The US Federal Budget – Part 2 – FY2022 Analysis

Appendix 7 – Glossary

The definitions in this Appendix are based on (or obtained from) the following sources. Definitions copied verbatim are enclosed in parenthesis.  

Reference Links/Listings

Ref1: Intro to Federal Budget Process – CRS – R46240

Ref2: Intro to the Federal Budget Process – CBPP 

Ref3: Common Budgetary Terms Explained – CBO – 57660

Ref4: Glossary of Terms – Federal Budget Process – GAO-05-734SP 

Ref5: US House of Rep. Glossary of Terms – house.gov

Ref6: Appropriations Process 101 – crfb.org

Ref7: Reflections on the Congressional Budget Act – americanprogress.org

Ref8: The Office of the Parliamentarian in the House and Senate

Ref9:  Filibusters and Cloture in the Senate

Ref10: Whitehouse.gov Circular No. A-11 Budget Prep Agency Guidance

Ref11:  Introduction to Budget Authority – CRS – IF12105

Ref12: Appropriations Committee description at senate.gov

Ref13:  Obamawhitehouse.archives.gov Functional Classifications

Ref14: Democrats-budget.house.gov Functions

Ref15: Continuing Resolution Overview CRS-R46595

Ref16: CBO-Historical Budget Data-Files

Ref17: OMB-Historical Tables 1.1 – 16.2

Ref18: OMB – Analyt. Persp. Section-Budget Auth. & Outlays by Funct. Cat. & Prog. Table

Ref19: OASI-ssa.gov

Ref20: DI-ssa.gov

Ref21: IRS FICA Description

Ref22: What is Medicare – medicare.gov

Ref23: Medicare parts – ssa.gov

Ref24: Medicare Funding – medicare.gov

Ref25: Federal Excise Taxes-CRS-R43189/4

Ref26: Federal Budget Trust Funds – GAO-01-199sp

Definitions

Administration (See Agency)

Agency

According to the US Tax Code (via Cornel LII): “18 U.S. Code § 6 – Department and agency defined. “

• “The term “department” means one of the executive departments enumerated in section 1 of Title 5, unless the context shows that such term was intended to describe the executive, legislative, or judicial branches of the government.”
• “The term “agency” includes any department, independent establishment, commission, administration, authority, board or bureau of the United States or any corporation in which the United States has a proprietary interest, unless the context shows that such term was intended to be used in a more limited sense.”

Appropriation

• Generally, an amount of money set aside for a particular purpose. To appropriate is to set aside an amount of money for a particular purpose.
• Congress appropriates by providing Budget Authority for both Mandatory and Discretionary Spending programs.
• When dealing with Mandatory Spending programs (e.g. Entitlement programs like Social Security), Budget Authority can be described as Entitlement Authority which involves permanently (until law is changed) distributing funds based on eligibility of recipients).     
• For Discretionary Spending programs (e.g. Defense programs), Budget Authority provides a legal Authorization to enter into Obligations for which payments (outlays) will be made from the Treasury. Just remember this sequence: Authorization (Budget Authority) ⇒ Obligation (enter into contract) ⇒ Outlay (pay). Discretionary Spending is established yearly through annually established Appropriations Acts (Bills).

Appropriation Committee

Appropriation Subcommittees

• The annual Federal Budget Process uses 12 House Appropriation Subcommittees and 12 Senate Appropriations Subcommittees to develop yearly Appropriations Bills (a reconciled set of 12). All agency proposed budgets are placed into one of the 12 categories listed below. Often these bills have been combined (called Omnibus if all of them are combined and Minibus if a subset of them is combined). 
• The Budget Resolution developed by the House and Senate Budget Committees sets the top line spending limit for the year (Called 302(a) limit…see “302(a)”). For example the cap or limit for the 2022 budget (for all 12 categories) was 1.47 Trillion USD. 
• The Appropriations Committees set the individual bill spending caps (called 302(b)s….see “302(a)).  For example, the 2022 cap on the Defense Bill was 728.5 Billion USD.
• Note that there used to be 13 Appropriations Bills which were consolidated into 12 in the 2005 to the 2008 time period.  

1. Agriculture, Rural Development, Food and Drug Administration
2. Commerce, Justice, Science, and Related Agencies
3. Defense
4. Energy and Water Development and Related Agencies
5. Financial Services and General Government
6. Homeland Security
7. Interior, Environment, and Related Agencies
8. Labor, Health and Human Services, Education
9. Legislative Branch
10. Military Construction, Veterans Affairs, and Related Agencies
11. State, Foreign Operations, and Related Programs
12. Transportation, Housing and Urban Development, and Related Agencies

Authority (See Agency)

Board (See Agency)

Budget Cycle

• The Government is typically working on 3 budgets at a time. For example, in February 2023, (1) the Government would be spending money for Fiscal Year (FY) 2023 (2) the President and OMB would present the Presidential Budget Request to Congress for FY 2024 and (3) the executive agencies would be planning for FY 2025.   

Bureau (see Agency)

Budget Equation (Federal Budget Equation)

• The US Federal Budget is a yearly accounting of the US Government’s cash inflows (Revenues or Receipts) and outflows (Outlays or Spend or Expenditures).
• Each year, the US Federal Government’s balance of cash flows results in a Balanced Budget, a Budget Deficit, or a Budget Surplus.    
• Receipts – Outlays <0 (Deficit)
• Receipts – Outlays > 0 (Surplus)
• Receipts = Outlays (Balanced)

Budget Functions

• See Function Classification

Budget Proposal (Request)

• The Congressional Budget Process begins when the President (OMB) submits the annual Budget Proposal (Request) to Congress. The law (not enforced and often not met) requires this to be submitted no later than the first Monday in February. (e.g. February 2023 for the 2024 Budget Fiscal Year which begins on October 2023 and ends on September 30 2024.).

