Glossary of Budget Terms

Appropriations Process. Meeting and decisions of 13 appropriations subcommittees in Senate and House to allocate money to specific programs for the next fiscal year. Must be completed by October 1 (beginning of new fiscal year), or federal departments will not be able to spend any funds.

Authorization Process. Meetings and decisions of the authorizing committees to permit a program or benefit to exist, and to describe its characteristics. Some programs are permanently authorized, others are reviewed every year, or every three to five years. Congressional rules forbid federal departments from spending money on programs that are not authorized.

Authorizing Committees. Design and oversee any creation of, or changes in, federal programs and benefits. These committees work throughout the year, and are sometimes called upon (by the budget committee) to change the programs under their jurisdiction in order to make them cost less. (See reconciliation bill.)

Budget Pie. A circular graph of the federal budget, showing the relative size of the “slices” for different categories of the budget.

Budget Proposal. The President’s recommendations on federal spending and taxes, submitted to Congress in February, proposing figures for the fiscal year that starts the following October 1. Available at government book stores, major libraries, and on-line at: www.whitehouse.gov/omb/budget.

Budget Resolution. A bill written by the House and Senate Budget Committees each spring that sets limits on funding for major categories in the budget (See functions). The first stage of the congressional budget process.

Conference Committee. Members appointed by the House and Senate who meet to work out a compromise between the House and Senate versions of the same legislation. Usually the conferees (or members of the conference committee) are the officers of the House and Senate, and senior members of the committees that worked on the bill. They report their compromise back to the House and Senate for approval.

Congressional Budget Office (CBO). A nonpartisan office serving Congress whose role is to provide independent, technical economic and budgetary information to Congress. CBO was created by the Congressional Budget Act of 1974 to free Congress from relying on the administration’s Office of Management Budget (OMB) for budgetary and economic information. But CBO is not a mirror image of OMB. OMB serves the President and acts as an advocate for the President’s policies. The CBO is intended to be independent and objective with regard to policy proposals. (See Office of Management Budget.)

Continuing Resolution (CR). A temporary appropriations bill to allow named departments to continue spending money at current rates until Congress passes a new appropriations bill. (See appropriations process.)

Discretionary. Spending that has not been promised to an individual, and that is not already obligated (such as mandatory and debt). In theory, at least, Congress could start with a clean slate of discretionary spending each year, and decide what is most important to buy or invest in with that portion of the budget.

Earmark. To set aside funds for a specific purpose, use, or recipient. Generally speaking, virtually every appropriation is earmarked, and so are certain revenue sources credited to trust funds. In common usage, however, the term is often applied as an epithet for funds set aside for such purposes as research projects, demonstration projects, parks, laboratories, academic grants, and contracts in particular congressional districts or states or for certain specified universities or other organizations.

Entitlements. Programs that promise a certain benefit to anyone who qualifies under the law. For example, Medicare promises comprehensive health care benefits to anyone who is over the age of 65. If Congress wants to change the cost of an entitlement program, it must change the law that qualifies people, or it must reduce the cost of the promised benefit.

Federal Budget Deficit. The difference, in any one year, between the amount of money the federal government raises, and a greater amount that it spends. The difference is usually borrowed, and hence, adds to the federal debt.

Federal Debt. The accumulation of borrowings over the years. The federal debt has increased from about $900 billion when President Reagan took office, to $5.6 trillion in 2001. Over half of the federal debt is due to high military spending.

Fiscal Year (FY). A financial year used as an alternative to a calendar year. The federal government’s fiscal year begins on October 1 and ends on September 30. The fiscal year carries the name of the calendar year in which it ends. For example, FY 2003 began on October 1, 2002 and ended on September 30, 2003.

Functions. Major categories in the federal budget, such as defense, agriculture, transportation, and health, organized by the purpose of the spending. Each category is numbered, and each program that is included in the budget carries a number that shows the function or category to which it belongs.

Mandatory. Spending that has already been promised, either to individuals, or as entitlements, or through other types of obligations, such as interest on the federal debt.

Means-Tested Programs. Programs that provide cash or services to people who meet a test of need based on income and assets. Most means-tested programs are entitlements- such as Medicaid, the Food Stamp Program, Supplemental Security Income (SSI), family support, and veterans pensions- but a few, such as subsidized housing and various social services, are funded through discretionary appropriations.

Off-Budget. Spending or revenues excluded from the budget totals by law. The revenues and outlays of the two Social Security Trust Funds and the transactions of the Postal Service are off-budget and (except for discretionary Social Security administrative costs) are not included in the official surplus and debt levels of the Federal Government, and are exempt from most budgetary controls.

Office of Management and Budget (OMB). The chief budget office in the executive branch of the Federal Government, which provides technical economic and budgetary information to the President and advocates the President’s policies.

Pay-As-You-Go (Pay-Go). A provision of the Budget Enforcement Act of 1990 which requires that any entitlement or tax proposal include provisions for financing. New entitlement or tax proposals must be paid for by raising new revenue or cutting existing entitlement programs. Thus, changes in entitlement programs must be deficit neutral.

Reconciliation Bill. A collection of changes in tax laws and in entitlement and mandatory spending programs which, taken together, reconcile the differences between money coming into the federal treasury (revenue) and money authorized to be spent in a fiscal year. Authorizing committees write various parts of the reconciliation bill, which is then compiled by the budget committees in the House and Senate, usually late in the summer.

Revenue. Money coming into the federal treasury from taxes, sales, interest, fees and other sources.

Supplemental Appropriation. An appropriation, normally adopted during the course of the fiscal year, for discretionary spending in addition to that included in previously enacted appropriations measures.

Unified Federal Budget. The unified budget, the most useful display of the Government’s finances, is the presentation of the Federal Budget in which revenues from all sources and outlays to all activities are consolidated.