Passing a federal budget, raising revenue, and coining money
The Power of the Purse
The Constitution makes clear in Article I that Congress holds the power of the purse, giving it authority “to lay and collect Taxes, Duties, Imposts and Excises,” and specifying that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by law.” In short, federal taxing and spending requires legislation that is enacted into law.
No single piece of legislation establishes the annual federal budget. Rather, Congress makes spending and tax decisions through a variety of legislative actions in ways that have evolved over more than two centuries.
Under the practices that have evolved, some tax and spending legislation is permanent — unless and until changed, which it often is. Other legislation covers multi-year periods, requiring periodic renewal. And many budget decisions are made year by year, through enactment of annual appropriations bills.
The budget planning begins a year before the budget is to go into effect.
Federal agencies create budget requests and submit them to the White House Office of Management and Budget (OMB).
OMB refers to the agencies’ requests as it develops the budget proposal for the president.
The president submits the budget proposal to Congress early the next year.
Proposed funding is divided among 12 subcommittees, which hold hearings. Each is responsible for funding for different government functions such as defense spending or energy and water.
The House and Senate create their own budget resolutions, which must be negotiated and merged. Both houses must pass a single version of each funding bill.
Congress sends the approved funding bills to the president to sign or veto.
However, this process is becoming rare.
Since 1977, when the current system for government budgeting went into effect, the US Congress has passed all of its spending bills by the fiscal year deadline only four times. During that period, the government has shut down due to the lack of funding — either fully or partially — at least 20 times. In this video, we look at how the current budgeting process is supposed to work and the way it actually plays out most of the time, and try to answer why it's so hard for the federal government to fulfill one of its most basic functions: funding itself on time.
December 2023 by a Senate vote of 49-51 ais to Ukraine was blocked. When Russia first invaded Ukraine in February 2022, aiding Kyiv was a bipartisan project. In May of that year, a $40bn Ukraine aid package sailed through the House with a vote of 368-57, and the Senate with a vote of 86 -11.
But as the war has stretched on, more Republican lawmakers have turned against aid to Ukraine, embracing Donald Trump’s “America first” approach to foreign policy. When the House voted in September on a bill to provide $300m to train and equip Ukrainian fighters, a majority of Republicans – 117 members – opposed it.
Taxation Debt and the Fiscal Cliff
The tax laws enacted by Congress do not raise enough revenue to cover the spending provisions enacted by Congress. The mismatch between the two is the federal deficit and requires government borrowing and will soon require borrowing beyond the current debt ceiling.
The $33 trillion (and growing) gross federal debt equals debt held by the public plus debt held by federal trust funds and other government accounts.
Why?
The rich don't pay enough: since the Second World War, the top marginal income tax rate for individuals has declined steeply, as Democrats came around to the position that cutting taxes for the wealthy stimulates the economy (under John F. Kennedy) and then Republicans came around to the position that deficits are not a big problem (under George. W. Bush, and because of Ronald Reagan). Even if you account for all of the loopholes in the 1950s tax code, the effective tax rate for the top 1 percent — that is, the taxes they actually pay — is considerably lower now than it was at mid-century. In fact, in 2018, one study found that the top 400 billionaires were, for the first time in history, actually paying a lower tax rate than the bottom 50 percent of families.
Americans generally don't pay enough tax. The United States has always rejected the European broad-based approach to taxation. On multiple occasions it has even been the American left, which in theory supports a more robust social system, that has undermined creating the European-style tax base needed to fund it.
Raising taxes is unpopular
Debt may not be a problem
However, government shutdowns are a problem