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The Budget Reconciliation

Process:
The Senate’s “Byrd Rule”
From
The Federal Budget Process
A description of the federal and congressional
budget processes, including timelines

Compiled by TheCapitol.Net
Authors: Sandy Streeter, James Saturno, Bill Heniff Jr., and Robert Keith

2009, 192 pages


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FederalBudgetProcess.com
GOVERNMENT SERIES

The
Federal
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Process

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Summary Table of Contents
The Federal Budget Process
Budgeting for the federal government is an enormously complex process. It entails dozens of
subprocesses, countless rules and procedures, the efforts of tens of thousands of staff persons in the
executive and legislative branches, and the active participation of the President, congressional leaders,
Members of Congress, and members of the executive branch. This analysis shows the various elements
of the federal budget process including the President’s budget submission, framework, timetable,
the budget resolution, reconciliation, the “Byrd Rule,” appropriations, and budget execution.

Analysis
“Introduction to the Federal Budget Process,” by Robert Keith,
CRS Report for Congress 98-721 GOV, November 20, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . 1

“Overview of the Executive Budget Process,” by Bill Heniff Jr.,


CRS Report for Congress RS20175, June 17, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

“The Executive Budget Process Timetable,” by Bill Heniff Jr.,


CRS Report for Congress RS20152, June 17, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

“The Congressional Budget Process: A Brief Overview,”


by James V. Saturno, CRS Report for Congress RS20095,
November 26, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

“The Congressional Budget Process Timetable,” by Bill Heniff Jr.,


CRS Report for Congress 98-472 GOV, March 20, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

“Budget Resolution Enforcement,” by Bill Heniff, Jr.,


CRS Report for Congress 98-815, August 12, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

“The Budget Reconciliation Process: The Senate’s ‘Byrd Rule,’”


by Robert Keith, CRS Report for Congress RL30862, March 20, 2008 ............. 55

“The Congressional Appropriations Process: An Introduction,”


by Sandy Streeter, CRS Report 97-684, December 2, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . 91

“Reforming the Federal Budget Process,” Testimony of Douglas Holtz-Eakin,


Director of OMB, before the Subcommittee on Legislative and Budget Process,
Committee on Rules, U.S. House of Representatives, March 23, 2004 . . . . . . . . . . . 119

Chapter 9 of Congressional Deskbook, Legislating in Congress:


Federal Budget Process, by Bill Heniff Jr. and Robert Keith . . . . . . . . . . . . . . . . . . . . . . . . 133

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Resources from TheCapitol.Net
Capitol Learning Audio Courses ......................................................... 179
Live Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

Other Resources
Books ........................................................................................ 180
Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
Federal Budget Web Sites ................................................................ 180

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Table of Contents
Analysis
“Introduction to the Federal Budget Process,” by Robert Keith,
CRS Report for Congress 98-721 GOV, November 20, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Evolution of Federal Budgeting 5
Basic Concepts of Federal Budgeting 6
Budget Authority and Outlays 6
Scope of the Budget 7
Deficit Reduction and the Rules of Congressional Budgeting 8
Budgeting for Discretionary and Direct Spending 10
Budgeting for Direct and Guaranteed Loans 12
The Budget Cycle 12
The Presidential Budget Process 13
Formulation and Content of the President’s Budget 13
Executive Interaction With Congress 14
The Congressional Budget Process 15
Formulation and Content of the Budget Resolution 15
Budget Resolution Enforcement 17
Budget Resolution Aggregates 17
Allocations of Spending to Committees 18
Scoring and Cost Estimates 18
Points of Order 19
The Sequestration Process 20
Spending Legislation 22
Authorizing Measures 22
The Annual Appropriations Process 22
Revenue Legislation 24
Debt-Limit Legislation 25
Reconciliation Legislation 26
Reconciliation Directives 27
Development and Consideration of Reconciliation Measures 27
Earmark Reform 28
Impoundment and Line-Item Veto 29
Impoundment 29
Rescissions 30
Deferrals 30
Line-Item Veto 31
Tables
Table 1. Congressional Budget Process Timetable 15

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“Overview of the Executive Budget Process,” by Bill Heniff Jr.,
CRS Report for Congress RS20175, June 17, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

“The Executive Budget Process Timetable,” by Bill Heniff Jr.,


CRS Report for Congress RS20152, June 17, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

“The Congressional Budget Process: A Brief Overview,”


by James V. Saturno, CRS Report for Congress RS20095,
November 26, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

“The Congressional Budget Process Timetable,” by Bill Heniff Jr.,


CRS Report for Congress 98-472 GOV, March 20, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

