You may have heard of President Obama's controversial $10 per barrel tax on oil that was included in his budget proposal, yet been puzzled by the analysis saying the proposal would probably never make it into law and exists mostly to make a statement on fossil fuels and alternative energies. If the President proposes the tax in his budget, why wouldn't it become law? It's possible, but highly unlikely — because Congress has the power of the purse strings.
How Congress may vote against Obama's new tax
While the President submits a budget proposal, that proposal may bear very little resemblance to the final bills that are passed to finance the government (known as appropriations bills). However, the President's budget still starts the process. Federal agencies such as the Department of Defense and Department of Education submit their budgets to be reviewed, and the President compiles and modifies the requests to form a comprehensive budget request to Congress. Generally, the President's budget is submitted to Congress in February.
Each house of Congress (the Senate and the House of Representatives) creates individual budget resolutions that set the basic framework for spending. It may accommodate the President's wishes or ignore them entirely. A joint conference committee including members from both chambers meets to work out the differences, and each chamber votes on the revised version.
This revised version goes back to each chamber to be "marked up" as the basic spending framework is filled out in greater detail within the agencies. Each of the twelve appropriations bills has its own appropriations subcommittee in each house. The subcommittees provide greater detail and move the budget bills on to the full Appropriations Committee in each house for even more markup.
After the final markup, each appropriations bill is voted on by the individual chambers, and once again, a conference committee reconciles any differences. The House and Senate vote yet again on the budget bill, but this time they are voting on the final version that is sent to the President.
Once the appropriations bills pass Congress, all twelve bills head to the President for his (or potentially her) signature. Upon the final signature, the budget is completed and becomes law. Sounds simple, right?
Unfortunately, in dysfunctional times, the Congress does not manage to pass the necessary appropriations bills before the beginning of the fiscal year (October 1st). Typically, the Congress creates a continuing resolution (or a series of them) buying more time by temporarily funding the government for a fixed period. Threats to hold up continuing resolutions in recent years have led to infamous and generally unsuccessful political government shutdowns.
In these cases, it is rare that Congress manages to pass all of the appropriations bills. Instead, the appropriations bills are lumped into one huge bill known as an omnibus bill — or sometimes as a "cromnibus" bill for the tendency of legislators to cram plenty of unrelated issues in the bill. It is a wonderful place to hide pork-barrel projects.
Congress must also pass authorizations along with appropriations, although they are not always on the same schedule. Appropriations allot a certain amount of money to an agency, and authorizations give that agency the legal authority to spend this. Mandatory spending like Medicare and Social Security are outside the appropriations process and are covered by authorizations. Some authorizations are multi-year in nature.
Let's see whether this year's budget process is closer to the standard appropriations process or becomes stalled with last minute grandstanding and theatrics. Given that this is an election year, which do you think will happen?