How Your Government Works

[Loulit01]

The Constitution and the federal budget process | Constitution Center

The state of the federal budget will be a hot topic of discussion as the new Trump administration and a Republican-controlled Congress set spending priorities in a contentious Washington environment. Here's a brief look at the constitutional roots of this process.

constitutioncenter.org

In 1974, Congress confronted some of these growing presidential budgetary powers when it passed the Congressional Budget and Impoundment Control Act, over a veto issued by President Richard Nixon. Nixon had refused to spend money allocated by Congress, citing inflation fears, using an executive power called impoundment. And as a presidential candidate in 1972, Nixon also demanded that the President be allowed by Congress to cut federal spending as needed, to control deficits.

Congress re-established some of its budgetary powers by creating the Congressional Budget Office to gather its own budget-research information and by adding standing committees in the House and Senate to handle budget matters. It also greatly curtailed the President’s budget impoundment powers, which some saw as a de facto veto of congressional actions. The 1974 act also put in place important procedural measures that allowed Congress to better coordinate the budget process.

So today, the Congress and the President share budget responsibilities, under a very general mandate from the Constitution. The President proposes annual budget guidelines. The proposed budget from the President is considered and amended in many cases by House and Senate committees. At some point, a group of House and Senate members meets to work out differences between these appropriations bills. And then the President signs the individual bills, or the one bill that includes the entire budget. If not all the bills are signed by October 1, Congress can pass a continuing

The Impoundment Control Act of 1974

Update: For GAO’s most recent testimony on the Impoundment Control Act, visit Testimony before the House Committee on the Budget—Proposals to...

www.gao.gov

 

[Peacenik]

Our government does not work at all. It has been totally corrupted by big money.

 

[ttwtt78640]

The federal government may be big and it may be slow to act, but it sure is expensive.

 

[MamboDervish]

Our government does not work at all. It has been totally corrupted by big money.

Actually, it does work. Not for the average American, but for the big money.

 

[ttwtt78640]

Actually, it does work. Not for the average American, but for the big money.

Yep, it should make folks ponder why a politician would spend 100X (or more) to apply (campaign) for a ‘temporary’ job than the ‘public service’ job pays.

 

[Peacenik]

The federal government may be big and it may be slow to act, but it sure is expensive.

After the government blood letting government will be doing less. What it does do will be to support the powerful. It will hurt most of America. Capitalism is a great engine of creativity and ingenuity, but it has a dark greedy side which requires monitoring and regulation. That's why the rich and powerful support the right wing propaganda machine that makes people hate our own government that we created and have the power to change. When enough people resent our government and hand power to oligarchs that allows big money to control it for their own benefit easier.

 

[ttwtt78640]

After the government blood letting government will be doing less. What it does do will be to support the powerful. It will hurt most of America. Capitalism is a great engine of creativity and ingenuity, but it has a dark greedy side which requires monitoring and regulation. That's why the rich and powerful support the right wing propaganda machine that makes people hate our own government that we created and have the power to change. When enough people resent our government and hand power to oligarchs that allows big money to control it for their own benefit easier.

Yep, yet we the sheeple re-elect ‘our’ congress critters at a rate of over 90%.

 

[Peacenik]

Yep, yet we the sheeple re-elect ‘our’ congress critters at a rate of over 90%.

Name recognition and big money backers expecting favors.

 

[ttwtt78640]

Name recognition and big money backers expecting favors.

Yep, and getting them.

 

[OrphanSlug]

So today, the Congress and the President share budget responsibilities...

It is fine to post and discuss the budget process, responsibilities of the executive and legislative branches, and consider "how your government works." The main issue you will run into is in reality how this is all supposed to function rarely does.

I want to say in the past 40-50 years there has only been 5-6 fiscal years where Congress actually completed appropriations as specified before the start of that fiscal year. Continuing resolutions, budgets and partial budgets passed after the fact, threats of shutdowns and occasional partial shutdowns are the norm. Moreover, Presidents have a habit of through executive action or executive orders made slight alterations in how budgets are spent department to department. Then you get actions like Trump is doing where departments are being financially cut, mass layoffs and firings, all without Congressional authority being issued for these changes.

The function of the budget process, the functions of the Congressional Budget Office, the relationship of set departmental budgets to actual spending as passed by Congress have all been harmed by political gridlock, partisanship, and other uselessness. Democrats are no more trusted with this than Republicans, then when splits of power occur the mess gets worse.

All of this allows for being cynical about not just core function but the application of slow and inefficient government.

 

[ttwtt78640]

It is fine to post and discuss the budget process, responsibilities of the executive and legislative branches, and consider "how your government works." The main issue you will run into is in reality how this is all supposed to function rarely does.