“Budget Resolution Enforcement,” by Bill Heniff, Jr.,


CRS Report for Congress 98-815, August 12, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

“The Budget Reconciliation Process: The Senate’s ‘Byrd Rule,’”


by Robert Keith, CRS Report for Congress RL30862, March 20, 2008 ............. 55
Introduction 58
Legislative History of the Byrd Rule 59
Current Features of the Byrd Rule 61
Definitions of Extraneous Matter 62
Exceptions to the Definition of Extraneous Matter 63
Implementation of the Byrd Rule 63
Points of Order 67
Waiver Motions 68
Years in Which the Byrd Rule Was Not Invoked 68
Byrd Rule Controversies 69
Impact on House-Senate Relations in 1993 and 1994 69
Effects on Tax-Cut Legislation 72
Rules Changes in the 110th Congress Barring Deficit Increases 75
Tables
Table 1. Figures and Resolutions Establishing the Byrd Rule 60
Table 2. Reconciliation Measures Enacted Into Law or Vetoed: 1980-2007 64
Table 3. Reconciliation Acts: Summary of Points of Order and
Waiver Motions Under the Byrd Rule 66
Table 4. Listing of Actions Under the Senate’s Byrd Rule, by Act: 1985-2007 77
Appendix. Text of the Byrd Rule 87

“The Congressional Appropriations Process: An Introduction,”


by Sandy Streeter, CRS Report 97-684, December 2, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Introduction 94
Annual Appropriations Cycle 95
President Submits Budget 95

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Congress Adopts Budget Resolution 96
Timetable for Consideration of Appropriations Measures 98
Work of the Appropriations Committees 98
House and Senate Floor Action 99
House 99
Senate 100
House and Senate Conference Action 101
Presidential Action 102
Types of Appropriations Measures 102
Regular Appropriations Bills 102
Continuing Resolutions 104
Supplemental Appropriations Measures 106
Spending Ceilings for Appropriations Measures 108
Allocations 108
Enforcement 111
House 111
Senate 113
Emergency Spending 114
Relationship Between Authorization and Appropriation Measures 115
Rescissions 117
Tables
Table 1. Number of Regular Appropriations Bills Packaged in Omnibus
(or Minibus) Measure, FY1977-FY2008 104
Table 2. Regular Appropriations Bills Completed by Deadline and
Number of ContinuingResolutions, FY1977-FY2008 106
Table 3. House Committee on Appropriations’ 302(a) Allocations for FY2008 108
Table 4. Initial House Appropriations Committee’s 302(b) Allocations for FY2008 110

“Reforming the Federal Budget Process,” Testimony of Douglas Holtz-Eakin,


Director of OMB, before the Subcommittee on Legislative and Budget Process,
Committee on Rules, U.S. House of Representatives, March 23, 2004 . . . . . . . . . . . 119

Chapter 9 of Congressional Deskbook, Legislating in Congress:


Federal Budget Process, by Bill Heniff Jr. and Robert Keith . . . . . . . . . . . . . . . . . . . . . . . . 133
§ 9.00 Introduction: Congress’s “Power of the Purse” 135
§ 9.01 Congress’s Constitutional “Power of the Purse” 135
§ 9.02 Federal Budgeting Concepts and Terminology 136
§ 9.10 Key Budget Process Laws 138
§ 9.11 Budget Enforcement Act Procedures 140
§ 9.20 The Budget Cycle 141
§ 9.30 Budget Enforcement Framework 141
§ 9.40 Presidential Budget Process 142
§ 9.41 Typical Executive Budget Process Timetable 143

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§ 9.42 Office of Management and Budget Publications 144
§ 9.43 Volumes Containing and Explaining the President’s Annual Budget 145
§ 9.44 Program and Financing Schedule in President’s Budget Appendix 146
§ 9.50 Congressional Budget Process 148
§ 9.51 Congressional Budget Process Timetable 149
§ 9.52 Completion Dates of Budget Resolutions 150
§ 9.53 Congressional Budget Process Flowchart 152
§ 9.54 Functional Categories in a Congressional Budget Resolution 154
§ 9.55 Membership on the House and Senate Budget Committees 155
§ 9.60 Spending, Revenue, and Debt-Limit Legislation 158
§ 9.61 Budgeting for Direct and Guaranteed Loans 158
§ 9.70 Spending Legislation 158
§ 9.71 Differences between Discretionary and Direct Spending 159
§ 9.80 Authorization and Appropriation Processes 159
§ 9.81 Limitations, Earmarks, and General Provisions 162
§ 9.82 New Appropriations Subcommittee Organization 163
§ 9.83 Sequence of Appropriations Measures through Congress 164
§ 9.84 Examples of Appropriations Subcommittees’ Requirements for Member Requests 166
§ 9.90 Revenue Legislation 169
§ 9.91 Tax Expenditures 169
§ 9.92 Revenue Estimates 170
§ 9.100 Debt-Limit Legislation 171
§ 9.110 Reconciliation Legislation 171
§ 9.120 Implementation of the Budget by Executive Agencies 173
§ 9.130 Apportionment 174
§ 9.140 Transfer and Reprogramming 174
§ 9.150 Impoundment: Deferrals and Rescissions 174
§ 9.160 Budget Process Glossary 177

