Have you ever wondered how the trillions of dollars
in your government actually get allocated? It's
it's a question most people avoid thinking about,
honestly. Right. You track the policy debates,
the campaign promises and the headline grabbing
legislative battles. But underneath all that
political theater lies the actual machinery of
the United States government. So today we are
taking a deep dive into the federal appropriations
process. Exactly. And we are using a comprehensive
Wikipedia overview of the U .S. federal appropriations
process as our source material today. And look,
I know what you're thinking. Bureaucracy. Math.
But you really should care about this. This isn't
just dry procedure. You know, this is the literal
engine of the country. Yeah, it dictates everything
from national defense to the taxes coming out
of your paycheck. Absolutely. And if you look
closely at the mechanics behind all the seemingly
boring bureaucratic terms like subcommittees
and budget resolutions, there's this fascinating
story. It's really about constitutional power,
political strategy and these incredibly high
stakes deadlines. OK, let's unpack this because
the Constitution. foundation for all of this
is actually pretty simple. It's rooted in Article
1, Section 9. Right. No money shall be drawn
from the treasury, but in consequence of appropriations
made by law. Just a single sentence. Just one
sentence, but it gives Congress the ultimate
power of the purse. They hold the checkbook.
But reading through the source material, I was
actually shocked by the history here. Because
the modern system we have now... It's surprisingly
recent. It is. Up until 1974, Congress mostly
just followed the president's lead. Which is
wild to think about today. Yeah, they were operating
under a 1921 law where the executive branch essentially
drove the budget process. But the dynamic shifted
dramatically in the early 70s. During the Nixon
administration, right? Exactly. So under Nixon,
something called presidential impoundments became
a massive issue. Impoundments. What does that
actually mean in practice? well congress would
pass a law appropriating funds for a specific
program often uh a program the Nixon administration
didn't like politically. And the president would
simply refuse to spend the money. He just wanted
to write the checks. Right. He would impound
the funds, claiming it was for fiscal management.
So Nixon was effectively vetoing specific spending
without actually using a veto. Exactly. And Congress
absolutely rebelled. They saw this as a direct
attack on their constitutional authority. So
they passed the Congressional Budget and Impoundment
Control Act of 1974. Which changed everything.
It was the ultimate aha moment for Congress.
The 1974 act gave them their own independent
brain. The Congressional Budget Office, the CBO.
Yes, the CBO, along with the House and Senate
budget committees. Before this, Congress really
couldn't analyze the numbers themselves. They
had to rely on the president's math. And the
president's math is always going to favor the
president's goal. Exactly. Giving Congress the
CBO meant they could scrutinize the data independently.
Okay, so that sets the stage for the modern era.
Let's walk through the actual step -by -step
process, the annual dance. Step one officially
kicks off on the first Monday in February. That's
when the president submits this massive budget
request, assisted by the Office of Management
and Budget, or the OMB. Right, but it's important
to remember this request is basically just a
highly detailed wish list. Right. It outlines
their revenue and spending plans, but it's not
binding. It's the opening bid. Opening bid. I
like that. So then we move to step two, usually
in April. And here's where it gets really interesting.
Congress passes a budget resolution based on
that wish list. Right. But this resolution is
not a law. It doesn't even go to the president's
desk for his signature. No, it operates strictly
as an internal blueprint for Congress itself.
So how do they figure out the numbers for this
blueprint? That's where the CBO comes back in.
In March, right before the resolution, the CBO
publishes a detailed analysis projecting 10 -year
baselines. Assuming no new laws are passed. Exactly.
And the scale of these projections is staggering.
The source material notes CBO projections showing
the baseline growing from $4 .1 trillion in 2018
up to $7 .0 trillion in 2028. Trillions. With
a T. It's a massive amount of money to organize.
Which brings us to step three. Slicing the pie.
Slicing the pie. So Congress takes this internal
blueprint and they establish the 302A allocation.
Right. The 302A is the absolute total amount
of money available to spend. The hard ceiling.
And once they have the total, they divide it
up into 302B allocations. Exactly. The 302B allocations
dictate how that total pie is divided among the
various subcommittees. And to make sense of everything.
The resolution organizes the government into
19 distinct budget functions. Because you can't
just categorize by agency. It's too messy. Right.
You have to categorize by what the money is actually
doing. So, for example, function 050 is national
defense. Function 250 is general science, space,
and technology. Then there's function 900. which
is just net interest, just paying the interest
on the debt. It's a way for lawmakers to look
at the macro level priorities before they get
into the weeds. Which is crucial because getting
into the weeds means understanding a really important
difference. The difference between authorizing
a program and appropriating funds for it. This
confuses people all the time. Right. So tell
us how that works. Authorizing a program basically
gives it permission to exist. It sets the rules
and says, we think this is a good idea. But it
doesn't give the program a single cent. It's
an unfunded mandate. Exactly. To actually give
them money, federal agencies must be given budget
authority through appropriations bills. Appropriating
is writing the check. And there are 12 of these
specific appropriations bills passed each year.
This is the discretionary spending. Right. The
12 bills cover the discretionary side of the
government. And looking at the numbers for fiscal
year 2025 really puts this into perspective for
you. Defense was at $831 .5 billion. A huge portion
of the pie. Massive. Meanwhile, the bill covering
labor, health and human services and education
was $198 .2 billion. And then you have the legislative
branch itself, which was just $6 .7 billion.