Budget Process (Federal Budget Process)

• The Federal Budget process can be broken down into three or four phases depending on which Government documents you use. 
• Phase 1. Executive Branch Budget Formulation. (~ 11 Month Process; ~ 19 Months before Fiscal Year Begins ). OMB and Agencies and President work together to produce a President’s Budget Request/Proposal (PBR).
• Phase 2. Congressional Budget Enactment (~ 8-9 Month Process ). PBR Passed to Congress (Legislature) for Enactment (Budget Resolution and Reconciliation, Program Authorization and Funding Appropriation).
• Phase 3. Budget Execution and Control (Fiscal Year Oct 1 – Sept 30). Agencies receive the funding and execute the budget.
• Phase 4. Audit and Evaluation. Evaluation and Auditing of Process by Agencies and others like OMB, CBO, and GAO.
• See Ref10: (Circular No. A-11) 
• See  Ref4: (GAO-05-734SP) 

Budget Request (Presidential Budget Request or Proposal or PBR)

• The Congressional Budget Process begins when the President (OMB) submits the annual Budget Proposal (Request) to Congress. The law (not enforced and often not met) requires this to be submitted no later than the first Monday in February. (e.g. February 2023 for the 2024 Budget Fiscal Year which begins on October 2023 and ends on September 30 2024.).
• A significant portion of the PBR addresses the yearly budget appropriations (Discretionary Spending).
• The PBR is a very detailed document showing the President’s priorities. The PBR Delineates how much the Government should spend and tax, and how much of a deficit or a surplus the Government should run. 
• The Executive office (Agencies, OMB, President) prepares the PBR each year. Congress is not responsible for the PBR.

Collections

• Ref10: (whitehouse.gov Circular No. A-11): ” Collections mean money collected by the government that the Budget records as a governmental receipt, an offsetting collection, or an offsetting receipt.”
• Ref4 (GAO-05-734SP ):” Amounts received by the federal government during the fiscal year. Collections are classified into three major categories: (1) governmental receipts (also called budget receipts or federal receipts), (2) offsetting collections, and (3) offsetting receipts. Governmental receipts result from the exercise of the government’s sovereign powers. Offsetting collections and receipts result from businesslike transactions with the public or transactions between appropriated activities. Offsetting collections and offsetting receipts are recorded as offsets to spending. They are offsetting collections when the collections are authorized by law to be credited to expenditure accounts. Otherwise, they are deposited in receipt accounts and called offsetting receipts.”

Commission (See Agency)

Congressional Budget Office (CBO)

• The non-partisan Congressional Budget Office provides Congress with information about budgetary and economic issues. It kicks off the annual Federal Budget Process by issuing a Baseline Budget Estimate to the Budget and Appropriations Committees. 
• It is an integral part of the Congressional Phase of the Federal Budget Process (e.g. provides baseline estimates at the beginning of this Phase). The CBO releases periodic publications on budget options for reducing the deficit. It also published monthly budget reviews and also has a role in Scorekeeping (tracking the budget effects of Congressional legislation). The CBO also publishes 10 year budget forecasts.
• The Congressional Budget Office (CBO) was established by the Congressional Budget and Impoundment Control Act of 1974 (CBA).
• Ref1: (CRS – R46240) : “The CBA (Congressional Budget Act of 1974) also established the House and Senate Budget Committees as well as the Congressional Budget Office (CBO) to provide Congress with an independent source for budgetary information, particularly estimates concerning the cost of proposed legislation.”

Congressional Research Service (see CRS) 

CRS (Congressional Research Service)

• Ref (CRS) : “The Congressional Research Service (CRS) serves as shared staff to congressional committees and Members of Congress. CRS experts assist at every stage of the legislative process — from the early considerations that precede bill drafting, through committee hearings and floor debate, to the oversight of enacted laws and various agency activities.”

Customs Duty

• Customs Duties are a  type of US Federal Budget revenue or receipt.  
• Ref (Customs duty info-cbp.gov) : “Customs Duty is a tariff or tax imposed on goods when transported across international borders. The purpose of Customs Duty is to protect each country’s economy, residents, jobs, environment, etc., by controlling the flow of goods, especially restrictive and prohibited goods, into and out of the country.”
• The Harmonized Tariff Schedule of the United States (HTS) establishes tariff rates on all merchandise imported into the United States.
• Customs duties amounted to about 99 Billion USD in FY 2022 (about 2% of total revenues).
• Cbp.gov publishes a report called the  “CBP Trade and Travel Report” which provides some information on customs duties imposed for a particular fiscal year. Some significant revenue can come from what are called Section 201, 232, and 301 duties (in 2022 these included duties on aluminum, steel, solar panels, and China Products).  

Deficit

• In an annual Federal Budget, the Deficit is the  amount of over-spend  i.e. Outlays (spending amounts) are greater than Receipts (Revenue)  i.e. Receipts – Outlays = <0 
• The amount of money the US Government needs to borrow in a given year. The Debt is the year by year accumulation of those deficits. The Government borrows money by issuing debt (e.g. Government bonds)   

Department (see Agency)

DI Trust Fund

• DI, the Disability Insurance Trust Fund is funded by Social Security payroll taxes.
• This trust fund receives payroll taxes and holds (and invests) surplus funds not immediately needed to pay benefits.
• Ref20: DI-ssa.gov: “The Disability Insurance (DI) Trust Fund was created with passage of the Social Security Act Amendments of 1956. DI became effective on January 1, 1957…The DI Trust Fund is a separate account in the United States Treasury…The trust fund provides automatic spending authority to pay monthly benefits to disabled-worker beneficiaries and their spouses and children. With such spending authority, the Social Security Administration does not need to periodically request money from the Congress to pay benefits.”

Disability Insurance (see DI Trust Fund)

Direct (Mandatory) Spending

• Mandatory Spending outlays continue from year to year (i.e. spending doesn’t have to be authorized each year) and depend on the number of qualified people who receive those benefits. Social Security and Health Care entitlement programs below to this category. Basically, the laws governing these programs continue from year to year until/unless they are changed. 
• About 73% of the 2022 budget is Mandatory Spending. 
• Ref1: (CRS – R46240) :”Direct spending is defined in the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, as consisting of entitlement authority (including appropriated entitlements), the Supplemental Nutrition Assistance Program, and any other budget authority (and resulting outlays) provided in laws other than appropriations acts. The term direct spending is often used interchangeably with the terms Mandatory or Entitlement Spending. Examples include Social Security, Medicare, Medicaid, unemployment insurance, and military and federal civilian pensions.”