Resources from TheCapitol.Net


Capitol Learning Audio Courses ......................................................... 179
Live Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

Other Resources
Books ........................................................................................ 180
Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
Federal Budget Web Sites ................................................................ 180
Government Web Sites 180
Non Government Web Sites 181

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Congressional Deskbook • Legislating in Congress: Federal Budget Process § 9.110

§ 9.100 Debt-Limit Legislation


When the revenues collected by the federal government are not sufficient to cover its expen-
ditures, it must finance the shortfall through borrowing. In addition, the federal government
is compelled to incur debt because of requirements that trust fund surpluses be invested in
federal securities. Federal borrowing is subject to a public-debt limit established by statute. As
long as the federal government incurs annual deficits and trust funds incur annual surpluses,
the public-debt limit must be increased periodically. The frequency of congressional action to
raise the debt limit has ranged in the past from several times in one year to once in several
years.
Legislation to raise the public-debt limit falls under the jurisdiction of the House Ways
and Means Committee and the Senate Finance Committee. Congress may develop debt-limit
legislation in any of three ways: (1) under regular legislative procedures; (2) as part of recon-
ciliation legislation; or (3) in the House, under Rule XXVII (referred to as the “Gephardt
rule” after its author, former Representative Richard Gephardt, D-MO). House Rule XXVII
requires that the House Clerk automatically engross and transmit to the Senate, upon the
adoption of the budget resolution, a joint resolution changing the public debt limit to the
level specified in the budget resolution. This automatic engrossing process was added to the
House rules in 1979, remained in the House rules until it was removed at the beginning of the
107th Congress, and was restored at the beginning of the 108th Congress. The Senate has no
comparable procedure and may consider this joint resolution under the regular legislative
process. With fewer constraints on the consideration of such measures than the House, the
Senate may add nongermane provisions to debt-limit legislation. For example, the 1985 Bal-
anced Budget Act (Gramm-Rudman-Hollings) was an amendment to a debt-limit bill.

§ 9.110 Reconciliation Legislation


Beginning in 1980, Congress has used reconciliation legislation to implement many of its most
significant budget policies. Section 310 of the 1974 Congressional Budget Act sets forth a spe-
cial procedure for the development and consideration of reconciliation legislation. Reconcili-
ation legislation is used by Congress to bring existing revenue and spending law into con-
formity with the policies in a budget resolution. Reconciliation is an optional process, but
Congress has used it more years than not since 1980.
The reconciliation process has two stages—the adoption of reconciliation directives in the
budget resolution and the enactment of reconciliation legislation that implements changes in
revenue or spending laws. Although reconciliation has been used for some time, specific pro-
cedures tend to vary from year to year.
Reconciliation is used to change the amount of revenues, budget authority, or outlays
generated by existing law. In a few instances, reconciliation has been used to adjust the pub-
lic-debt limit. On the spending side, the process focuses on entitlement laws; it may not be

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§ 9.110 Government Series: The Federal Budget Process

used, however, to impel changes in Social Security law. Reconciliation sometimes has been
applied to discretionary authorizations, which are funded in annual appropriations acts, but
this is not the usual practice.

