The Federal Budget Process: How The United States Allocates Spending on Federal Programs and Services

Background

The formulation of the federal budget is an annual process that involves Congress, the White House and all federal agencies. Congress does not approve a single budget. “The federal budget” is instead composed of many pieces of legislation. While there is no single federal budget, there is an annual process that sets in motion multiple routes for spending prioritization and authorization. This entire process is often contentious and many factors come into play as Congress determines how it will prioritize government spending for the upcoming year. This year is unique because President Trump has proposed significant and severe spending cuts to most federal agencies, including the U.S. Department of Agriculture and food safety programs implemented by the Food and Drug Administration. There is bipartisan concern about the president’s proposed budget, with many members of Congress worrying that his proposal could harm the country’s farm economy.

Weird and wonky like the Policy Team? Keep on reading to learn more about the federal budget process and about the current situation. Eventually, you’ll read your way to the TAKE ACTION section! If you’re a normal human who is not fascinated by the nitty gritty details of the budget process, just click on TAKE ACTION to find out what you should do to ensure the federal budget supports local, organic agriculture.

Three Types of Federal Spending

The U.S. Treasury divides all federal spending into three groups: mandatory spending, discretionary spending and interest on debt. Mandatory and discretionary spending account for more than ninety percent of all federal spending, and pays for all of federal government programs, including all of the services provided by the USDA on which farmers across the country rely. So, what is the difference between the two types of federal spending – mandatory and discretionary – and how does the government budget for it?

Mandatory spending is required by a particular law, and so is not dependent on an annual or periodic appropriation bill. The two largest mandatory programs are Social Security and Medicare. Congress must, from time to time, pass legislation that authorizes the federal government to spend mandatory amounts. These authorization bills can extend over multiple years.

The second type of federal spending – discretionary – is optional. Often a law will provide the maximum that Congress can spend on a particular program, but doesn’t require a specific amount. These discretionary items require annual appropriation bills to set out how much, if anything, Congress will spend. Congress determines the annual discretionary budget through an appropriations process where both houses must work to pass appropriations bills each year that direct that discretionary federal money to different government agencies and programs.

The multi-year farm bill is an example of legislation that incorporates both mandatory and discretionary spending. Congress must pass a farm bill every four or so years to ensure that mandatory funding continues for the authorized programs covered by the legislation. The last farm bill – the Agricultural Act of 2014 – provided $489 billion in mandatory spending over the next five years. The farm bill also includes programs that, without annual Congressional discretionary appropriations, go unfunded.

If you’ve kept up with us to this point, you’re doing great! It is helpful to think about this annual, or discretionary, federal budget process in four central phases: the president’s budget formulation; the Congressional budget resolution process; the Congressional appropriations process; and the execution of the budget by federal agencies starting on Oct. 1, the beginning of the federal fiscal year.

The Annual Federal Budget Process

Here are the basic steps in each phase of the annual federal budget process:

The President’s Budget Formulation

  1. In the fall, federal agency heads submit budget requests to the Office of Management and Budget (OMB).

  2. OMB reviews and modifies the budget requests and sends them back to the agencies.

  3. The agencies make their final edits and, in January, OMB compiles the final budget request and sends it to the president.

  4. In the spring, the president publishes the budget that he would ideally like to pass, as if he controlled the purse strings (he doesn’t, Congress does, but this is a chance for the president to make clear his priorities to the public and to Congress). The president’s budget request to Congress includes funding requests for discretionary programs, mandatory programs, and taxes. The president’s funding request for discretionary programs varies from year to year to reflect the administration’s evolving policy priorities.

    The Budget Resolution Process

  1. The House and Senate Budget Committees hold public hearings with agency heads and other experts to learn the rationale behind the agencies’ budget requests.

  2. The House and Senate each draft budget resolutions prepared by their Budget Committees. The budget resolution sets the overall framework for spending for a one year fiscal term. The resolution includes a top-line spending figure for discretionary activities.

