Every year, the United States government decides how it will raise and spend public money. The federal budget process is the set of steps through which that decision is made, involving the president, Congress and the agencies that carry out government programmes. It is a long and often contentious process, but its basic shape has stayed broadly the same for decades.
Understanding the process helps readers follow debates about spending, taxes and government shutdowns without getting lost in the jargon. At its heart, the budget is a plan: it sets out expected income, mainly from taxes, and decides how much will go to defence, health, education, transport, social programmes and the many other things the federal government does.
What the Federal Budget Is
The federal budget covers the spending and income of the national government for a fiscal year, which runs from 1 October to 30 September of the following year. It is not a single document that becomes law in one vote. Instead, it is a series of proposals, resolutions and laws that together decide what the government may spend and for what purposes.
Some spending is set by existing law and continues unless that law is changed, such as payments under long-standing social programmes. Other spending is decided afresh each year through the appropriations process. The distinction matters, because it explains why some parts of the budget change little from year to year while others are debated intensely.
Step 1: The President’s Budget Proposal
The process usually begins with the president’s budget proposal, prepared with the help of the Office of Management and Budget and sent to Congress early in the calendar year. It sets out the administration’s priorities: which programmes it would like to expand, which it would trim, and how it would pay for them through taxes and other income.
This proposal does not become law by itself. Congress is not obliged to follow it, and in practice it often makes substantial changes. Even so, the proposal matters: it frames the debate, signals the administration’s priorities and gives Congress a detailed starting point to work from.
Step 2: Congress Writes Its Budget Resolution
Next, the House of Representatives and the Senate each consider the budget through their budget committees. They aim to agree on a budget resolution, which sets overall totals for spending and income and divides spending among broad areas such as defence, health and transport. The resolution is a plan for Congress itself, rather than a law that needs the president’s signature.
The resolution also sets limits that guide the next stage. If the two chambers cannot agree on a resolution, Congress can still move ahead with spending bills, but the process becomes harder to coordinate. The resolution is therefore an important, if often little-noticed, part of the system.
Step 3: Appropriations Divide the Money
The detailed work happens in the appropriations committees of the House and Senate. These committees divide their work among subcommittees, each responsible for a group of agencies and programmes. Each subcommittee drafts a bill setting out how much its agencies may spend in the coming year, and for what purposes.
These bills are debated, amended and voted on in each chamber. Where the House and Senate versions differ, negotiators work to reconcile them into a final text that both chambers can approve. The final bills are then sent to the president, who may sign them into law or veto them. In a typical year, there are a dozen such bills covering the main areas of government.
Deadlines, Delays and Shutdowns
The process is meant to be finished before the new fiscal year begins on 1 October. In practice, it often runs late. When spending bills are not ready in time, Congress commonly passes a temporary measure, known as a continuing resolution, which keeps the government funded at broadly existing levels while negotiations continue.
If neither spending bills nor a temporary measure are in place, parts of the federal government may shut down, with non-essential services paused and many federal workers sent home until funding is agreed. Shutdowns are therefore a sign that the budget process has stalled, rather than a normal part of it. They also show how much of everyday government depends on these annual decisions being completed on time.
Frequently Asked Questions
When does the US federal fiscal year begin? The federal fiscal year begins on 1 October and ends on 30 September of the following year.
Does the president’s budget proposal become law? No. It is a proposal that sets out the administration’s priorities; Congress writes and passes the spending laws itself.
What is a continuing resolution? It is a temporary funding measure that keeps the government running at broadly existing levels while Congress finishes the regular spending bills.