Reconciliation Directives
Reconciliation begins with a directive in a budget resolution instructing one or more desig-
nated committees to recommend legislation changing existing law. These directives have
three components: (1) they name the committee or committees directed to recommend legis-
lation; (2) they specify the amounts of changes in revenues or outlays that are to be achieved
by changes in existing law, but do not indicate how these changes are to be made, which laws
are to be altered, or the programs to be affected; and (3) they usually set a deadline by which
the designated committee or committees must recommend the changes in law. The directives
typically cover the same fiscal years covered by the budget resolution. The dollar amounts are
computed with reference to the Congressional Budget Office baseline. Thus, a change repre-
sents the amount by which revenues or spending would decrease or increase from baseline
levels as a result of changes made in existing law.
Although the instructions do not mention the programs to be changed, they are based on
assumptions concerning the savings or deficit reduction (or, in some cases, increases) that
would result from particular changes in revenue provisions or spending programs. These pro-
gram assumptions are sometimes printed in the reports on the budget resolution. Even when
the assumptions are not published, committees and members usually have a good idea of the
specific program changes contemplated by the reconciliation directives.
A committee has discretion to decide the legislative changes to be recommended. It is not
bound by the program changes recommended or assumed by the Budget Committees in the
reports accompanying the budget resolution. However, a committee is expected to recom-
mend legislation estimated to produce the dollar changes delineated in its reconciliation
directives.
When a budget resolution containing a reconciliation directive has been approved by
Congress, the instruction has the status of an order by the House and Senate to designated
committees to recommend legislation, usually by a date certain.

Development and Consideration


of Reconciliation Measures
When more than one committee in the House and Senate is subject to reconciliation direc-
tives, the proposed legislative changes are consolidated by the Budget Committees into an
omnibus bill. The 1974 Congressional Budget Act does not permit the Budget Committees to
revise substantively the legislation recommended by the committees of jurisdiction. This
restriction pertains even when the Budget Committees estimate that the proposed legislation
will fall short of the dollar changes called for in the instructions. Sometimes, the Budget Com-

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Congressional Deskbook • Legislating in Congress: Federal Budget Process § 9.120

mittees—working with the leadership—develop alternatives to the committee recommenda-


tions. These alternatives may be offered as floor amendments to achieve greater compliance
with the reconciliation directives.
The 1974 act requires that amendments offered to reconciliation legislation in either the
House or the Senate be deficit-neutral. To meet this requirement, an amendment reducing
revenues or increasing spending must offset these deficit increases by equivalent revenue
increases or spending cuts. In addition, nongermane amendments may not be offered in either
chamber.
During the first several years of experience with reconciliation, the legislation contained
many provisions that were extraneous to the purpose of the reconciliation measures, such as
reducing the deficit. The reconciliation submissions of committees included such things as
provisions that had no budgetary effect, that had a budgetary effect merely incidental to a sig-
nificant policy change, or that violated another committee’s jurisdiction. In 1985, the Senate
adopted a rule (commonly referred to as the Byrd rule, after Senator Robert C. Byrd, D-WV)
on a temporary basis as a means of curbing these practices. The Byrd rule has been extended
and modified several times over the years. In 1990, the Byrd rule was incorporated into the
1974 Congressional Budget Act as section 313 and made permanent. The Senate, nonethe-
less, may waive the Byrd rule by unanimous consent or by a waiver motion requiring a three-
fifths vote of the membership. Although the House has no rule comparable to the Senate’s
Byrd rule, it may use other devices to control the inclusion of extraneous matter in reconcili-
ation legislation. In particular, the House has used special rules to make in order amendments
to strike extraneous matter. (See § 8.90, Rules Committee and Special Rules.)
Senate debate on reconciliation legislation is limited to twenty hours. The Senate may
continue to consider amendments, motions, and appeals after that time, but no additional
debate is allowed. The House is not restricted by the 1974 act in debate on reconciliation leg-
islation, but it typically adopts a special rule limiting general debate, amendments, and other
floor procedures.

§ 9.120 Implementation of the


Budget by Executive Agencies
Federal agencies implement the various spending and revenue measures enacted into law
through thousands of discrete actions. While the submission of the president’s budget propos-
als and the subsequent consideration of them by Congress in the legislative process usually
garner considerable attention in the media, less scrutiny is often paid to what actually hap-
pens to funds after congressional action is finished. Three categories of executive agency
actions are of particular interest to Congress: apportionment (§ 9.130), transfer and repro-
gramming (§ 9.140), and impoundment (§ 9.150).

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Resources from TheCapitol.Net

Resources from TheCapitol.Net


Capitol Learning Audio Courses
<www.CapitolLearning.com>

• Appropriations Process in a Nutshell with James Saturno, ISBN 1-58733-043-1

• Authorizations and Appropriations in a Nutshell with James Saturno, ISBN 1-58733-029-6

• The Budget Execution Process with Carl Moravitz, ISBN 978-1-58733-136-7

• Budget Formulation, Justification, and Execution: A How-To for Budget Analysis with
James Capretta, ISBN 1-58733-060-1

• The Federal Budget Process with Philip Joyce, ISBN 1-58733-083-0

• The Budget Resolution in a Nutshell with Roy Meyers, ISBN 1-58733-085-7

Live Training
• Understanding Congressional Budgeting and Appropriations
<www.CongressionalBudgeting.com>