  3. Both committee resolutions go the House and Senate floors for a vote.

  4. A House-Senate conference committee then resolves any difference between the resolutions and then both houses vote on the conference report, which can pass with a simple majority and not be filibustered. Because this is a resolution, not a bill, it does not have to be signed into law by the president.

The Congressional Appropriations Process

  1. Once Congress passes a budget resolution, the appropriations process begins. If Congress does not pass a budget resolution by the statutory deadline of April 15, the Appropriations Committees can begin their work without the resolution. The House and Senate Appropriations Committees divide the budget resolution allocations among each of their 12 appropriations subcommittees in each chamber.  Each subcommittee conducts hearings on the programs under its jurisdiction and then hold a markup of each of their draft bills. They report out the bill that they pass to their respective committee.

  2. Each Appropriations Committee then vote on the 12 bills approved in subcommittee.

  3. The full House and Senate vote on each appropriation bill and reconcile the differences in conference. Both chambers vote again on the reconciled bill, and the conference report is sent to the president.

  4. The president either signs or vetoes each appropriations bill.

    Budget Implementation

  1. Appropriations bills are supposed to be signed by the president by Oct. 1, but this rarely happens. If the bills do not pass or are vetoed, Congress and the president must pass a continuing resolution to continue funding agencies and prevent a government shutdown.

And, now, to further challenge your brain, we’re going to complicate matters. Not only does this process address the annual appropriation of discretionary funds, Budget Committees can also direct cuts to mandatory spending through their budget resolutions. Budget Committees have directed changes to mandatory spending on the farm bill many times in recent history.

FY 2018: This is not normal

President Trump’s proposed budget for fiscal year 2018 not only calls for massive discretionary spending cuts to be made as part of the appropriations process, it also calls for deep cuts to mandatory spending. These cuts would drastically change how the federal government is involved in farming and supporting rural communities across America and could cripple many federal programs important to farmers across the Carolinas. The president’s proposal also calls for the elimination of a handful of programs that are critical to sustainable farming and small and mid-size farmers and food producers, including the Value Added Producer Grant, Rural Business Development Grants, and the ATTRA project, which has served as an important source of information about sustainable agriculture for more than twenty years.

On behalf of our members, the Carolina Farm Stewardship Association will work with our allies in Washington to preserve these critical USDA programs. We will fight against efforts to harm family farms and threaten our economies, our ecosystems and our food supply.

Current Situation

Fiscal Year 2018 Budget Process

July 21
On July 17, the House Budget Committee passed its budget reconciliation proposal for fiscal year 2018. The budget parameters call for $203 billion in cuts to mandatory spending, including a $10 billion 10-year cut to farm bill food and agricultural programs. The main target for these cuts is the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps. The proposed cuts have the potential to cause major problems for the upcoming farm bill negotiations. The full House will not vote on the bill until they return from their August recess. For additional information, read more from the National Sustainable Agriculture Network, of which CFSA is a member.

Had enough of our wonky explanation and just want to know what you can do? Click HERE to scroll below to learn how you can TAKE ACTION today!

July 1, 2017
The House Agriculture Appropriations Subcommittee released their draft fiscal year 2018 agriculture funding bill this week. Overall, the bill has few drastic and unexpected cuts or rollbacks to sustainable agriculture priorities. However, the bill does call for cuts to programs that are important to farmers across the Carolinas – like the Sustainable Agriculture Research and Education Program, the Value Added Producer Grant Program and FSA Direct and Guaranteed loans. The next step is for the bill to go to the full House Appropriations Committee where amendments can be put forward for consideration. Full committee markup may happen as early as the week of July 10th but possibly later in the month. The Senate Agriculture Appropriations Subcommittee is expected to meet later in July to mark up their own bill. For more information on the House bill, check out this recent blog post from the National Sustainable Agriculture Coalition, of which CFSA is a member.

June 27, 2017
National news reports claim that House Republicans are working this week to finalize their budget proposal for fiscal year 2018. Reports claim that it calls for large increases in military spending and for $200 billion in cuts to mandatory spending programs.

