What’s Going On With the Federal Budget? A Review of the Basics with a Focus on Housing and Economic Development Programs

Photo source: politico.com <p>Congress and the White House are in the midst of budget negotiations, making it a good time to review federal budget basics so community and economic development professionals will understand how different streams of funding are affected.  This post is a quick ‘Federal Budget Process 101’ as it relates to the current issues in the news, and it highlights a few affected programs of relevance to community economic development professionals.</p> <p>This year’s shutdown is referred to as a “partial” shutdown. The reason the shutdown is only “partial” results from how the budget is constructed.</p> <p>The federal budget is made up of two kinds of spending—mandatory spending and discretionary spending.  Mandatory spending is everything that is legally on ‘auto-pilot,’ including most entitlements such as Social Security, Medicare, and Medicaid.  By law, anyone who meets the statutory eligibility standards for these programs is “entitled” to receive aid.  Costs come from who enrolls and what the needs are – we do not limit the amount of funds we will spend for these programs each year, but just pay the bills for services used.  Mandatory spending also includes paying interest on our debt – also not something we can choose to pay for or not each year.   Mandatory spending is not directly affected by the government shutdown because the spending for the benefits was authorized by legislation many years ago.  Mandatory spending comprises two-thirds of the total budget.</p> <p>The current confrontation around the federal budget primarily affects discretionary spending.  This spending, which is included in 12 annual appropriation bills, [...]</p>