Federal Budget

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michael duffey

Former PAD for National Security, White House Office of Management and Budget

Duffey was a member of Donald Trump's presidential transition team. The transition team was a group of around 100 aides, policy experts, government affairs officials, and former government officials who were tasked with vetting, interviewing, and recommending individuals for top cabinet and staff roles in Trump's administration. He was part of the Department of Defense landing team. 

Michael Duffey, a politically appointed Office of Management and Budget official, was given authority by the White House to keep aid to Ukraine on hold after career budget staff members questioned the legality of delaying the funds.

Budget Concepts such as:

  • authorization vs. appropriations 
    • Authorization: “[An authorization] can establish, continue, or modify an agency, program, or activity for a fixed or indefinite period of time.”
    • Appropriation: An appropriations measure provides budget authority to an agency for specified purposes
      • The power to appropriate is exclusively a legislative power and functions as a limitation on the executive branch
      • An agency may not spend more than the amount appropriated to it and it may use available funds only for the purposes and according to the conditions provided by Congress
    • Unauthorized appropriation: an appropriation in the absence of a current authorization, in excess of an authorization ceiling, or for purposes not authorized by law
  • discretionary vs. mandatory spending
    • Mandatory spending:
      • About 65 percent of the federal budget is classified as mandatory spending
      • Congress authorizes a program through legislation that both determines its purposes and rules and also sets the funding amount, often through eligibility criteria that establishes who - persons, households, or levels of government - is eligible for what benefit and/or who must pay user fees
    • Discretionary Spending
      • The annual appropriations bill determines how much funding is made available to each program through one or more accounts and budget line items.

Budget Structure - the Structure and Contents of the Federal Budget

  • The budget is organized into a hierarchical structure that includes:
    • The first level of organization within the federal budget parses total federal spending into approximately 20 categories known as budget functions
      • A function comprises a set of programs that serve a shared purpose or activity such as agriculture, health, or national defense. 
    • Funding in the federal government ties back to appropriations accounts, which in turn are owned by departments and agencies.
      • Each agency conducts its own budget development process. The proposals are submitted to OMB by agency, and the budget chapters are organized by agency.
    • Executive branch agencies carry out programs financed through approximately 7,500 appropriations accounts in the federal budget
      • Each appropriations account is established by Congress and includes an agency, account name, and specific time frame in which to commit and spend the funding made available through that account. 
    • A budget line item further subdivides budget accounts often into a particular expenditure, such as program, subprogram, or object class
  • The information contained in the President’s budget is based on information submitted by agencies and revised in the executive’s annual budget process to reflect the President’s priorities. 
  • In summary, the budget provides data and information including:
    • The amount, by account, that each agency may obligate the Government to pay (budget authority) and estimates of the payments (outlays) that result from these obligations by agency and account. 
    • The amount of receipts each agency collects from various sources. 
    • The resulting surpluses or deficits, which in turn affects the level of the national debt.

Organizations & Stakeholders - The Organization and Stakeholders of the Federal Budget Enterprise and their Role in Budget Development and Execution

  • Budget Committees
    • The House and Senate Budget Committees are responsible for drafting budget plans for Congress and for monitoring and enforcing rules surrounding spending, revenue, and the federal budget. 
    • Each chamber introduces its own resolution, which, when jointly agreed to by the House and the Senate, becomes the so called “budget resolution”
  • Appropriations Committees
    • The United States House and Senate Committees on Appropriations are standing committees within each chamber that are responsible for passing appropriations bills
    • Upon submission of the President’s budget request to Congress, the appropriations committees convene hearings with witnesses to review and consider the President’s budget proposal. 
    • List:
      • Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
      • Commerce, Justice, Science, and Related Agencies
      • Defense
      • Energy and Water Development
      • Financial Services and General Government
      • Homeland Security
    1.  
  • Congressional Budget Office (CBO)
    • The Congressional Budget Office (CBO) is a federal agency within the legislative branch that provides budget and economic information to Congress in a strictly nonpartisan fashion
  • Office of Management and Budget (OMB)
    • The role of the Office of Management and Budget is to manage the process of producing the annual budget proposals of the President for consideration by Congress
    • OMB has traditionally had five (recently changed to six) resource management offices (RMOs), organized by agency and by program area. 
      • RMOs carry out OMB’s central role of assisting the President in preparing the budget, transmitted annually to Congress, and also help supervise each agencies’ administration of law and policy. 
      • RMOs:
        • Assess the effectiveness of agency programs, policies, and procedures
        • Review and assess agency funding proposals and policy initiatives
        • Help OMB leadership prioritize competing funding demands consistent with presidential priorities and guidance
    • OMB splits budget-related work among six RMOs organized by policy/program area:
      • National security
      • Education, Income Maintenance, & Labor (IML)
      • Health
      • Natural Resources, Energy, and Science
      • Financial Service & Housing
      • Homeland Security, Justice, and Transportation

Federal Budget Process - the Outline of Key Events Throughout the Fiscal Year.

  1. Formulation: during this phase, which starts about a year and a half before the fiscal year begins and ends the following February, the Executive Branch prepares the President’s budget request
  2. Congressional: This phase starts in late January when the Congressional Budget Office submits its baseline to the Congress
  3. Execution: After Congress has appropriated funds, OMB RMOs apportion those funds. 
  • Major Milestones during the formulation phase of the budget process in a normal year:
    • Spring: The OMB Director issues a guidance letter to agency heads
    • Spring/Summer: Agencies analyze budget issues and options
    • July: OMB issues Circular No. A-11 to all federal agencies, which provides detailed instructions for submitting budget data and materials
    • Early September: Agencies finalize their budget requests and submit them to OMB
    • September to November: OMB staff will review the agency budget proposals
    • November: The OMB director recommends a complete set of budget proposals to the President
    • First Monday in February: OMB transmits the President’s Budget to the Congress
  • The Congressional Phase
    • The House and Senate create their own budget resolutions, which must be negotiated and merged into a concurrent resolution. 
    • Proposed funding is divided amongst the 12 subcommittees of the Appropriations Committees, which hold hearings. 
      • Each subcommittee is responsible for funding for different government functions such as defense spending or energy and water
    • As these bills move through hearings, markups, and Floor consideration, they are constrained by the levels and allocations in the budget resolution and the enforcement of the Budget Act and through House and Senate rules
    • Congress sends the approved funding bills to the president to sign or veto
    • Execution - once the budget has been enacted and signed by the President, OMB and the federal agencies are empowered to begin executing those funds.