I want to say in the past 40-50 years there has only been 5-6 fiscal years where Congress actually completed appropriations as specified before the start of that fiscal year. Continuing resolutions, budgets and partial budgets passed after the fact, threats of shutdowns and occasional partial shutdowns are the norm. Moreover, Presidents have a habit of through executive action or executive orders made slight alterations in how budgets are spent department to department. Then you get actions like Trump is doing where departments are being financially cut, mass layoffs and firings, all without Congressional authority being issued for these changes.

The function of the budget process, the functions of the Congressional Budget Office, the relationship of set departmental budgets to actual spending as passed by Congress have all been harmed by political gridlock, partisanship, and other uselessness. Democrats are no more trusted with this than Republicans, then when splits of power occur the mess gets worse.

All of this allows for being cynical about not just core function but the application of slow and inefficient government.

Yep, while US GDP has grown about 35% from FY2019 to FY2024, federal spending has grown about 56% during that time.

 

[Luce]

Our government does not work at all. It has been totally corrupted by big money.

Odd.

I take I-10 to work, and it exists and is even being improved.

How is this possible, if the US federal government does not work at all?

Sorry for ****ing with your MAGA like that.

 

[OrphanSlug]

Yep, while US GDP has grown about 35% from FY2019 to FY2024, federal spending has grown about 56% during that time.

I tend to look at the relationship of the two in spending as a percentage of GDP, because it reveals trend lines that are more representative, but I will add spending is only half the math as the other is taxation as a percentage of GDP.



By trend, give or take a few things, you can argue our spending from 2004 to 2024 is on an incline as a percentage of GDP. Lots of reasons for that of course but overall the GS (Government Spending) part of the GDP math year on year is trending up. That is likely to change given what we know of current events, my concern is overall GDP slowing down to perhaps going negative as the CS (Consumer Spending) and BI (Business Investment) part has no reason to make up the difference. BTW, net exports for us is also up for discussion, usually a negative number but that is a whole separate discussion.

 

[eohrnberger]

Yep, while US GDP has grown about 35% from FY2019 to FY2024, federal spending has grown about 56% during that time.

Hmm. Interesting factoid there.
So the economy is trying to grow itself and handle the nation's debt, but the government keeps making that debt worse.
Would that be a fair reading?

 

[ttwtt78640]

I tend to look at the relationship of the two in spending as a percentage of GDP, because it reveals trend lines that are more representative, but I will add spending is only half the math as the other is taxation as a percentage of GDP.

View attachment 67557077

By trend, give or take a few things, you can argue our spending from 2004 to 2024 is on an incline as a percentage of GDP. Lots of reasons for that of course but overall the GS (Government Spending) part of the GDP math year on year is trending up. That is likely to change given what we know of current events, my concern is overall GDP slowing down to perhaps going negative as the CS (Consumer Spending) and BI (Business Investment) part has no reason to make up the difference. BTW, net exports for us is also up for discussion, usually a negative number but that is a whole separate discussion.

OK, but federal spending in FY2019 was 21% of GDP and in FY2024 was 23.4% of GDP. Federal revenue (taxation) in FY2019 was 16.3% of GDP and in FY2024 was 17% of GDP. The federal deficit in FY2019 was 4.7% of GDP and in FY2024 was 6.4% of GDP for a 36% increase.

 

[ttwtt78640]

Hmm. Interesting factoid there.
So the economy is trying to grow itself and handle the nation's debt, but the government keeps making that debt worse.
Would that be a fair reading?

See post #15, which includes federal spending, revenue and the difference (deficit) as % of GDP for those two fiscal years.

 

[OrphanSlug]

OK, but federal spending in FY2019 was 21% of GDP and in FY2024 was 23.4% of GDP. Federal revenue (taxation) in FY2019 was 16.3% of GDP and in FY2024 was 17% of GDP. The federal deficit in FY2019 was 4.7% of GDP and in FY2024 was 6.4% of GDP for a 36% increase.

Shit, you are making me do math... thanks!

And I will use the Office of Management and Budget data. Well, before Trump took the site down so using Fed alternate reporting from that data (note that this data is slightly different than the Fed's own calculation but I like this data as it is supposedly based on Treasury data.) You might have used FY2023 data for FY2024, but that is not a big deal.

What I see...

