Federal Budgeting
2.17.09

• Budgets provide governments with a mechanism to allocate resources for the pursuit of goals that are consistent with community preferences and needs.
• According to Aaron Wildavsky a budget is:
1) A prediction
2) A translation of financial resources into human purposes
3) A contract in which the public provides money to government and government spends that money to benefit the public.
• As a contract a budget represents:
1) A commitment on both sides to this fiscal relationship
2) Mutual agreement of parties on priorities
3) Sanctions for both sides if their terms go unmet
• A commitment to a course of action; a decision

Baseline
Budget
Debt
Deficit
Discretionary spending
Entitlement
Fiscal year
Gross Domestic Product
Inflation
Mandatory spending
Outlay
Outyear estimates
Revenue
Surplus

GAO 2008 Citizens Guide to the Federal Govt’s Financial Health

GAO 2008 Citizens Guide to the Federal Govt’s Financial Health

• Social Security
• Medicare
• Medicaid
• Food Stamps
• Debt Interest
• Congressional Salaries
• Veteran’s benefits

NYT July 29, 2008

An estimate of spending, revenue, the deficit or surplus, and the public debt expected during a fiscal year under current laws and current policy. The baseline is a benchmark for measuring the budgetary effects of proposed changes in revenues and spending. It assumes that receipts and mandatory spending will continue or expire in the future as required by law and that the future funding for discretionary programs will equal the most recently enacted appropriation, adjusted for inflation.
GAO 2005 A Glossary of Terms Used in the Federal Budget Process

Any yearly accounting period, regardless of its relationship to a calendar year. The fiscal year for the federal government begins on October 1 of each year and ends on September 30 of the following year; it is designated by the calendar year in which it ends. For example, fiscal year 1990 began October 1,
1989, and ended September 30, 1990.
In the Concurrent Resolution on the Budget, or in the
President ʼ s budget submission, any fiscal year (or years) beyond the budget year for which projections are made.
GAO 2005 A Glossary of Terms Used in the Federal Budget Process

GDP: total expenditures for all final goods and services produced within the country
• New homes
• Imports
• Savings
• Transfer
Payments

Inflation: defined as a rise in the general price level
CPI = Consumer Price Index
GDP Deflators (responds to changing consumption patterns)