The Power of the Purse

Congress will send a $1.4 trillion spending deal to the President this week. It will fund the government and avert an end-of-the-year shutdown. The House has already passed the deal and the Senate will take it up by the end of the week. The government is currently operating under a continuing resolution that expires Dec. 20.

Read about the health-related specifics of what’s included in the deal here. But first let’s start with some key concepts related to Congress’ power of the purse.

The government’s fiscal year runs from Oct. 1 – Sept. 30. Appropriations bills typically comprise 35-39% of federal spending.

THE BUDGET PROCESS

Departments and agencies submit spending proposals to the White House. They help create the President’s budget, which is typically submitted to Congress on the first Monday in February.

Congress considers a budget resolution that sets discretionary spending limits for the upcoming fiscal year – the target date of completion is April 15. The Appropriations subcommittees draft appropriations bills for each agency under their jurisdiction.

TYPES OF SPENDING

Mandatory spending is spending for entitlement programs and is generally governed by the statutory criteria. This category includes Medicare, Social Security, Medicaid/CHIP, marketplace insurance subsidies, SNAP, TANF, earning income tax credit, unemployment insurance, and student loans.

Discretionary spending is set by annual appropriations bills, under the jurisdiction of the House and Senate Appropriations Committees. This category includes most defense, education, public health, energy, and transportation programs.

The Congressional Budget Office (CBO) projected 2019 federal spending to be $4.4 trillion, with Social Security and major health programs accounting for HALF. It also estimated federal revenues to be $3.5 trillion, leading to a $960 billion deficit – the difference between revenue coming in and spending going out.

The Council on Budget and Policy Priorities has a fantastic longer read on the budget process.

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