FY2019... $3.46T receipts and $4.45T outlays, or 16.3% and 20.9% of GDP... resulting in $983B in deficit, or -4.6% of GDP
FY2024... $5.08T receipts and $6.94T outlays, or 18.0% and 24.6% of GDP... resulting in $1.86T in deficit, or -6.6% of GDP

What jumping from 2019 to 2024 (or 2023) does is skip over the awkward results from FY2020 and FY2021, the covid impacted fiscal years. Our spending jump from FY2019 to just FY2020 alone was some 33% 'ish. That -4.6% FY2019 deficit as percentage of GDP jumped to -14.7% for FY2020. It took until FY2022 for that to more normalize relatively speaking. The other part of the math is the GDP actuals showed a decrease from FY2019 to FY2020.

So everything ballooned just that one FY to the next FY allowing for the math to radically change. Since we are only 3-4 FYs removed from that reduction I can see how the math worked out when considering going from FY2019 to FY2024. On GDP alone, the growth from FY2020 to FY2022 is greater than the jump from FY2022 to FY2024, so our growth year on year is slowing down. And from FY2020 to FY2024 our spending as a percentage of GDP was 30.8%, 29.7%, 24.8%, 22.7% then popped up in FY2024 to 24.6%.

FY2022 to FY2024 in range is not so bad no matter if observing receipts as percentage of GDP, spending as percentage of GDP, or deficit as percentage of GDP.

And even though the trend on deficit as percentage of GDP is inching upwards each year FY2022 to FY2024, I already know why. How budgets were passed those years did not account for GDP growth year on year from FY2022 to FY2024 slowing down.

Everything now though is up in the air, with a new President and a Republican Party agreeable Congress. FY2025 and on may go in all sorts of directions depending on several things including GDP impacts from all these changes (fiscal, trade, and Executive actions.)

 

[ttwtt78640]

Shit, you are making me do math... thanks!

And I will use the Office of Management and Budget data. Well, before Trump took the site down so using Fed alternate reporting from that data (note that this data is slightly different than the Fed's own calculation but I like this data as it is supposedly based on Treasury data.) You might have used FY2023 data for FY2024, but that is not a big deal.

What I see...

FY2019... $3.46T receipts and $4.45T outlays, or 16.3% and 20.9% of GDP... resulting in $983B in deficit, or -4.6% of GDP
FY2024... $5.08T receipts and $6.94T outlays, or 18.0% and 24.6% of GDP... resulting in $1.86T in deficit, or -6.6% of GDP

What jumping from 2019 to 2024 (or 2023) does is skip over the awkward results from FY2020 and FY2021, the covid impacted fiscal years. Our spending jump from FY2019 to just FY2020 alone was some 33% 'ish. That -4.6% FY2019 deficit as percentage of GDP jumped to -14.7% for FY2020. It took until FY2022 for that to more normalize relatively speaking. The other part of the math is the GDP actuals showed a decrease from FY2019 to FY2020.

So everything ballooned just that one FY to the next FY allowing for the math to radically change. Since we are only 3-4 FYs removed from that reduction I can see how the math worked out when considering going from FY2019 to FY2024. On GDP alone, the growth from FY2020 to FY2022 is greater than the jump from FY2022 to FY2024, so our growth year on year is slowing down. And from FY2020 to FY2024 our spending as a percentage of GDP was 30.8%, 29.7%, 24.8%, 22.7% then popped up in FY2024 to 24.6%.

FY2022 to FY2024 in range is not so bad no matter if observing receipts as percentage of GDP, spending as percentage of GDP, or deficit as percentage of GDP.

And even though the trend on deficit as percentage of GDP is inching upwards each year FY2022 to FY2024, I already know why. How budgets were passed those years did not account for GDP growth year on year from FY2022 to FY2024 slowing down.

Everything now though is up in the air, with a new President and a Republican Party agreeable Congress. FY2025 and on may go in all sorts of directions depending on several things including GDP impacts from all these changes (fiscal, trade, and Executive actions.)

Loads of words and numbers, but they are what they are. IMHO, the problem is what many call ‘baseline budgeting’ which keeps (past) federal spending increases (plus some annual growth) in place regardless of what the GDP is doing.

Added to that is the ever increasing national debt and the (interest) cost of servicing that debt, thus the more is added to the national debt the more total annual federal ‘mandatory’ spending becomes. We have reached the point where even if congress critters cut 100% of federal non-defense ‘discretionary’ spending (mission impossible) we would still have an annual federal “budget” deficit.

 

[Econ4every1]

OK, but federal spending in FY2019 was 21% of GDP and in FY2024 was 23.4% of GDP. Federal revenue (taxation) in FY2019 was 16.3% of GDP and in FY2024 was 17% of GDP. The federal deficit in FY2019 was 4.7% of GDP and in FY2024 was 6.4% of GDP for a 36% increase.