• Advanced Federal Budget Process


<www.BudgetProcess.com>

• Congressional Dynamics and the Legislative Process


<www.CongressionalDynamics.com>

• The President’s Budget


<www.PresidentsBudget.com>

• The Defense Budget


<www.TheDefenseBudget.com>

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Government Series: The Federal Budget Process

Other Resources
Books
• The Federal Budget, Third Edition: Politics, Policy, Process by Allen Schick and with
the assistance of Felix LoStracco, Brookings, 2007, 345 pages, ISBN: 0815777353

• Evolution of United States Budgeting: Revised and Expanded Edition by Annette E. Meyer,
Greenwood Publishing Group, Inc., 2002, 288 pgs, ISBN 9780275968618

• The New Politics of the Budgetary Process by Aaron Wildavsky, Longman Publishers, 2003,
288 pgs, ISBN 9780321159670

• Why Budgets Matter: Budget Policy and American Politics by Dennis S. Ippolito,
Penn State Press, 2004, 334 pgs, ISBN 0271022604

• Public Performance: Why Management Matters by Philip Joyce, Patricia Ingraham and
Amy Donahue, Johns Hopkins University Press, 1993, 216 pgs, ISBN 9780801872280

• Public Budgeting Systems 8th Edition by Robert Lee, Ronald Johnson, and Philip Joyce,
Jones & Bartlett Publishers, Inc., 2008, 757 pgs, ISBN 9780763746681

Statutes
• Budget and Emergency Deficit Control Act of 1985
<http://www.ssa.gov/OP_Home/comp2/F099-177.html>

• Budget Enforcement Act of 1990


<www.worldbank.org/publicsector/pe/BudgetLaws/BudgetEnforcementAct1990.doc>

Federal Budget Web Sites

Government Web Sites:


• “Compilation of Laws and Rules Relating to the Congressional Budget Process,” by
the Committee on the Budget, U.S. House of Representatives, As amended through
November 30, 2008 (234-page pdf) <http://budget.house.gov/laws.shtml>

• <www.rules.house.gov> From the homepage, click on the Budget Process which brings
you to <http://www.rules.house.gov/budget_pro.htm> which lists all rules, timelines, and
regulations regarding the federal budget.

• <www.budget.house.gov> On the homepage, left hand side, click on Budget Laws and you
will be able to see the link for “Compilation of Laws and Rules Relating to the Congressional
Budget Process,” among other topics.

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www.FederalBudgetProcess.com
Other Resources

• <www.budget.senate.gov> Shows federal budget timelines, glossary of budget terms,


jurisdiction, and committee rules.

• <www.omb.gov
• <http://www.whitehouse.gov/omb/gils_gil-budg/> The Budget of the U.S. Government,
gives overview of how to locate individual agencies and their financial budgets for FY 2009.
• <www.cbo.gov> The Congressional Budget Office’s website displays timely analyses to
aid in economic and budgetary decisions on the wide array of programs covered by the
federal budget. The website shows the information and estimates required for the
Congressional budget process.

• <www.opm.gov>
• <http://www.opm.gov/budget/index.asp> The Office of Personal Management’s website
shows reports for the last ten years of the congressional budget justifications and
performance plans.

Non-Government Web Sites:


• <www.ombwatch.org> OMB Watch displays government transparency and accountability
in regards to the regulatory and budgetary processes and policies; and to protect and promote
active citizen participation in our democracy.

• <www.thisnation.com> Shows the roots of the federal budget process with historical
documents, budget news, editorial and advocacy, and facts and figures.

• <www.cbpp.org>
• <http://www.cbpp.org/cms/index.cfm?fa=view&id=155&zoom_highlightsub=federal+
budget+process> “Policy Basics: Introduction to the Federal Budget Process,”
by Center on Budget and Priority Policies, December 17, 2008

• <www.budgetanalyst.com> Shows federal budget process timeline where you can find
a step in the federal budget process and get an in-depth description.

• <www.columbia.edu> Shows chart of the federal budget process by clicking on Columbia


University Libraries and using the search engine with the phrase “Federal Budget Process”
under website tab.

• www.congressmatters.com>
• <http://www.congressmatters.com/story/2009/2/28/11218/5656> By using the search section
on the right hand side of the screen, typing in the phrase “Federal Budget Process” will bring
you to web post “Treasure trove of tools we need to understand the budget process” by David
Waldman posted on February 28, 2009. Shows various links to the House and Senate budget
committees, CRS reports, timelines, and charts one can use to understand the budget.

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