June 20, 2017
The House may or may not move forward this week with a budget resolution to set the spending cap for the appropriations committees.

May 30, 2017
A group of 29 Democratic Senators, including Debbie Stabenow (D-MI)-  the top Democrat on the Senate Agriculture Committee – sent a letter to President Trump in opposition to his proposed cuts to the USDA. The letter focused on cuts to rural development programs and stated: “If enacted, these cuts would have a damaging impact on rural communities throughout the country.” Now, before Congress writes its budget, is a great time to call your Senators and Representative to influence their thoughts about which parts of the budget are important to their constituents.

May 23, 2017
President Trump released his fiscal year 2018 budget proposal today, which includes deep spending cuts – $3.6 trillion over 10 years –  to programs across the Federal government. The proposed budget would slash the budget of the U.S. Department of Agriculture, reducing it by $12 billion, or 8%, from an estimated $149 billion in 2017.  The president’s budget proposal is unusual. Instead of working within spending parameters set in the  2014 Farm Bill, which is the way the budget process usually goes, President Trump’s proposal seeks to reopen the 2014 Farm Bill to make a wide range of changes to food, farm, and agricultural policies and spending priorities now. The changes the president want to see to the 2014 Farm Bill would eliminate programs that are critical to farmers and the food chain across the country – including the Conservation Stewardship Program and Regional Conservation Partnership Program, as well as the Farmers Market and Local Food Promotion Programs and Specialty Crop Block Grants.

For a more detailed breakdown of the president’s budget proposal, read this blog post from the National Sustainable Agriculture Coalition, of which CFSA is a member. Thank you also to NSAC for providing the detailed list below of funding proposals included in Trump’s budget.

Fiscal Year 2018 President Trump Budget Proposals

Programs recommended for elimination:

  • Value-Added Producer Grants

  • ATTRA

  • Business and Industry Loan Guarantees (including Local and Regional Food Enterprise guarantees)

  • Rural Cooperative Development Grants

  • Rural Business Development Grants

  • And all other rural business and cooperative programs

  • Organic Transitions research program

  • And several other agricultural research and extension programs

  • WIC Farmers Market Nutrition Program

Programs proposed for cuts:

  • SARE (from $27M down to $19M)

  • AFRI (from $375M down to $349M)

  • Conservation Technical Assistance (from $766M to $668M)

  • Direct Operating Loans, Guaranteed Operative Loans, Guaranteed Farm Ownership Loans

  • Food safety programs across the FDA (from $2.1B down to $1.3B)

Programs proposed for level funded:

  • Food Safety Outreach Program

  • 2501 Program

Programs proposed for cuts to mandatory programs:

  • Environmental Quality Incentive Program by 14%

Farm Bill proposals:

  • Eliminate the Farmers Market and Local Food Promotion Program

  • Eliminate Specialty Crop Block Grants

  • Eliminate the Conservation Stewardship Program

  • Eliminate the Regional Conservation Partnership Program

  • Eliminate the Rural Energy for America Program

  • Eliminate the Biomass Crop Assistance Program

  • Cut SNAP by $193 billion over ten years

  • Eliminate subsidies for the Harvest Price Option within crop insurance, and establish tight income and payment limits for crop insurance and commodity subsidies

Fiscal Year 2017 Budget Process (Abridged)

May 6, 2017
Despite a particularly contentious political environment, one area on which Congress was largely able to agree in the omnibus spending bill for 2017 was support for sustainable agriculture programs. Overall, we at CFSA are pleased with the bill, which includes increased funding for: the Sustainable Agriculture Research and Education (SARE) program; Farm Service Agency (FSA) loan programs; Value Added Producer Grants (VAPG) program; Conservation Technical Assistance; the National Sustainable Agriculture Information Service (ATTRA); and the Agriculture and Food Research Initiative (AFRI), among other programs. The bill also does not cut mandatory farm bill funding from the Conservation Stewardship Program (CSP). Read more about the bill here from our friends at the National Sustainable Agriculture Coalition, of which CFSA is a member.

