Contents

• Introduction
• Initial Preparation of Agency Budget Requests
• OMB Review of Agency Budget Requests
• Submission and Justification of the President's Budget
• Potential Issues for Congress

Introduction

The Constitution vests Congress with the power of the purse, with provisions that refer to congressional authority to levy taxes, authorize the issuance of debt, and make appropriations to fund the federal government.¹ The Constitution does not address the role of the President in the budget process in similarly specific terms. Rather, the executive budget process exists primarily due to statutes enacted by Congress, and it specifies roles for the President, the Office of Management and Budget (OMB), and agencies. The executive budget process consists of three main phases: development of the President's budget proposal, submission and justification of the President's budget proposal, and execution of enacted annual appropriations and other budgetary legislation. Congress may become involved in any of these phases.

Under current law, the President must develop and submit a consolidated budget to Congress no later than the first Monday in February prior to the start of the upcoming fiscal year.² OMB assists the President in carrying out budgetary duties. Originally created by the 1921 Budget and Accounting Act as the Bureau of the Budget,³ it was reconstituted as OMB in 1970.⁴ One of OMB's primary functions is to oversee the development of the President's budget proposal.⁵

This report briefly highlights the roles of OMB in budget development. For a detailed overview of the development, submission, and justification of the President's budget proposal, see CRS Report R47019, The Executive Budget Process: An Overview, by Dominick A. Fiorentino and Taylor N. Riccard. CRS has also published a suite of "In Brief" products covering components of the executive budget process, including:

• CRS Report R47089, The Role of the Office of Management and Budget (OMB) in Budget Development: In Brief, by Taylor N. Riccard (this report);
• CRS Report R47092, The Role of the President in Budget Development: In Brief, by Taylor N. Riccard;
• CRS Report R47091, The Role of Executive Agencies in Budget Development: In Brief, by Dominick A. Fiorentino;
• CRS Report R47090, Executive Agency Justification of the President's Budget: In Brief, by Dominick A. Fiorentino; and
• CRS Report R47088, The Executive Budget Process Timeline: In Brief, by Dominick A. Fiorentino.

Initial Preparation of Agency Budget Requests

OMB coordinates the development of the President's budget proposal by issuing circulars, memoranda, and guidance documents to the heads of executive agencies. Executive agencies may then prepare their budget requests in accordance with the instructions and guidance provided by OMB.

In particular, OMB's Circular A-11 is an extensive document that contains instructions and schedules for agency submission of budget requests and justification materials to OMB.⁶ Updated annually, Circular A-11 provides agencies with an overview of applicable budgetary laws, policies for the preparation and submission of budgetary estimates, and information on financial management and budget data systems. Circular A-11 also provides agencies with directions for budget execution and guidance regarding agency interaction with Congress and the public.

Early in the development phase of the executive budget process, OMB usually issues a budget planning guidance memorandum that observers refer to as "spring guidance" (see Figure 1). This memorandum provides executive agencies with detailed instructions and deadlines for submitting their budget requests and supporting materials to OMB.⁷ The guidance may also include instructions for how agency budget requests may help achieve the President's budgetary priorities and other policy goals. For example, the FY2019 budget guidance instructed that

[u]nless otherwise directed by OMB, your initial discretionary FY 2019 budget submission to OMB should continue the proposals included in the FY 2018 Budget, and should reflect a level no higher than the net total provided for your agency in the FY 2019 column of the FY 2018 Budget.⁸

The relevant statute does not require a certain date for submission of these budget requests to OMB. OMB typically has administratively set the annual submission dates for September, which occurs 13 months before the beginning of the forthcoming fiscal year (see Figure 1).

OMB Review of Agency Budget Requests

Agency budget requests are submitted to OMB in early fall, approximately four to five months before the President must submit the budget to Congress. In practice, the President delegates to OMB responsibility for reviewing executive agency requests and justification materials to ensure that they are consistent with the President's policy objectives.

