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What is the Budget Act?

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  • Written By: Jason C. Chavis
  • Edited By: Bronwyn Harris
  • Last Modified Date: 07 September 2016
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The Budget Act is any number of legislative measures enacted by the United States Congress designed to standardize the process by which the federal government establishes the national budget. Framework for the process was first established in 1921 and was then modified again in 1874. According to the mandate of the legislation, many different offices are included in the process, including the President, the House and Senate Budget Committees and the Congressional Budget Office.

Each year, the Office of Management and Budget in the executive branch aids the President in establishing a proposed budget request. This request includes all financial needs for the federal executive offices and independent agencies within the government. According to the Budget and Accounting Act of 1921, this must occur each year between the first Monday in January and the first Monday in February. To outline the needs of the proposal, the budget request includes various research papers and statements detailing the necessities of the next fiscal year.

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This proposal is then sent to the legislative branch where the House and Senate Budget Committees take the requests and modify it as they see fit. Known as the annual budget resolution, each committee must submit the modified legislation to the floors of both houses in early April. Constitutionally, the budget process is considered a concurrent resolution in which the President does not have to sign the finished product. It simply binds Congress to the legislation, requiring it to appropriate the necessary funds for each expenditure. Each house passes its own version of the budget resolution, which then requires a conference report that reconciles the differences.

The Budget Act is modified periodically to address challenges with establishing the annual expenditure process. A major overhaul took place with the 1974 Congressional Budget Act, which created the Congressional Budget Office and gave the Senate the ability to expedite the budget process. Another important change occurred in 1990 with the establishment of pay-as-you-go (PAYGO) legislation requiring all new spending be paid for by new taxes or cuts from existing programs. This helped keep the deficit and overall federal debt down.

Unlike most other legislation in the Senate, the budget reconciliation process cannot be filibustered. Normally, a filibuster requires a three-fifths vote to end the debate on the floor, without which the legislation process is essentially brought to a standstill. This led to many unrelated bills, known as riders, being attached to the budget. In response, the Budget Act mandated the Byrd Rule. This rule allows Senators to remove provisions that are considered extraneous and have nothing to do with the budget.

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