So you have these subcommittees fighting over
every line item in these 12 bills. They debate,
they do markups, and they have to reconcile the
House version with the Senate version. And they
have to do all of this before October 1st. Yes.
October 1st is the start of the federal fiscal
year. That is the hard deadline. But what happens
if they miss it? Because we see this on the news
all the time. If they miss it, the budget authority
simply vanishes. The agencies legally cannot
spend money. Which means a government shutdown.
Exactly. The lights go out. To prevent that,
Congress will usually pass a continuing resolution
or a CR. Which is just a temporary fix, right?
Right. A CR keeps the lights on by funding agencies
at the previous year's levels. But it's an administrative
nightmare because agencies are stuck. They can't
start new programs or adapt to new threats. They're
frozen in time. Yes. Or, alternatively, instead
of passing 12 separate bills, Congress will just
pack everything into one giant... thousands of
pages long piece of legislation. An omnibus bill.
The omnibus. It forces a single massive up or
down vote on the entire government, usually right
before a shutdown deadline. It's high drama every
single year. But here's the crazy part. All of
that drama, the 12 bills, the CRs, the omnibus
packages, the shutdowns, that is. only for discretionary
spending. Right. It's actually the smaller part
of the budget. There is an entire other side
of the ledger called mandatory spending. Yeah.
Or direct spending. And mandatory spending doesn't
need annual bills. It runs on auto pay. So contrast
that for us. Discretionary is an annual fight.
Mandatory is what? Mandatory spending is enacted
by permanent law programs like Social Security
and Medicare. Congress doesn't have to vote to
fund them every year. The Treasury is legally
obligated to cut those checks automatically based
on who is eligible. It's like your automatic
monthly subscriptions versus your daily spending.
You debate whether to buy a coffee today. That's
discretionary. But your electric bill is on auto
pay. That's mandatory. That's a great analogy.
And the numbers for the auto pay are staggering.
Yeah, the source gave us the fiscal year 2026
data. Social Security is projected at 268. billion.
Just for one year? And Medicare is at $176 billion.
And that money flows automatically unless Congress
passes a new law to change the underlying structure
of those programs. Which brings us to the cheat
code. Ah, yes. Reconciliation. Right. Because
if you want to change those massive permanent
structures or change the tax code, you normally
need a 60 -vote supermajority in the Senate to
overcome a filibuster. Usually, yes. But reconciliation
bills are special. They are a unique legislative
tool. Explain how this works. Why is it so powerful?
Reconciliation allows Congress to make changes
to mandatory spending, revenues, and the debt
limit with only a simple majority in the Senate.
Just 51 votes. Just 51 votes. There is no threat
of a filibuster whatsoever. And there is a strict
20 -hour limit on debate. Wow. So they can just
fast -track massive changes. Exactly. It removes
the minority party's ability to stall the legislation.
So what does this all mean for the average person
watching the news? It means that if one party
controls the House, the Senate and the presidency,
even by razor thin margins, reconciliation is
their primary mechanism for enacting sweeping
fiscal policy. It's an incredibly valuable procedural
shortcut. Of course, there are rules. Yeah. The
Byrd rule prevents them from just attaching random
laws to a budget reconciliation bill. It has
to actually impact the budget. Right. It has
to directly affect spending. or revenues. But
within those rules, it's the ultimate power play.
OK, we have covered so much ground here. Let's
briefly recap the journey of a federal dollar
for you. It's a long journey. It really is. It
starts way back in February with the president
proposing that massive wish list. Then Congress
takes the wheel. They use the CBO to run the
numbers and draft their internal blueprint in
April. The budget resolution. Right. Then they
slice up the pie. They assign it subcommittees
who draft 12 specific appropriations bills to
fund the discretionary side. Assuming they don't
hit a wall and rely on continuing resolutions
or an omnibus. Exactly. And all the while, the
mandatory spending, the Social Security and Medicare
auto pay just keeps flowing in the background
until it all eventually gets back to the president's
desk to be signed into law. It's a complex, continuous
cycle. It is. But before we wrap up, there was
one detail in the source material about the CBO
that really stood out. Oh, the current policy
baseline? Yes. So we talked about how the CBO
calculates a baseline assuming no laws change.
But the source notes they also calculate a...
current policy baseline. Right. And to do that,
the CBO has to make assumptions about future
events. Exactly. They have to guess how politicians
will vote on things like tax cuts, sunset provisions
in the future. Because some tax cuts are written
to expire after a few years and the CBO has to
predict. Will Congress let them expire or will
they extend them? Right. We think of the federal
budget as hard math, strict accounting. But fundamentally,
these multi trillion dollar 10 year projections
rely on. guessing future human behavior. Predicting
the political moods of people who might not even
be elected yet. It really leaves you with something
to mull over. How stable is a financial foundation
if it requires predicting what future politicians
might do years before they actually vote? It's
a house built on mathematical probabilities of
human behavior. It really is. Well, to everyone
listening, thank you so much for joining us on
this deep dive into the federal appropriations
process. We hope it demystified things a bit.
Absolutely. So the next time you hear about a
looming continuing resolution or an omnibus package
or budget reconciliation on the news, you'll
actually know the strategic machinery operating
behind the scenes. Until next time, keep exploring,
keep analyzing, and always keep questioning the
world around you.