1. CRS - 11 List of Tables COMPARISON OF BUDGET DATA ON THE UNIFIED BUDGET CONCEPT, Page 10 4. TYPES OF BUDGET AUTHORITY (BA), FISCAL YEARS 1967-1971 34 THE FEDERAL BUDGET PROCESS Introduction This report outlines the legislative and administrative procedures involved in the Federal budget process. These procedures are the methods by which the magnitude and composition of Government receipts and expenditures are determined. The primary purpose of the budget is to present the Administration's requests for new spending authority to the Congress. It also contains proposals affecting revenues of the Federal Government. In turn, the budget becomes a basis of decision-making by the Congress as it considers the new spending authority requested. The President's budget is characterized by a heavy emphasis on the government's outgo appropriations, obligations incurred, and outlays. Furthermore, - the administration's tax program is traditionally submitted to the Congress at a different, generally later time than the budget. Therefore, largely because of this organizational and separate time sequence, the Federal budget is principally thought of as an expenditure document. However, although much less emphasis and attention are given to revenue and tax policy in the budget presentation and discussion, they are, in fact, a major determinant of the volume and timing of Federal Government borrowings and repayment of public debt securities. The budget summary tables show the relation between estimated receipts and outlays; requested or anticipated tax changes have been considered in arriving at these estimates. Any budget is basically a set of plans for future action. The Federal 1/ budget documents are the most inclusive statement of the Federal Government's proposed policy and plans for the budgetary period. They serve several different purposes, some of which are: planning future outlays, reviewing previous outlays, relating estimated outlays and receipts to indicate the need for new borrowing or the possibility of debt reduction, and indicating the fiscal impact of planned government action on the economy. Actually, through the new legislation proposed and new budget authority requested, the budget is indicative of government plans beyond the specific budgetary period. Not only is the budget a planning instrument used by Congress and Federal agencies, but it is also used for planning purposes by State and local governments, individuals, businesses and other private organizations that will be affected by Government policies and decisions. Many businesses and industries 2/ are substantially affected by changes in Government policies. 1/ Generally, there are four published budget documents submitted to the Congress each January. For fiscal year 1973 these were: 1103 pages. The Budget of the United States Government, 1973. 570 pages. 88 pages. Special Analyses, Budget of the U.S. Government, 1973. 309 pages. 2/ One economist has pointed out the attachment and dependency of some industries on Government action. Based on 1958 Census of Manufacturers data, shipments to the Federal Government, as a percent of their total shipments for the following industries were: 95 percent for complete aircraft, 75 percent for aircraft propellers, 54 percent for aircraft and missile engines, 39 percent for shipbuilding and repairs, and 38 percent for scientific instruments. Weidenbaum, Murray L. Federal budgeting the choice of Government programs. Washington, D.C. American Enterprise Institute, 1964. P. 16. - CRS · 3 The purposes which the budget is designed to serve are summarized as follows in the budget special analyses: To serve the broadest national objectives, it proposes an allocation of resources between the private and public sectors, within the public sector and, through its effect on investment decisions, within the private sector; It is an economic document that reflects the taxing and spending policies of the Government for promoting growth of the national economy, high employment, relative price stability, and strengthening of the Nation's balance-of-payments position; It sets forth the President's requests to Congress for appropriation action on existing or new programs, and changes in tax legislation; and It is a report to the Congress and the people on how the Government has spent the funds entrusted to it in past years. The budget document contains various types of data and various totals for receipts and outlays. Included are actual data for the last completed fiscal year, plus revised estimates for the current fiscal year, plus estimates for the forthcoming fiscal year based on current and proposed legislation. The budget documents are compiled and presented on the unified budget concept. Prior to fiscal year 1969 the budget was formulated and presented principally on the administrative budget concept. The administrative budget concept corresponded closely to the current Federal funds basis of the unified budget. The administrative budget recorded revenues and expenditures of Federal funds transactions only. All trust fund activities of the Federal Government were excluded from the administrative budget accounts. Administrative budget revenue came from income taxes (individuals and corporations), excise taxes not earmarked for specific accounts such as the highway trust fund, estate and gift taxes, customs duties, and miscellaneous 1/ Special Analyses, Budget of the United States Government, fiscal year 1973, page 7. - largely interest receipts. Administrative budget expenditures were for the historical functions of government, such as national defense, commerce, labor, agriculture, welfare, education, veterans' benefits, international affairs, interest on the public debt and other general government activities. The administrative budget provided a measurement of the operations financed by the Federal Government's own funds. Also, except for the permanent Federal fund appropriations on public debt, the administrative budget expenditures represented those activities which the Congress generally appropriates for on an annual basis. The major criticism of the administrative budget focused on the fact that it covered only "wholly owned" Federal funds and omitted the large and rapidly growing transactions of the Federal trust funds. During the decades of the 1950's and 1960's, there was increasing criticism of the continued use of the administrative budget concept. Early in 1967 President Johnson appointed a commission to study Federal budget concepts and presentations. This commission rendered its report and recommendations in October 1967. The President's Commission on Budget Con 1/ cepts stressed that its most important recommendation was that the budget should be presented on a unified basis and thereby replace the three budget concepts employed previously (the administrative budget, the consolidated cash budget, and the national income accounts budget.) President Johnson adopted this recommenda tion and in January 1968 submitted the budget (fiscal year 1969) on the unified budget concept. The unified budget has been the form used in compiling and presenting all subsequent Federal budgets. 1/ Report of the President's Commission on Budget Concepts. Washington, U.S. Govt. Print. Off., October 1967, 109 pages. |