary spending). Thus, the President wants to freeze, in effect, 13% of the budget.

Why does this matter?

Every dollar the federal government spends comes from a tax. It may be a tax on stock profits, a tax on businesses, or a tax on personal income. Because you, the taxpayer, pay for these programs, it is crucial that you understand how the government is spending your money. The budget makes its way through the House and the Senate so that you, via your representatives, have the chance to speak up and shape the nation's budgetary priorities.

See our President's Budget material for charts, in-depth analysis, and much more.