Discretionary Spending

• Sometimes described as Indirect Spending. Spending that is decided at the “discretion of Congress” on an annual basis. Discretionary expenditures are the yearly Federal Department and Agency outlays that are authorized by Congress on an Annual Basis (through the Federal Budget Process). The biggest portion (~45% in 2022) of Federal Discretionary Spending is dedicated to the Department of Defense. 
• Discretionary Spending encompasses appropriations not mandated by existing law.
• Defense spending makes up the majority of Discretionary Spending (about 45% in 2022). 
• Ref1: (CRS – R46240) : “The Balanced Budget and Emergency Deficit Control Act of 1985, as amended, defines Discretionary Spending as budget authority provided in annual appropriation acts and the outlays derived from that authority. Discretionary spending encompasses appropriations not mandated by existing law and therefore made available in appropriation acts in such amounts as Congress chooses.” 

Entitlement Spending

• Spending on programs that don’t require annual budget appropriations to continue (i.e. Mandatory programs like Social Security and Medicare).
• Ref1: (CRS – R46240) : “Direct spending is defined in the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, as consisting of entitlement authority (including appropriated entitlements), the Supplemental Nutrition Assistance Program, and any other budget authority (and resulting outlays) provided in laws other than appropriations acts. The term direct spending is often used interchangeably with the terms mandatory or entitlement spending. Examples include Social Security, Medicare, Medicaid, unemployment insurance, and military and federal civilian pensions.”

Excise Taxes (Federal)

• Per Google Bard, “A federal excise tax is a tax that is levied on the production, sale, or consumption of certain goods or services.”
• Ref (taxfoundation.org): The first excise tax was on the manufacture of whiskey in 1791. Excise taxes today are a small part of total federal taxes (20% in 1950 versus 1.8% in FY2022). 
• Ref25: (CRS-R43189/4): “Excise taxes are selective taxes on specific forms of consumption or behavior (compared to general sales taxes which tend to apply to all forms of consumption, with some exceptions). Today, federal excise taxes apply to a wide variety of consumer goods and economic activities, such as alcohol, tobacco, firearms and ammunition, gasoline, the industrial use of ozone-depleting chemicals, and indoor tanning services…”
• Ref25: (CRS-R43189/4): “There are four common purposes of excise taxes: (1) sumptuary (or “sin”) taxes, (2) regulatory or environmental taxes, (3) benefit-based taxes (or user charges), and (4) luxury taxes. Sumptuary (or “sin”) taxes were traditionally imposed for moral reasons, but are currently rationalized, in part, to discourage a specific activity that is thought to have negative spillover effects (or externalities”) on society… Economists also refer to taxes applied to an activity generating negative  externalities as a “Pigovian tax.” This type of tax is named after economist Arthur Pigou, who developed the concept of economic externalities.” 
• Example of FY2022 Excise Taxes (organized as Federal Funds): Alcohol, Tobacco, crude oil windfall profit, Telephone , Ozone depleting chemicals/products , Transportation fuels, High cost health insurance coverage , Health insurance providers, Indoor tanning services, Medical devices, Other.
• Example of FY2022 Excise Taxes (organized as Trust Funds): Transportation, Airport and airway, Black lung disability, Inland waterway, Hazardous substance superfund, Post-closure liability (hazardous waste), Oil spill liability, Aquatic resources, Leaking underground storage tank, Tobacco Assessments, Vaccine injury compensation, Supplementary medical insurance, Patient-centered outcomes research

Federal Budget Equation (Budget Equation)

• The US Federal Budget is a yearly accounting of the US Government’s cash inflows (Revenues or Receipts) and outflows (Outlays or Spend or Expenditures).
• Each year, the US Federal Government’s balance of cash flows results in a Balanced Budget, a Budget Deficit, or a Budget Surplus.    
• Receipts – Outlays <0 (Deficit)
• Receipts – Outlays > 0 (Surplus)
• Receipts = Outlays (Balanced)

Federal Budget Process (see Budget Process)

Federal Fund (see Trust Fund)  – Specific to Federal Government Budgetary terms. 

• Ref10: (whitehouse.gov Circular No. A-11): “Federal funds group refers to the moneys collected and spent by the Government through accounts other than those designated as trust funds. Federal funds include general, special, public enterprise, and intragovernmental funds.”
• Federal Funds include Special Funds and Revolving Funds. 

FICA (see FUTA and SECA and Payroll Taxes)

• FICA is the law that requires employees/employers to pay taxes to fund Social Security and part of Medicare. Federal Payroll taxes consist of FICA taxes + SECA taxes (for self employed individuals) + FUTA taxes (Unemployment Insurance taxes). 
• FICA, the Federal Insurance Contributions Act was passed in 1935 (part of Roosevelt’s New Deal). FICA imposes federal payroll taxes to fund Social Security and (some) Medicare programs. 
• FICA taxes comprise three taxes: (1) an Old-Age, Survivors Insurance (OASI) tax, (2) a Disability Insurance or DI tax, and (3) a Hospital Insurance (HI) tax which is part of the Medicare Part A program.    
• Ref21: (IRS FICA Description) :”Taxes under the Federal Insurance Contributions Act (FICA) are composed of the old-age, survivors (OASI), and disability insurance (DI) taxes, also known as social security taxes, and the hospital insurance tax, also known as Medicare taxes. Different rates apply for these taxes…The current (2023 tax year) tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. “ 

Fiscal Year

• Ref1: (CRS – R46240) : “The Fiscal Year for the federal government begins on October 1 and ends on September 30. The Fiscal Year is designated by the calendar year in which it ends: For example, FY2020 began on October 1, 2019, and ends on September 30, 2020.”

