With the help of the Office of Management and Budget (OMB), the President draws up budget guidelines with spending and taxation targets. Federal departments and agencies prepare funding plans and submit them to OMB which, together with senior department and agency officials, negotiate final budget plans which are sent to the White House. The President presents his budget to Congress each January, usually conveying his priorities for the next fiscal year to Congress and the American people through the State of the Union Address.
Congressional Budget Review
The Congressional Budget and Impoundment Act of 1974 strengthened the legislative branch’s capacity to control the federal budget. Institutionally, Congress created three new entities: the Senate Budget Committee, the House Budget Committee, and the Congressional Budget Office.
The Act permits Congress to review the federal budget as a whole, to relate taxing and spending to decisions, and to determine priorities among competing national programs. The Senate and House Budget Committees accomplish the following:
- Receive budget proposals from the President as well as budget requests from authorization and appropriations committees.
- Study these proposals, amend them, and develop budget resolutions.
- Set a spending limit on each budget category, through budget resolutions.
There are 17 major government functions for which the budget committees recommend appropriate levels of budget authority (i.e., set spending ceilings).