Backgrounder: What is a Budget Resolution?

In general, a "Budget Resolution" is a concurrent resolution of the Congress that establishes a general framework for subsequent congressional action on spending and revenue bills.

• The Budget Resolution does not require presidential signature and does not become law.
• The Budget Resolution includes spending and revenue totals, but the Budget Resolution does not set annual spending levels for specific programs; that authority belongs to the House and Senate Appropriations Committees.

• In order to calculate proposed spending and revenue totals, the Budget Resolution makes "non-binding assumptions" regarding levels of spending for specific programs. The background materials on the budget plan therefore include considerable discussion about program areas being "increased" or the President's proposed program terminations being "rejected." Such discussion is superfluous since the Budget Committee has no jurisdiction to make those programmatic decisions. The Budget Committee decision that does have great import is the total amount of discretionary spending authority made available to the Appropriations Committees.

• "Budget authority," (often referred to as "BA") is the legal authority Congress gives to a Federal department or agency to enter into financial obligations that will result in outlays. When Congress appropriates funds for a particular program, it is enacting BA--not outlays.

• "Outlays," by contrast, are actual disbursements by the Treasury. When the Treasury issues a check in FY'08, that becomes an FY'08 outlay. This Budget Alert uses both BA and Outlays, depending on which numbers are available for specific items to do an apples-to-apples comparison between the Conrad plan and the President's Budget.

What is the Difference Between Discretionary and Mandatory Spending?

• Discretionary programs are funded by Congress in annual appropriations bills, that is, decisions are made each year on funding levels.

• "Mandatory programs" are programs that are driven by legal obligations written into U.S. law. Most mandatory programs are "entitlements," which are programs where annual spending is driven by statutory eligibility and benefit formulas (such as Social Security, Medicare, Medicaid, and Food Stamps).

What is a "Reserve Fund"?

• A reserve fund is a provision in a Budget Resolution that allows spending and revenue aggregates and committee allocations to be adjusted to accommodate new programs, provided the legislation is accompanied by spending cuts or revenue increases to fully pay the costs of the new program. It is important to realize that reserve funds do not fund anything. They allow the Budget Resolution framework to be adjusted to accommodate new programs only if they are deficit-neutral.