Function Classifications

• Budget Functions classify federal budgetary activities into functional categories and subcategories.
• Based on OMB definitions, the Budget is organized into superfunctions (total of 6), functions (total of 20), and subfunctions (total of 77 but expandable)
• See Appendix 2 for superfunctions, functions, and subfunction classifications. They are also listed below. 
• Ref13:  Obamawhitehouse.archives.gov: “The budget is organized into functions and subfunctions according to the major purpose the spending serves— such as agriculture or national defense. There are 20 major functions, most of which are divided into subfunctions. For example, the Agriculture function comprises the subfunctions Farm Income Stabilization and Agricultural Research and Services. There are then program accounts under each of these subfunctions. For example, the subfunction Farm Income Stabilization has several program accounts, including Agricultural Credit Loan Program and Commodity Credit Corporation Fund.”

Breakdown by Superfunction/Function and Subfunction

National Defense/050 National Defense

051 Department of Defense-Military – subfunction
053 Atomic energy defense activities – subfunction
054 Defense-related activities – subfunction

Other/150 International Affairs

151 International development and humanitarian assistance
152 International security assistance
153 Conduct of foreign affairs
154 Foreign information and exchange activities
155 International financial programs

Other/250 General Science, Space, and Technology

251 General science and basic research
252 Space flight, research, and supporting activities

Physical Resources/270 Energy

271 Energy supply
272 Energy conservation
274 Emergency energy preparedness
276 Energy information, policy, and regulation

Physical Resources/300 Natural Resources and Environment

301 Water resources
302 Conservation and land management
303 Recreational resources
304 Pollution control and abatement
306 Other natural resources

Other/350 Agriculture

351 Farm income stabilization
352 Agricultural research and services

Physical Resources/370 Commerce and Housing Credit

371 Mortgage credit
372 Postal Service
373 Deposit insurance
376 Other advancement of commerce

Physical Resources/400 Transportation

401 Ground transportation
402 Air transportation
403 Water transportation
407 Other transportation

Physical Resources/450 Community and Regional Development 

451 Community development
452 Area and regional development
453 Disaster relief and insurance

Human Resources/500 Education, Training, Employment, and Social Services 

501 Elementary, secondary, and vocational education
502 Higher education
503 Research and general education aids
504 Training and employment
505 Other labor services
506 Social services

Human Resources/550 Health

551 Health care services
552 Health research and training
554 Consumer and occupational health and safety

Human Resources/570 Medicare

571 Medicare

Human Resources/600 Income Security

601 General retirement and disability insurance (excluding social security)
602 Federal employee retirement and disability
603 Unemployment compensation
604 Housing assistance
605 Food and nutrition assistance
609 Other income security

Human Resources/650 Social Security

651 Social security

Human Resources/700 Veterans Benefits and Services 

701 Income security for veterans
702 Veterans education, training, and rehabilitation
703 Hospital and medical care for veterans
704 Veterans housing
705 Other veterans benefits and services

Other/750 Administration of Justice

751 Federal law enforcement activities
752 Federal litigative and judicial activities
753 Federal correctional activities
754 Criminal justice assistance

Other/800 General Government

801 Legislative functions
802 Executive direction and management
803 Central fiscal operations
804 General property and records management
805 Central personnel management
806 General purpose fiscal assistance
808 Other general government
809 Deductions for offsetting receipts

Net Interest/900 Net Interest

901 Interest on Treasury debt securities (gross)
902 Interest received by on-budget trust funds
903 Interest received by off-budget trust funds
908 Other interest
909 Other investment income

Other/920 Allowances

921–929 Allowances [Assigned by OMB]

Undistributed Offsetting Receipts/950 Undistributed Offsetting Receipts

951 Employer share, employee retirement (on-budget)
952 Employer share, employee retirement (off-budget)
953 Rents and royalties on the Outer Continental Shelf
954 Sale of major assets
959 Other undistributed offsetting receipts

• • See Ref14: Democrats-budget.house.gov Functions
  • See Ref4 (GAO-05-734SP Appendix IV) 

  • See Ref1: (CRS – R46240)

FUTA (see FICA, SECA, and Payroll Taxes)

• The Federal Unemployment Tax Act (FUTA) of 1939 requires employers to pay a payroll tax to fund federal-state unemployment programs. 
• FUTA taxes are a part of required federal payroll taxes (Federal Payroll taxes consist of FICA taxes + SECA taxes (for self employed individuals) + FUTA taxes (Unemployment Insurance taxes).). 

GAO (Government Accountability Office)

• Per House.gov, ” The Government Accountability Office (GAO) is known as “the investigative arm of Congress” and “the congressional watchdog.” GAO supports the Congress in meeting its constitutional responsibilities and helps improve the performance and accountability of the federal government for the benefit of the American people.”
• Created by the Budget and Accounting Act of 1921. 

Governmental Receipts (see Collection) 

• Ref10: (whitehouse.gov Circular No. A-11): ” Governmental receipts mean collections that result from the Government’s exercise of its sovereign power to tax or otherwise compel payment. They are compared to outlays in calculating a surplus or deficit. Receipts and revenues are common terms used in place of governmental receipts.”

General Fund (See Trust Fund)

• Ref10: (whitehouse.gov Circular No. A-11): “General fund means the accounts for collections not earmarked by law for a specific purpose, the proceeds of general borrowing, and the expenditure of these moneys. It is part of the Federal funds group.”

Hospital Insurance (HI) Trust Fund (see Medicare Funding)

• One of two trust funds that fund Medicare. The HI Trust fund, funds Medicare Part A.
• Ref24: Medicare Funding – medicare.gov: “Hospital Insurance (HI) Trust Fund: Funded mainly (~90%) through Payroll taxes paid by most employees, employers, and people who are self-employed. Also funded by Income taxes paid on Social Security benefits ,Interest earned on the trust fund investments, and Medicare Part A premiums from people who aren’t eligible for premium-free Part A. It funds (a) Medicare Part A (Hospital Insurance) benefits, like inpatient hospital care, skilled nursing facility (SNF) care, home health care, and hospice care. (b) Medicare Program administration, like costs for paying benefits, collecting Medicare taxes, and fighting fraud and abuse.”
• The other Medicare trust fund is the Supplementary Medical Insurance (SMI) Trust Fund which funds Medicare Part B and Medicare Part D.