May 5, 2017
After three continuing resolutions, which delayed the fiscal year 2017 appropriations package by over seven months, President Trump signed a $1.1 trillion appropriations bill to fund the federal government through the end of September 2017.

May 4, 2017
The Senate voted to approve a bipartisan compromise, which had been approved by the House on Wednesday, to fund federal agencies through September 30, 2017.

April 28, 2017
Congress passed a continuing resolution to avoid a government shutdown at midnight and give lawmakers until May 5 to reach a deal on federal spending through the end of the fiscal year – September 30.

December 9, 2016
The Senate passed a last-minute continuing resolution to keep the federal government funded until April 28, 2017.

September 29, 2016
President Barack Obama signed the bill containing the continuing resolution into law 36 hours before the end of fiscal year 2016.

September 28, 2016
The Senate approved a continuing resolution budget bill, on a final vote 72-26, to continue funding the federal government. The bill, H.R. 5325, is the appropriations bill for the legislative branch, which the House passed in June.

Take Action

July 6, 2017

Take Action TODAY! Call on Congress to support funding for USDA programs that are critical for sustainable agriculture.

Take action today by making three quick phone calls! Call both of your Senators and your Representative – they need to hear from YOU!. Ask them to share your concerns about this budget with their colleagues who serve on the House and Senate Appropriations Committees. Ask them to stand up for family farms and to oppose the budget cuts to the USDA proposed by President Trump.

Senate Calls

Senator Richard Burr (R-NC)
DC Office: 202-224-3154

Senator Thom Tillis (R-NC)
DC Office: 202-228-2563

Senator Lindsey Graham (R-SC)
DC Office: 202-224-5972

Senator Tim Scott (R-SC)
DC Office: 202-224-6121

Here is some sample language to both Senators in your state that you can use for your calls (or make up your own!):

“Hello, I’m a constituent and a voter (let them know if you are a farmer).  I am calling today to ask you to oppose President Trump’s proposal to slash the budget of the USDA. His proposed changes seek to reopen the 2014 Farm Bill to make severe cuts to a wide range of programs that support food, farming and agriculture. The changes the president wants to see would eliminate funding for programs that are critical to farmers and the food chain across the country – including the Conservation Stewardship Program and Regional Conservation Partnership Program, as well as the Farmers Market and Local Food Promotion Programs and Specialty Crop Block Grants. In 2014, farmers were told that they could rely on consistency in federal spending until the next farm bill, and instead the president wants to preemptively gut funding to these important programs. Please oppose these drastic and unprecedented cuts and encourage all of your colleagues on the Appropriations Committees to do the same. Thank you for your time.”

House Call

Not sure who represents you in the House or need their contact information? Click here to find out.

Here is some sample language that you can use for your call to your Representative (or make up your own!):

“Hello, I’m a constituent and a voter (let them know if you are a farmer). I am calling today to ask you to oppose cuts to critical programs in the Agriculture Appropriations Committee budget bill. While this budget is a much better plan than the budget proposed by President Trump, this bill calls for cuts to programs that are important to farmers across our state – like the Sustainable Agriculture Research and Education Program, the Value Added Producer Grant Program and FSA Direct and Guaranteed loans. Please oppose these cuts and encourage all of your colleagues on the House Appropriations Committee to do the same when the bill comes before the full committee. Thank you for your time.”

Making these three calls will take just over five minutes and actually makes a difference. If you feel nervous, or want to prepare for a phone call, CFSA has a quick video on how to call your legislators.

Have you participated in or benefited from any of the Federal programs listed above that are proposed for a cut or elimination? Tell us your story! Please take a few minutes to fill out this short form and tell us how you or your community have benefited from these important programs. Lawmakers need to hear success stories of Federal programs and we would love to share your story with our members of Congress!

Thanks for all that you do,
The CFSA Policy Team

Let us know if you make the call:
Policy-Action-Button

Related Articles