Appropriations Bill

     A bill allocating funds to a program, department, agency, commission, etc.

Appropriations Committees

     The name of both the House and Senate committees responsible for allocating funds to programs, agencies, etc.

Authorization Bill

     A bill which establishes a program or agency, or redefines it; and defines, expands, or contracts its jurisdiction.

Balanced Budget

     A theory by which, if Congress passes a budget in which expenditures are equal to revenues, the national debt will shrink as a percentage of the gross national product (GNP) and gross domestic product (GDP), and thus automatically be reduced by inflation.

Balanced Budget Amendment

     This is an amendment to the U.S. Constitution advocated by some which would require for Congress to pass budgets in which expenditures are equal to revenues.
     The problem with this idea is that revenues depend, to a great extent, on the state of the economy--something very difficult to predict. Moreover, a large percentage of our budget is spent on entitlement programs, such as Social Security, Medicaid, etc., where no specific amount can be allocated.
     In addition, domestic or international crises often cause the government to spend money unexpectedly, and these expenditures are often not counted as part of the regular budget. Therefore, there is no practical possibility of actually achieving a balanced budget in advance.

Budget Committees

     These are committees in both the House and the Senate which draft the annual budget resolutions which establish general guidelines for taxing and spending by the federal government, in an attempt to gain control of the deficit.

Budget Message

     This is the first step in the budget process. The President delivers the Budget Message in an address to Congress, and sets forth the executive priorities for spending and tax mesures. The President's message is prepared in conjunction with the Office of Management and Budget (OMB), based on information supplied by the OMB.
     Although Congress is not bound to accept the President's directions, usually the budget passed by Congress is close to the President's recommendations.

Budget Resolution

     This is part of the budget process established by the Federal Budget and Impoundment Control Act of 1974. The House and Senate Budget Committees, working with the advice of the Congressional Budget Office (CBO), present this joint resolution to Congress. The budget resolution establishes budget guidelines that set maximum amounts that can be spent in general categories, and minimums for revenues to be collected by the federal government.
     The idea of this process was to establish a way for Congress to control the annual federal deficit. These resolutions do not set funding for specific programs or agencies, or specific tax or other revenue measures, but simply establish general guidelines within which the specific appropriations and revenue measures are to be drafted by other committees.

Budget Summit

     This occurred in 1990 when President Bush and Congressional leaders of both parties could not reach a compromise on the budget. The final agreement reached in the summit contained provisions about which neither the President nor Congress was happy. It forced President Bush to break his 1988 campaign promise of "no new taxes."

Bureau of the Budget (BB)

     This was the predecessor to the Office of Management and Budget (OMB).

Congressional Budget Office (CBO)

     This was established by the Federal Budget and Impoundment Control Act of 1974. It is one of the four staff offices of Congress, and is designed to assist the House Budget Committee and the Senate Budget Committee in establishing the mandated budget resolutions.
     It was established as a legislative check on the powerful executive Office of Management and Budget (OMB) which assists the President in establishing the executive's budget priorities. It was hoped that, through the establishment of this Office, Congress would be better able to challenge what was seen as the President's advantage in budget leadership.

Continuing Resolution

     Often the federal budget is not passed in time to go into effect when it is supposed to on October 1. With no budget in place, the federal government would be forced to shut down. In these cases, Congress passes a continuing resolution which must be signed by the President.
     Under this resolution, the federal government operates on the budget priorities in the previous year's budget for a specific period of time. Sometimes, Congress uses these resolutions in a partisan fashion when it wishes to maintain the budget priorities of the previous budget.

Deficit Reduction

     This is a concept in which certain funds, including budget surpluses, are allocated specifically to reduce the federal deficit and cannot be used for other purposes or programs.

Federal Budget and Impoundment Control Act of 1974

     This Act initiated the current budget procedures and established the House and Senate Budget Committees and the Congressional Budget Office (CBO). Its chief mechanism was to require Congress to pass annual budget resolutions which set general guidelines for federal spending and taxation.
     It also set up strict guidelines for the impoundment of federal budget funds by the president. To some extent, this bill was passed in reaction to President's Nixon's practices regarding domestic social programs and to give Congress more power in dealing with the executive branch on budgetary matters.

Federal Debt

     This is the total sum of all past and present federal deficits. In the last decade and a half, it has risen from one trillion to over four trillion dollars --and is still growing.

Federal Deficit

     This is an annual figure which reflects the amount by which federal spending exceeds federal revenues for that year.

Finance Committee

     This is the Senate committee which parallels the House Ways and Means Committee. It is the committee in the Senate which deals with all tax and other revenue bills.
     Constitutionally, tax bills can only originate in the House, and not in the Senate. This is because the Founders saw the House as representing the people and the Senate as representing the states, and according to the concept of "No taxation without representation," only the House had the authority to tax the people.
     The Senate Finance Committee gets around this, however, through the amendment process; it does, in fact, introduce new tax measures by adding them on--or amending them--to tax bills originating in the House.