HI Trust Fund (See Hospital Insurance Trust Fund)

Independent Establishment (see Agency)

Indirect Spending

• See Discretionary Spending

Interest (Net Interest)

• The Net Interest is a Federal Budget outlay (spending) category which reflects the Government’s cost of borrowing money to finance its operations. Net Interest = Interest paid on Treasury Bonds (and other securities) issued minus income from Government income (including, for example, income from Government small business or student loans).
• The US Government Treasury issues debt by selling Government securities like Bills, Notes, Bonds, TIPS, etc. These are sold to individuals, corporations, pensions funds, foreign Governments, etc.
• The CBO counts Net Interest as a separate spending category (in addition to Discretionary or Mandatory) whereas the OMB categorizes Net Interest as a Mandatory Budget Function. 

Intragovernmental Revolving Funds (See Revolving Fund)

Laws (see US Code)

Laws that Govern the Budget Cycle

• See Ref10: (whitehouse.gov Circular No. A-11):
• 1870 Antideficiency Act (several revisions, amendments)
• 1921 Budget and Accounting Act.
• 1974 Congressional Budget and Impoundment Control Act (CBA)
• 1985 Balanced Budget and Emergency Deficit Control Act (BBEDCA)
• 1990 Federal Credit Reform Act.
• 1990 Budget Enforcement Act
• 2010 Statutory Pay-As-You-Go Act
• 2010 GPRA Modernization Act (AKA Government Performance and Results Act)

Legislative Process

• The Federal Budget congressional legislative process is basically the same general process that applies to all lawmaking.
• In House or Senate Committees, hearings are held, markups are made, votes are cast, and if approved, the Bill (or Resolution) is sent to the House or Senate Floor.
• In the House or Senate Floor, there are debates (and amendments are considered), votes are cast, and if approved, the Bill (or Resolution) is sent to Conference.
• In the Conference Committee (comprised of House and Senate Committee members), the House and Senate Bills (or Resolutions) are reconciled and voted on. 
• The approved Conference Bills (not Resolutions, only Bills), are sent to the President for approval. If the President vetoes the Bill, it takes a 2/3 vote by both Houses to overturn the veto.  
• In the legislative process, if votes to pass fail,  then the process goes back to the beginning.
• Filibusters (right of members to unlimited debate) are excluded (with only simple majority vote needed) for Budget Resolutions and Reconciliation Bills.

Legislative Year

• January 3 through January 2 of the following year.

Mandatory (Direct) Spending

• Sometimes described as Direct Spending. Mandatory Spending outlays continue from year to year (i.e. spending doesn’t have to be authorized each year) and depend on the number of qualified people who receive those benefits. Social Security and Health Care entitlement programs below to this category. Basically, the laws governing these programs continue from year to year until/unless they are changed. 
• Mandatory Spending encompasses appropriations mandated by existing law.
• About 73% of the 2022 budget is Mandatory Spending (including Net Interest). 
• The CBO considers Net Interest (on Treasury Bonds issued to cover the deficits) to be a separate spending category whereas the OMB (office of Management and Budget) considers it part of Mandatory Spending. 
• Ref1: (CRS – R46240) :”Direct spending is defined in the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, as consisting of entitlement authority (including appropriated entitlements), the Supplemental Nutrition Assistance Program, and any other budget authority (and resulting outlays) provided in laws other than appropriations acts. The term direct spending is often used interchangeably with the terms Mandatory or Entitlement Spending. Examples include Social Security, Medicare, Medicaid, unemployment insurance, and military and federal civilian pensions.”
• Ref10: (whitehouse.gov Circular No. A-11): “Mandatory spending means spending controlled by laws other than appropriations acts (including spending for entitlement programs) and spending for the Supplemental Nutrition Assistance Program. Although the Statutory Pay-As-You-Go Act of 2010 uses the term “direct spending” instead of “mandatory spending” to describe this concept, “mandatory spending” is the term to describe the concept that is commonly used.”

Medicaid

According to cbpp.org, Medicaid was created in 1965 and provides health coverage to low-income families and individuals. It is funded by both each of the States and the Federal Government . Each state operates its own Medicaid program within federal guidelines. 

Medicare

• Medicare is a federal health insurance entitlement program which is categorized by the Federal Budget as Mandatory Spending.
• Medicare was enacted in 1965 (part of President L.B. Johnson’s Great Society programs). Its purpose was to provide health insurance to people who were too old to be covered by private health insurance.
• Ref22: (What is Medicare – medicare.gov): “The federal health insurance program for (a) People who are 65 or older (b) Certain younger people with disabilities (c) People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).”

Medicare Parts A and B

• Parts A and B are the original parts of the Medicare program. 
• Ref23: (Medicare parts – ssa.gov): “Part A (Hospital Insurance). Part A helps pay for inpatient care at: Hospitals, Skilled nursing facilities, Hospice. It also covers some outpatient home health care. Part A is free if you worked and paid Medicare taxes for at least 10 years. You may also be eligible because of your current or former spouse’s work…
• Part B (Medical Insurance). Part B helps cover: Services from doctors and other health care providers, Outpatient care, Home health care, Durable medical equipment and Some preventive services. Most people pay a monthly premium for Part B. The exact premium depends on your income level.”

Medicare Parts C and D

• Ref23: (Medicare parts – ssa.gov): “Private companies run Parts C and D. The federal government approves each plan. Costs and coverage types vary by provider…
• Part C is known as Medicare Advantage. It’s an alternative to Parts A and B that bundles several coverage types, including Parts A, B, and usually D. It may also include: Vision, Hearing, Dental insurance…You must sign up for Part A or Part B before enrolling in a Medicare Advantage plan…
• Part D (prescription drug coverage). Part D helps cover prescription drug costs. You must sign up for Part A or Part B before enrolling in Part D.”