Agency requests are first reviewed by the OMB program examiners who are responsible for the associated policy areas. More senior OMB officials may also review agency requests. Prior to making recommendations, OMB program examiners may ask for additional information from agencies, either informally or by conducting formal hearings. Examiners' recommendations are reviewed by senior OMB officials and finally by the OMB director and the President.⁹

Agencies are notified of OMB's decisions through a process known as "passback" (see Figure 1). During passback, OMB officials notify agencies of their approved budgetary levels, which may differ from the agencies' budget requests.¹⁰ The passback process and the content of passback decisions may differ under each Administration and each OMB director. For example, passback decisions may also include program policy changes.¹¹ An agency may appeal these decisions to the relevant OMB examiner or branch chief, the OMB director, a group of officials, or, in some cases, to the President directly, depending on the procedures established by the OMB director.¹²

Figure 1. Executive Budget Process Milestones Before and After Annual Submission to Congress

Sources: CRS analysis of U.S. Code, OMB guidance documents, and Presidents' budget submissions. Milestones that are established by law are also indicated by relevant U.S. Code citations. Notes: Initial passback decisions are made by OMB. Disagreements between agencies and OMB may be resolved by the President or designated White House officials. The degree of presidential involvement in the passback decisionmaking process may vary among Administrations.

Submission and Justification of the President's Budget

Once the President has submitted the budget proposal, OMB and agency officials explain and justify the request to Congress. Early in the congressional budget process, the OMB director and other agency officials may provide testimony regarding the President's budgetary objectives before congressional committees. Agencies submit written justification of their budget requests to the appropriations committees and subcommittees of jurisdiction in each chamber. Agencies also post their justifications online.¹³ The form and content of agency budget justifications (also referred to as congressional budget justifications, or CBJs) have been shaped by appropriations committee and subcommittee norms and practices. OMB also provides guidance for the creation of CBJs in Circular A-11.¹⁴

The President, with the assistance of OMB, may also update the budget proposal by submitting revisions to the original request (sometimes referred to as "budget amendments") and, in the wake of key events, supplemental requests to Congress.¹⁵ Under current law, the President is required to submit a supplemental summary of the budget, commonly referred to as the "Mid-Session Review" (MSR), after the January/February budget submission deadline but before July 16 of each year (see Figure 1). The MSR contains revised budget estimates and other information, including substantial changes in estimates of expenditures and receipts within the current fiscal year.¹⁶

Potential Issues for Congress

The President's budget is a statement of the President's policy priorities and a unified plan for the allocation of federal budgetary resources. While Congress is not required to adopt this plan, it creates a starting point for congressional revenue and spending actions. As OMB is responsible for facilitating the development of the President's budget request, it has a key role in shaping the result. In evaluating OMB's current role in the executive budget process, Congress may consider the following opportunities to conduct oversight of OMB's activities and options for potential legislation that would modify OMB's role:

• Oversight. Some observers suggest that OMB practices during the development of the budget are too opaque and that OMB may be exerting an overly politicized control over budgetary outcomes at the expense of seeking to achieve operational expertise through budgetary decisions. Congress may consider legislation that requires greater transparency in how OMB makes budget decisions and the control it exercises over agency budgets.
• Budget timelines. Congress may wish to exercise increased control over the executive budget process timeline by statutorily establishing deadlines for the steps of the process that are currently based on norms or set administratively. An important consideration is how any deadlines might reduce the authority or responsibility that Congress has provided to OMB. Also important is how these deadlines might alter existing relationships between Congress and OMB or agencies and OMB.

This report supersedes CRS Report RS20167, which was originally written by Bill Heniff Jr., Analyst on Congress and the Legislative Process, and updated by Clinton T. Brass, Specialist in Government Organization and Management.

Mari Y. Lee, Visual Information Specialist, and Brion A. Long, Visual Information Specialist, collaborated on the report's figure.

Footnotes