US Budget and Other Bedtime Fables

The US budget, Big Red Car? Couldn’t you come up with anything more boring?

Big Red Car here on a perfectly delightful Texas day — convertible weather, y’all.

So, today, we chat about the US budget. [Boring, Big Red Car. Can we talk about … anything … else? No, dear reader, please be quiet and eat your vegetables. Act like an adult.]

This week the Congress passed a CR (continuing resolution) to fund the government through the end of September when the government’s fiscal year ends. It was a piece o’ crap, but that is not the story today. The story is what is a continuing resolution?

The US Budget Structure

The government is funded by three elements.

 1. “Regular” appropriations bills. There are twelve appropriations bills required to fund our Jabba the Hutt monster. When you read these bills, notice how they conform structurally to the way the government is organized. You will recognize the departments of the government.

 a. Agriculture (Dept of Agriculture),  Rural Development, Food and Drug Administration (FDA), Related Agencies;

 b. Commerce (Dept of Commerce), Justice (Dept of Justice), Science, Related Agencies

 c. Defense (Dept of Defense — Mad Dog’s fiefdom);

 d. Energy (Dept of Energy) and Water Development;

 e. Financial Services (Dept of Treasury), General Government (Federal Courts, the Office of the President, Washington DC);

 f. Homeland Security (Dept of Homeland Security);

 g. Interior (Dept of Interior), Environment (EPA), Related Agencies;

 h. Labor (Dept of Labor), Health and Human Services Dept of Health and Human Services), Education (Department of Education), Related Agencies;

 i. Legislative Branch (US Congress);

 j. Military Construction, Veterans Affairs (Dept of Veterans Affairs), Related Agencies;

 k. State (Dept of State), Foreign Operations, Related Programs; and,

 l. Transportation (Dept of Transportation), Housing and Urban Development (Dept of Housing and Urban Development), Related Agencies.

 2. Continuing resolutions which are bandaids the Congress puts on budgets when they have not passed a regular appropriation bill, but want to continue the operation of the government until they do. This past week, the Congress fed Jabba with a continuing resolution. It is just a mass of slop with no rigor in its accumulation.

If the Congress takes up its review of regular appropriations bills, there is no need for a continuing resolution or CR.

CRs use formulae which are extensions of previous rates of funding. They are lazy macro gobs of money. “Whatever y’all spent last year plus, say, six percent. OK, go away.”

In this week’s CR, EPA got a 1% haircut (not the 21% which the President asked for in 2018) and Defense got a $21B increase. [A $21B increase in a $611B budget for Defense is inflation plus the rounding error. Complete, total head fake.]

 3. Supplemental appropriations bills are increases in funding unexpected expenses like the wars in Iraq or Afghanistan. They can also be used to fund the response to natural disasters such as hurricanes. Hurricane Sandy was funded by the Disaster Relief Appropriations Act of 2013.

The US Budget Process

The Congress is to receive a budget proposal from the President in early February and take until September to craft appropriations.

Once appropriations are drafted, they are to be reviewed by the appropriate committees of the House and Senate. All spending bills must originate in the House.

The committees are to conduct hearings, vote, and recommend the finished product to the entire body for its deliberation and approval.

The U.S. Constitution (Article I, section 9, clause 7) states: “No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law…”

That is the “process” but it has only been successfully undertaken.

To review in a bit more detail:

 1. The President sends over a budget proposal on or before the first Monday in February. Presidents never hit this deadline. Ever.

The President’s approval contains three elements of importance:

 a. How much the Federal government should spend;

 b. How much money the Federal government should collect in revenue; and,

 c. How much of a surplus [good one, Big Red Car] or a deficit the Federal government will run. [Einstein, this is “a” minus “b” above.]

Before we get ahead of ourselves, the House is not going to follow the President’s budget, which is a policy directive not a real budget. It’s just a set of guidelines.

So, when folks say, “President Trump is cutting EPA by twenty-one percent.” guess what? That’s just his recommendation and the House is not going to follow it. Grow up, y’all.

 2. The Congress debates the budget and sets forth a budget resolution which covers ten years (must be a minimum of five years). This is a macro document and focuses on spending ceilings and revenue floors for the period.

 The Congress puts guardrails on spending by authorizing “budget authority” — the amount of money any Federal government function may spend in any fiscal year; and, “outlays” which are the amounts the Treasury will actually spend.

You can authorize $100,000,000 for a new bridge, but you may spend $50,000,000 per year for the next two years. One is the budget authority and the other is the outlay.

 3. Then, there is a single 302(a) allocation which is then cut up into twelve 302(b) sub-allocations which conform to the appropriations bills noted above.

The Congress doesn’t like to do things the simple way, so some of the House and Senate committees don’t have the exact same charge and the budget has to be “resolved” between the two bodies when they finish.

As to finishing, Big Red Car? They never finish.

Whoa, Big Red Car — MESSY!

It is even messier than you can imagine as there are other control mechanisms like PAYGO (2010 Statutory Pay-As-You-Go Act) which requires $1 dollar of new spending must be funded by $1 of cuts. Good luck with that, Congress.

There are caps on levels of appropriations set by the 2011 Budget Control Act which impose limits on defense and non-defense spending, the infamous sequester. Good luck with that, Congress.

Bottom line it, Big Red Car — don’t have all day

If you walk away understanding the US budget process is orderly — in theory — then we have accomplished something. If you learn there are differences between regular appropriations, continuing resolutions (the way the government has been funding itself of late and what happened last week), and supplemental appropriations bills, then you will have done your homework.

The rest of it is “inside baseball.”

Know this — everybody in Washington is late with all of their budget work. They make no effort to conform to or comply with the law or the budget process. They are sloppy and lazy, and that’s why we have an out of control Jabba the Hutt Federal government which runs a deficit and which has an insatiable appetite for revenue.

But, hey, what the Hell do I really know anyway? I’m just a Big Red Car and I demand a paint job. Paint job! Paint job! Paint job! Be good to yourself and balance your damn checkbook.