Medicare Funding

• Budgetary Funding for Medicare is considered Mandatory Spending. Part A (Hospital Insurance) is funded mainly through Payroll Taxes (~90%). Part B and Part D are funded mainly through Government general revenues and premiums. See this source for more data. 
• Ref24: Medicare Funding – medicare.gov: “Medicare is paid for through 2 trust fund accounts held by the U.S. Treasury. These funds can only be used for Medicare…
• Hospital Insurance (HI) Trust Fund: Funded mainly (~90%) through Payroll taxes paid by most employees, employers, and people who are self-employed. Also funded by Income taxes paid on Social Security benefits ,Interest earned on the trust fund investments, and Medicare Part A premiums from people who aren’t eligible for premium-free Part A. It funds (a) Medicare Part A (Hospital Insurance) benefits, like inpatient hospital care, skilled nursing facility (SNF) care, home health care, and hospice care. (b) Medicare Program administration, like costs for paying benefits, collecting Medicare taxes, and fighting fraud and abuse
• Supplementary Medical Insurance (SMI) Trust Fund: Funded by: (a) Funds authorized by Congress (b) Premiums from people enrolled in Medicare Part B (Medical Insurance) and Medicare drug coverage (Part D) (c) Other sources, like interest earned on the trust fund investments. It funds (a) Medicare Part B (b) Medicare Part D (c) Medicare Program administration, like costs for paying benefits and for fighting fraud and abuse

Net Interest

• The Net Interest is a Federal Budget outlay (spending) category which reflects the Government’s cost of borrowing money to finance its operations. Net Interest = Interest paid on Treasury Bonds (and other securities) issued minus income from Government income (including, for example, income from Government small business or student loans).
• The US Government Treasury issues debt by selling Government securities like Bills, Notes, Bonds, TIPS, etc. These are sold to individuals, corporations, pensions funds, foreign governments, etc.
• The CBO counts Net Interest as a separate spending category (in addition to Discretionary or Mandatory) whereas the OMB categorizes Net Interest as a Mandatory Budget Function. 

OASDI (see OASI or DI)

• A shortcut way to describe both the OASI (Old-Age and Survivors Insurance Trust Fund)  and DI (Disability Insurance Trust Fund) trust funds. 
• OASI + DI are funded by Social Security payroll taxes (part of FICA).

OASI Trust Fund

• OASI, The Old-Age and Survivors Insurance Trust Fund is funded by Social Security payroll taxes.   
• This trust fund receives payroll taxes and holds (and invests) surplus funds not immediately needed to pay benefits.
• Ref19:(OASI-ssa.gov): “The Old-Age and Survivors Insurance Trust Fund is a separate account in the United States Treasury…The OASI Trust Fund was created pursuant to section 201 of the Social Security Act Amendments of 1939. These amendments also established a Board of Trustees. OASI became effective on January 1, 1940…The trust fund provides automatic spending authority to pay monthly benefits to retired-worker (old-age) beneficiaries and their spouses and children and to survivors of deceased insured workers. With such spending authority, the Social Security Administration does not need to periodically request money from the Congress to pay benefits.”

Obligation 

• A Federal Budget Process term. 
• A binding commitment to spend. Commitment that creates a legal liability by the Government to pay for goods and services and results in outlays (immediate or in in the future). So, outlays come from obligations. 
• Authority–>Obligation –> Outlay: The Budget Process entails three steps: (1) Congress provides Budget Authority (2) Various Agencies enter into Obligations or binding commitments to spend and (3) Various Agencies actually spend the money (outlays or expenditures)
• See References 1 and 11

Off-Budget Accounts

• Ref4 (GAO-05-734SP ): “Those budgetary accounts (either federal or trust funds) designated by law as excluded from budget totals.”  These are considered off budget: the two Social Security trust funds (the Old-Age and Survivors Insurance, OASI, Trust Fund and the Disability Insurance, DI, Trust Fund) and the transactions of the Postal Service (wym: some not all) are off-budget accounts.  
• For Fiscal Year 2022 budget , there were only three off-budget Accounts: (1) OASI Trust Fund (2) DI Trust Fund (3) Postal Service Fund (wym: some not all) 

Office of Management and Budget (see OMB)

Offsetting Collections

• Ref10: (whitehouse.gov Circular No. A-11): ” Offsetting collections mean payments to the Government that, by law, are credited directly to expenditure accounts and deducted from gross budget authority and outlays of the expenditure account, rather than added to receipts. Usually, offsetting collections are authorized to be spent for the purposes of the account without further action by Congress. They usually result from business-like transactions with the public, including payments from the public in exchange for goods and services, reimbursements for damages, and gifts or donations of money to the Government and from intragovernmental transactions with other Government accounts. The authority to spend offsetting collections is a form of budget authority.”
• Ref4 (GAO-05-734SP ): “Collections are amounts received by the federal government during the fiscal year. They are authorized by law to be credited to appropriation or fund expenditure accounts. They result from (1) businesslike transactions or market-oriented activities with the public, (2) intragovernmental transfers, and (3) collections from the public that are governmental in nature but required by law to be classified as offsetting. Collections resulting from businesslike transactions with the public and other government accounts are also known as reimbursements. Laws authorizing offsetting collections make them available for obligation to meet the account’s purpose without further legislative action…Offsetting collections include reimbursements, transfers between federal and trust fund accounts, offsetting governmental collections, and refunds.”

Offsetting Receipts

• Ref10: (whitehouse.gov Circular No. A-11): ” Offsetting receipts mean payments to the Government that are credited to offsetting receipt accounts and deducted from gross budget authority and outlays, rather than added to receipts. Usually they are deducted at the level of the agency and subfunction, but in some cases they are deducted at the level of the Government as a whole. They are not authorized to be credited to expenditure accounts.”
• Ref10: (whitehouse.gov Circular No. A-11): “The legislation that authorizes the offsetting receipts may earmark them for a specific purpose and either appropriate them for expenditure for that purpose or require them to be appropriated in annual appropriations acts before they can be spent. Like offsetting collections, they usually result from business-like transactions with the public, including payments from the public in exchange for goods and services, reimbursements for damages, and gifts or donations of money to the Government, and from intragovernmental transactions with other Government accounts.”
• Ref4 (GAO-05-734SP ): “Collections that are offset against gross outlays but are not authorized to be credited to expenditure accounts. Offsetting receipts are deposited in receipt accounts. Like offsetting collections, they result from (1) businesslike transactions or market oriented activities with the public, (2) intragovernmental transfers, and (3) collections from the public that are governmental in nature but required by law to be classified as offsetting receipts. Unlike offsetting collections, offsetting receipts cannot be used without being appropriated. Trust fund offsetting receipts are permanently appropriated and, therefore, can be used without subsequent annual appropriation legislation. “

Offsetting Receipts and Collections

• Ref1 (CRS – R46240): “Offsetting receipts/collections. Funds collected from the public primarily as a result of businesslike activities (such as user fees or royalties paid to the government) that are levied on a class directly availing itself of, or directly subject to, a governmental service, program, or activity rather than on the general public. Such receipts and collections are recorded as negative amounts of spending rather than as revenues. In most cases, offsetting receipts require an explicit appropriation, while offsetting collections may be obligated without further legislative action”.