Fire Walls

     A mechanism in the Omnibus Budget Reform Act of 1990 (OBRA) by which savings in one general area of the budget could not be used for programs in another general area. OBRA established three areas of discretionary spending: defense, domestic matters, and international aid. These categories do not include entitlement spending. In this way, savings on military programs, for example, could not used be for domestic programs.

General Accounting Office (GAO)

     This is one of the four staff offices of Congress. It is known as Congress' "fiscal watchdog." It is responsible for conducting fiscal and programmatic audits of the budget after the fact , and insuring that funds are not misappropriated. It does not take part in the actual budget making process, except by issuing reports on how wisely allocations in previous budgets were spent.

Gramm-Rudman-Hollings (GRH)

     Senators Gramm (R, TX), Rudman (R, NH), and Hollings (D, SC) were the principal sponsors of the Deficit Reduction Act of 1985. As with most acts passed by Congress, this Act is sometimes referred to by its sponsors' names, and is called the Gramm-Rudman-Hollings Act--or, sometimes simply Gramm-Rudman. This Act set up a series of deficit reduction goals, with sequestration as its means of enforcement. If specific budget reduction goals are not met by the budget deadline, the executive can order a sequestration or across the board percentage cut in the discretionary parts of the federal budget.
     GRH was amended in 1987 in what is sometimes called the Son of GRH. These amendments take economic forecasts into account. The budget reduction goals now had to reflect and allow for either an upswing or a downturn in the economy. This amendment was designed to prevent a sequestration due to the increased entitlement spending brought about by a recession or other economic disaster, and to prevent sequestration from having a negative effect on the nation's economy.

Impoundment

     An action by the president by which funds allocated by Congress for a certain program or agency are set aside and not used. This represents a delegation of power from Congress to the Executive.
     Impoundment was originally intended to be used when funds could not be spent for technical reasons. However, President Nixon used this authority extensively for political purposes to block funds from being spent for programs to which he was opposed. In response to this, Congress passed the Federal Budget and Impoundment Control Act of 1974 in which the president's power to impound funds was greatly limited, and subject to strict reporting requirements.

OBRA: The Omnibus Budget Reform Act of 1990

     This Act, which contained the Budget Enforcement Act, replaced the deficit reduction goals of Gramm-Rudman with a spending cap approach to the control of the federal budget. It established a PAY-GO system through which increases in spending in one federal program had to be balanced by decreases in spending in other programs. It also established fire walls by which savings in programs in one budget area could not be used to pay for increases in spending for programs in another area.

OMB: Office of Management and Budget

     The Office of Management and Budget is located within the Executive Office of the President (EOP). It was established during the Nixon administration as a replacement for the former Bureau of the Budget (BB). It is responsible for providing the President with the figures necessary to develop the budget message.
     It is a quite successful attempt to use the budgeting process as a management tool. All executive departments, agencies, commissions, and other bureaucratic units are required to submit their budget requests to the OMB which, with the president, then passes these requests on to Congress. In this way, the president can maintain better control of the agencies and other bureaucratic units within the executive branch. Because of an agency's concern about its budget for the next fiscal year, it is more likely to carry out the wishes of the President.

PAY-GO

     This means of deficit control was initiated under the Omnibus Budget Reform Act of 1990 (OBRA). Under this pay-as-you-go system, if Congress wishes to increase spending for a specific program or initiate spending for a new program, it must either balance this new spending with cuts in the budget in other programs in the same budget area, or introduce new sources of revenue to balance the new spending. In other words, all budgetary increases in old programs or introductions of new programs had to be designed in a way to be budget neutral .

Reconciliation Legislation

     This is part of the budget process called for under the Federal Budget and Impoundment Control Act of 1974.
     Although the budget resolutions passed by Congress set up general budgetary guidelines, specific spending and revenue bills are enacted separately through the Appropriations Committees, and the Ways and Means and Finance Committees, respectively. Often, the totals of these individual bills do not match the guidelines set forth in the budget resolution. In order to align these figures properly to meet the budget resolution's guidelines, legislation must be passed adjusting the appropriation and revenue bills accordingly. This overall legislation is referred to as reconciliation legislation. This reconciliation legislation, together with the individual appropriations and revenue bills passed by Congress and signed by the President, make up the federal budget.

Sequestration

     This is a mechanism set up in Gramm-Rudman through which the President could order an automatic, uniform percentage, across the board budget cut in all discretionary spending which would occur if Congress passed a budget which exceeded deficit reduction guidelines.

Ways and Means Committee

     This is the House committee in which all revenue raising bills must originate. It determines what methods of taxation will be used to fund the federal government.
     Its parallel in the Senate is the Finance Committee. However, according to the Constitution, the House committee has more power since it is the House which was seen by the Founders as representing the people. According to the principle of "No taxation without representation," all tax bills have to originate in the House, and therefore in the Ways and Means Committee.