These are interesting numbers, but I don't think they tell the whole story.

There was a large debt transfer from the private to the public sector. For example PPP loans were supposed to allow private companies to pay employees during COVID with the understanding that it costs less to subsidize businesses and ultimately the people that work there through the pandemic than it would have cost trying to pick up the pieces after the inevitable economic collapse. Those payments helped employees avoid defaults on loans, mortgages, rent etc. However you feel about "handouts", the fact remains that the reason that the recovery (for some) happened so fast was exactly because of what the government did from 2019-2021. Thus looking at the government's increases in debt relative to GDP, ignores the benefit to the private sector that isn't adequately captured in the GDP data.

Sadly, I fear that one of these times, representatives believing they are acting in the best interest of their constituents are going to take a hard line against "handouts" promoting the idea that people should care for themselves. Events like 2008 and 2020-2022, if they had been allowed to crash without intervention would have certainly lead to conditions at least as bad if not worse than the Great Depression (ironically, the result of the GD was the result of the government refusing to take on the debt of the private sector). I say worse because at that period there was less globalization and less specialization than there is now and as a result I think things would be much worse.

That said, it's important to remember that government payments to the private sector used to pay off bank debts didn't drive inflation the way they otherwise would have because money used to pay off debt causes that money to effectively cease to exist and that's what the numbers you're quoting fail to capture.

A bank loan is an IOU. The money the bank created comes from the IOU. When the money is repaid the cancel out. So a $100 IOU meets $100, the result is zero.

Now don't get me wrong, there were plenty of people who got money that likely didn't deserve it, and people that deserved it that didn't get it. And of course there are companies that took advantage of the period though greedflation, but I still think we are light years better off, than we would have been if the government had stayed on the sidelines.

 

[Econ4every1]

What I see...

Take a moment and consider my post above?

 

[samiam5211]

Actually, it does work. Not for the average American, but for the big money.

It actually works much better that most people give it credit for, because they have no idea what all it is doing for them.

 

[Econ4every1]

It actually works much better that most people give it credit for, because they have no idea what all it is doing for them.

I agree, which is why someday a populist is going to come along and the people will encourage them to break government things. Telling them that all that is wrong is the fault of government. And only after it happens and the wealthy and an authoritarian that did what so many people demanded will they realize just how well it was working, warts and all.

Maybe that time is near?

 

[ttwtt78640]

These are interesting numbers, but I don't think they tell the whole story.

There was a large debt transfer from the private to the public sector. For example PPP loans were supposed to allow private companies to pay employees during COVID with the understanding that it costs less to subsidize businesses and ultimately the people that work there through the pandemic than it would have cost trying to pick up the pieces after the inevitable economic collapse. Those payments helped employees avoid defaults on loans, mortgages, rent etc. However you feel about "handouts", the fact remains that the reason that the recovery (for some) happened so fast was exactly because of what the government did from 2019-2021. Thus looking at the government's increases in debt relative to GDP, ignores the benefit to the private sector that isn't adequately captured in the GDP data.

Sadly, I fear that one of these times, representatives believing they are acting in the best interest of their constituents are going to take a hard line against "handouts" promoting the idea that people should care for themselves. Events like 2008 and 2020-2022, if they had been allowed to crash without intervention would have certainly lead to conditions at least as bad if not worse than the Great Depression (ironically, the result of the GD was the result of the government refusing to take on the debt of the private sector). I say worse because at that period there was less globalization and less specialization than there is now and as a result I think things would be much worse.

That said, it's important to remember that government payments to the private sector used to pay off bank debts didn't drive inflation the way they otherwise would have because money used to pay off debt causes that money to effectively cease to exist and that's what the numbers you're quoting fail to capture.

A bank loan is an IOU. The money the bank created comes from the IOU. When the money is repaid the cancel out. So a $100 IOU meets $100, the result is zero.

Now don't get me wrong, there were plenty of people who got money that likely didn't deserve it, and people that deserved it that didn't get it. And of course there are companies that took advantage of the period though greedflation, but I still think we are light years better off, than we would have been if the government had stayed on the sidelines.

How does any of that justify more federal annual deficit (stimulus?) spending in FY2045 or FY2025?

 

[PeacefulWarrior]

So the economy is trying to grow itself and handle the nation's debt, but the government keeps making that debt worse.

I know Crooked donnie trump sure made it worse.

 

[Peacenik]

Odd.

I take I-10 to work, and it exists and is even being improved.

How is this possible, if the US federal government does not work at all?

Sorry for ****ing with your MAGA like that.

If the government does practically anything it is because the rich want it. The rich need I-10, too.