Old-Age and Survivors Insurance (see OASI Trust Fund)

OMB (Office of Management and Budget)

• According to whitehouse.gov, “The Office of Management and Budget (OMB) serves the President of the United States in overseeing the implementation of his or her vision across the Executive Branch. OMB’s mission is to assist the President in meeting policy, budget, management, and regulatory objectives and to fulfill the agency’s statutory responsibilities.”
• Created by the Budget and Accounting Act of 1921. 

On-Budget Accounts

• Ref4 (GAO-05-734SP ): “All budgetary accounts other than those designated by law as off-budget.” 

Outlay 

• A Federal Budget Process term. 
• A federal budget expenditure. Federal Budget outlays can be categorized as Mandatory or Discretionary. 
• The CBO categorizes outlays into Discretionary (Defense+ Non-Defense) + Mandatory (Social Security, Medicare, Medicaid, Income Security, Federal Civilian and Military Retirement, Veterans’ Programs, Offsets, Other) + Net Interest.
• The OMB categorizes outlays into 20 Budget Functions (see “Function Classifications”) . The OMB considers Net Interest as part of Mandatory Spending.
• Authority–>Obligation –> Outlay: The Budget Process entails three steps: (1) Congress provides Budget Authority (2) Various Agencies enter into Obligations or binding commitments to spend and (3) Various Agencies actually spend the money (outlays or expenditures)
• Ref1: (CRS – R46240) : “The actual amount of payments from the Treasury that result from obligations entered into by executing provisions in appropriations and direct spending legislation that provides budget authority. Outlays consist of payments, usually by check, by electronic fund transfer or cash to liquidate obligations incurred in prior Fiscal years as well as in the current Fiscal year.” 

Payroll Taxes (See FICA, SECA, and FUTA)

• Payroll taxes are salary income taxes paid by employers and employees. Federal Payroll taxes are used to finance Social Security, Medicare Hospital Insurance, and Unemployment Insurance. Most states also levy payroll taxes (in 2023, only 9 states did not impose a state income tax…Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming). 
• Federal Payroll Taxes = FICA Taxes (for Social Security{OASI + DI} + Hospital Insurance{HI} Medicare)  +  SECA taxes (FICA type taxes for self employed individuals) + FUTA taxes (paid by employers to fund Unemployment Insurance).

Pigovian tax (see Excise Tax)

• An excise tax sometimes called a sin tax.

Presidential Budget Request (Proposal) or PBR – See Budget Request

• One of the deliverables of the US Federal Budget Process

Public Enterprise Fund (See Revolving Fund)

Receipts (Revenue)

• The US Federal Budget is a yearly accounting of the US Government’s cash inflows (Revenues or Receipts) and outflows (Outlays or Spend or Expenditures).
• Ref16: CBO-Historical Budget Data-Files : The CBO (Congressional Budget Office) categorizes Receipts into the following 6 categories: Income Taxes, Payroll Taxes, Corporate Income Taxes, Excise Taxes, Customs Duties, Miscellaneous Receipts
• Ref17: OMB-Historical Tables 1.1 – 16.2: The OMB’s (Office of Management and Budget) categorizations are almost identical.  SIRR or Social Insurance and Retirement Receipts roughly represents about 95%  of Payroll Taxes. Miscellaneous Receipts are broken down into  “Federal Reserve Deposits” and “Other”.  

Revenue (Receipts; See Governmental Receipts)

• The US Federal Budget is a yearly accounting of the US Government’s cash inflows (Revenues or Receipts) and outflows (Outlays or Spend or Expenditures).
• Ref3: (CBO – 57660): “Revenues are funds that the federal government collects from the public using its sovereign power. About 90 percent of federal revenues come from individual income taxes, corporate income taxes, and social insurance taxes (which fund Social Security, Medicare, and other social insurance programs). Other sources include excise taxes, estate and gift taxes, duties on imported goods, remittances from the Federal Reserve, and various fees and fines.”
• Ref16 (CBO-Historical Budget Data-Files) : The CBO (Congressional Budget Office) categorizes Receipts into the following 6 categories: Income Taxes, Payroll Taxes, Corporate Income Taxes, Excise Taxes, Customs Duties, Miscellaneous Receipts.
• Ref17 (OMB-Historical Tables 1.1 – 16.2): The OMB’s (Office of Management and Budget) categorizations are almost identical.  SIRR or Social Insurance and Retirement Receipts roughly represents about 95%  of Payroll Taxes. Miscellaneous Receipts are broken down into  “Federal Reserve Deposits” and “Other”. 

Revolving Fund

• Ref10: (whitehouse.gov Circular No. A-11): “Revolving fund means a fund that conducts continuing cycles of business-like activity, in which the fund charges for the sale of products or services and uses the proceeds to finance its spending, usually without requirement for annual appropriations. There are three types of revolving funds: Public enterprise funds,
  which conduct business-like operations mainly with the public, intragovernmental revolving funds, which conduct business-like operations mainly within and between Government agencies, and trust revolving funds, which conduct business-like operations mainly with the public and are designated by law as a trust fund.”
• Ref10: (whitehouse.gov Circular No. A-11): Revolving Funds “…charge for the sale of products or services and use the proceeds to finance their spending.”
• Ref10: (whitehouse.gov Circular No. A-11): “There are two types of revolving funds in the Federal funds group. Public enterprise funds, such as the Postal Service Fund, conduct business-like operations mainly with the public. Intragovernmental funds, such as the Federal Buildings Fund, conduct business-like operations mainly within and between Government agencies.”

