How the federal budget works
The federal government spends roughly seven trillion dollars a year. Most Americans could not explain how that number gets decided. The budget process is one of the most consequential functions of Congress, and one of the least followed.
The fiscal year and the budget request
The federal fiscal year runs from October 1 to September 30. By law, the President must submit a budget proposal to Congress by the first Monday in February. That document is a detailed plan for how the executive branch would like to spend money and raise revenue in the coming year. It is a wish list, not a binding directive. Congress is under no obligation to follow it, and rarely does in full. But it sets the terms of the debate.
Appropriations: how Congress actually funds the government
The real work of funding the government happens in Congress through appropriations. Twelve subcommittees in each chamber write the spending bills that allocate money to federal agencies and programs. These bills are supposed to be passed and signed into law before October 1, when the new fiscal year begins. In practice, Congress almost never meets that deadline. Negotiations over spending levels, policy riders, and competing priorities routinely extend well past the start of the fiscal year.
Continuing resolutions
When appropriations bills are not passed on time, Congress passes a continuing resolution, which keeps the government funded at roughly prior-year levels until a deal is reached. Continuing resolutions allow the government to keep operating, but they create real costs: new programs cannot be launched, agencies cannot make long-range plans, and contractors and grantees operate in uncertainty. A government that runs on continuing resolutions is a government operating without a real budget.
Government shutdowns
When a continuing resolution expires and no new agreement has been reached, the government shuts down. Non-essential functions stop. Federal workers are sent home without pay, though they are typically paid retroactively once the shutdown ends. Essential services continue: the military stays on duty, air traffic controllers keep working, the postal service delivers mail. Shutdowns are rare but have become more frequent in recent decades as budget negotiations have grown more contentious. They are not a feature of the system. They are a failure of it.
The debt ceiling
The debt ceiling is a separate mechanism from the appropriations process, and the confusion between them is worth clearing up. Appropriations bills authorize the government to spend money. The debt ceiling is a statutory limit on how much the Treasury can borrow to pay for spending Congress has already authorized. Hitting the debt ceiling does not prevent Congress from having authorized spending; it prevents the Treasury from paying for it. The debt ceiling has been raised dozens of times since it was created in 1917. Debates over raising it are politically contentious but rarely about the underlying spending decisions, which have already been made.
Mandatory vs. discretionary spending
Federal spending falls into two broad categories. Mandatory spending -- Social Security, Medicare, and Medicaid -- is set by formula in law and does not go through the annual appropriations process. If you meet the eligibility requirements, you receive the benefit; the cost is whatever it costs. Discretionary spending covers everything else: defense, education, transportation, scientific research, foreign aid. Congress negotiates discretionary spending every year. Mandatory spending accounts for roughly two-thirds of the total federal budget; discretionary spending, including defense, accounts for about one-third. When people debate the federal budget, they are mostly arguing over the smaller portion.