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The federal budget process

Learn about the federal government’s budget process, from the president’s budget plan to Congress’s work creating funding bills for the president to sign.

Every year, the U.S. Congress begins work on a federal budget for the next fiscal year. The federal government’s fiscal year runs from October 1 of one calendar year through September 30 of the next.

Annual funding areas

The annual budget covers three spending areas:

  • Mandatory spending - funding for Social Security, Medicare, veterans benefits, and other spending required by law. This typically uses over half of all funding.
  • Discretionary spending - federal agency funding. Congress sets funding levels for these each year. This usually accounts for around a third of all funding.
  • Interest on the debt - this usually uses less than 10 percent of all funding.

Creating the U.S. federal budget

The budget planning begins a year before the budget is to go into effect.

  1. Federal agencies create budget requests and submit them to the White House Office of Management and Budget (OMB).

  2. OMB refers to the agencies’ requests as it develops the budget proposal for the president.

  3. The president submits the budget proposal to Congress early the next year.

  4. 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.

  5. 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.

  6. Congress sends the approved funding bills to the president to sign or veto.

LAST UPDATED: December 6, 2023


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