SECA (See FICA, FUTA, and Payroll Taxes)

• SECA imposes a payroll tax on self employed individuals. 
• The Self-Employment Contributions Act (SECA) of 1954 extends Social Security coverage to self-employed individuals. SECA based payroll taxes fund this coverage (tax on a portion of their net earnings to help fund Social Security and Medicare programs).
• Note that for funding Social Security benefits, FICA taxes apply to people who work for other companies while SECA taxes apply to self employed individuals. 
• Federal Payroll taxes consist of FICA taxes + SECA taxes (for self employed individuals) + FUTA taxes (Unemployment Insurance taxes). 

SIRR (Social Insurance and Retirement Receipts)

• SIRR is a US Government Federal Budget descriptor for Social Insurance and Retirement Receipts.
• SIRR programs provide benefits (retirement, disability, unemployment) to individuals based on their working year contributions.  
• OMB Breaks down SIRR into the following categories (3) and subcategories (5):
• 1. Employment and general retirement
  a. Old-Age and Survivors Insurance (OASI) – Part of Social Security benefit
  b. Disability Insurance (DI) – Part of Social Security Benefit. Funded through the DI Trust Fund.
  c. Hospital Insurance (HI) – A Medicare Part A benefit funded through the HI Trust Fund.
  d. Railroad retirement/pension fund
  e. Railroad social security equivalent account
• 2. Unemployment insurance
• 3. Other retirement

SMI Trust Fund (see Supplementary Medical Insurance (SMI) Trust Fund and Medicare Funding)

Social Insurance (see SIRR)

• Social Insurance can be defined in more than one way (see this excellent Brookings article or this Investopedia article). In the US, it typically refers to the Government programs (Social Security, Medicare, Unemployment Insurance) into which employees and employers pay during their employment years. They then receive benefits when a qualifying event is satisfied (i.e. retired / disabled/ laid off). 

Social Insurance and Retirement Receipts (see SIRR)

Social Security Trust Funds (see OASI, See DI)

• The Social Security Trust Funds comprise the Old Age & Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund.

Subfunction (see Function Classification)

Super Functions (see Function Classification)

Supplementary Medical Insurance (SMI) Trust Fund (See Medicare Funding)

• One of two trust funds from which Medicare is paid through. SMI funds Medicare Part B and Part D.
• Ref24: Medicare Funding – medicare.gov: “Supplementary Medical Insurance (SMI) Trust Fund: Funded by: (a) Funds authorized by Congress (b) Premiums from people enrolled in Medicare Part B (Medical Insurance) and Medicare drug coverage (Part D) (c) Other sources, like interest earned on the trust fund investments. It funds (a) Medicare Part B (b) Medicare Part D (c) Medicare Program administration, like costs for paying benefits and for fighting fraud and abuse.”
• The other Medicare Trust Fund is called the Hospital Insurance (HI) Trust Fund which funds Medicare Part A.

Trust Fund (Federal Fund) – Specific to Federal Government Budgetary terms. 

• Ref10: (whitehouse.gov Circular No. A-11): “Trust fund refers to a type of account, designated by law as a trust fund, for receipts or offsetting receipts dedicated to specific purposes and the expenditure of these receipts. Some revolving funds are designated as trust funds, and these are called trust revolving funds. Trust revolving funds have no receipt account and the collections are credited directly to the expenditure account.”
• Ref10: (whitehouse.gov Circular No. A-11): “Like special funds and revolving funds, trust funds earmark collections for spending on specific purposes. Many of the larger trust funds finance social insurance payments for individuals, such as Social Security, Medicare, and unemployment compensation. Other major trust funds finance military and Federal civilian
  employees’ retirement, highway and mass transit construction, and airport and airway development.”
• Ref1: (CRS – R46240) : “The budget consists of two main groups of funds: Federal Funds and Trust funds. Federal funds, which comprise mainly the general fund, largely derive from the general exercise of the taxing power and general borrowing. For the most part, these funds are not designated in law for any specific program or agency, although there are also special funds that are designated with respect to their source or purpose…
• …Trust funds are established under the terms of statutes that specifically designate them as such and are available to fund only specific purposes (i.e. earmarked items). For example, the Social Security trust funds (the Old-Age and Survivors Insurance Fund and the Disability Insurance Fund), which are the largest of the trust funds, comprise revenues collected under a Social Security payroll tax and are used to pay for Social Security benefits and related purposes.
• …The unified budget includes both the federal funds and the trust funds.”
• See Ref26: (GAO-01-199sp) also.

Trust Revolving Fund (see Revolving Fund, see Trust Fund)

Tax Types

• Taxes on what you earn (e.g. Payroll and other Income Tax). Pay is taxed at ordinary income tax rates. Other income (e.g. dividends and capital gains) are taxed at different levels depending on ownership duration.  
• Taxes on things you buy (e.g. tax on a car purchase)
• Taxes on things you own (e.g. property tax)

Undistributed Offsetting Receipts

• Ref4 (GAO-05-734SP ): “Undistributed Offsetting Receipts are Offsetting Receipts that are deducted from totals for the government as a whole rather than from a single agency or subfunction in order to avoid distortion of agency or subfunction totals. Offsetting receipts that are undistributed in both agency and functional tables are the collections of employer share of employee retirement payments, rents, and royalties on the Outer Continental Shelf, and the sales of major assets. Interest received by trust funds is undistributed offsetting receipts in the agency tables, but is distributed by function (i.e., subfunction 950 in functional tables).”

US Code

According to www.govinfo.gov, “The United States Code is the codification by subject matter of the general and permanent laws of the United States. It is divided by broad subjects into 53 titles and published by the Office of the Law Revision Counsel of the U.S. House of Representatives.”. You can view the code electronically at govinfo.gov. You can also view the code at Cornels Legal Information Institute. 

US Government Manual

According to www.govinfo.gov, “As the official handbook of the Federal Government, The United States Government Manual provides information on the agencies of the legislative, judicial, and executive branches. It also includes information on quasi-official agencies; international organizations in which the United States participates; and boards, commissions, and committees. The Manual begins with reprints of the Declaration of Independence and the U.S. Constitution.” You can download the pdf from the www.govinfo.gov link.  

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