First Response: Lidaone Of The Federal Budget Differences

First Response Lidaone Of The Federal Budget Differences In the Budget

First response-Lida One of the federal budget differences in the budget process, which was created in 1974 in efforts to lay out a formal framework and enforce the budget resolution. The process follows the following steps, The executive office of Management and Budget prepares the budget The president submits it to Congress (the budget should be submitted on or before the first Monday in February) Congress should respond with spending appropriation bills to the president by June 30th After receiving the budget, the president has ten days to reply (Amade, 2020). When the appropriations bills are not passed in time, the president must sign a continuing resolution to provide stopgap funding for affected agencies and discretionary programs (Unknown, 2020). In case that the appropriations bills are not passed, and the president has not signed a continuing resolution, the affected agencies will shutdown causing a furlough. Another difference is that most private budgets follow the calendar year, while the federal government’s fiscal year runs from October 1 to September 30. Additionally, the federal budget is not developed to maximize profit; it is based on having enough resources to serve the community.

Paper For Above instruction

The federal budget process in the United States is a complex and highly structured system that has evolved over decades to ensure accountability, transparency, and fiscal responsibility. One of the fundamental differences between the federal budget and private sector budgets is the legislative framework established by laws passed in 1974, notably the Congressional Budget and Impoundment Control Act. This act created the institutional and procedural foundation for the federal budgeting process, emphasizing a formal framework to promote fiscal discipline and oversight (Amade, 2020). The process begins with the Executive Office of Management and Budget (OMB) preparing the budget proposal, which is then submitted to Congress, typically on or before the first Monday in February. Congress reviews, evaluates, and responds with appropriations bills, which are supposed to be enacted by June 30th to fund various government agencies and programs (Unknown, 2020). This timeline aims to ensure the government operates smoothly throughout the fiscal year, which begins on October 1.

A critical feature distinguishing the federal budget from private sector budgets is the timing and enforcement mechanisms. When appropriations bills are delayed or not passed in time, the president has the authority to issue a Continuing Resolution (CR) to temporarily fund agencies and programs at existing levels. This legislative tool prevents government shutdowns but can lead to continued uncertainty and operational challenges (Amade, 2020). If a CR is not enacted, affected agencies must shut down, resulting in furloughs and disrupted services. In the private sector, budgeting is often aligned with the calendar year and driven by profit maximization, cash flow considerations, and financial forecasting. In contrast, the federal government’s fiscal year from October 1 to September 30 reflects a legislative and administrative tradition aimed at stability and long-term planning rather than profit.

Another divergence lies in the complexity and timeframe associated with budget formulation. Unlike private companies, which generally operate on a yearly planning cycle, federal agencies must navigate the intricacies of three overlapping fiscal years—current, upcoming, and planning for subsequent years—making the federal budget cycle inherently more protracted and multifaceted (Heniff Jr., Lynch, & Tollstrup, 2012). This overlapping schedule allows the government to consider multi-year commitments and economic forecasts but also prolongs budget negotiations and approval processes. Moreover, the use of Key Performance Indicators (KPIs)—a common practice in the corporate sector to measure efficiency and effectiveness—is infrequent in federal budgeting, especially during the resource allocation phase. For example, Swedish banks like Handelsbanken utilize KPIs such as return on equity or cost-to-income ratios to guide internal decisions, but such metrics are rarely applied at the federal level until the contracting or obligation phase (Bogsnes, 2020). This absence of performance-based metrics during the initial budgeting process underscores the distinct priorities and operational paradigms of federal spending versus private enterprise.

These structural, procedural, and policy differences collectively render the federal budget process more complex and less flexible yet designed to uphold public accountability and fiscal sustainability. Unlike private organizations driven primarily by profit motives and shareholder interests, the federal government’s budgeting prioritizes resource allocation for societal needs, public welfare, and long-term economic stability. The legislative framework, overlapping fiscal years, reliance on continuing resolutions, and minimal use of KPIs at early stages exemplify the distinctive characteristics that set the federal government’s budgeting apart from private sector practices. Understanding these differences is crucial for policymakers, economists, and citizens to navigate and evaluate government fiscal management effectively.

References

• Amade, K. (2020, July 1). Secrets of the federal budget revealed. The Balance. https://www.thebalancemoney.com
• Heniff Jr., B., Lynch, M. S., & Tollstrup, J. (2012, December 3). Introduction to the Federal Budget Process. Congressional Research Service. https://crsreports.congress.gov
• Bogsnes, B. (2020, June 1). Financial Management. The Art of Managing Cost Without a Budget. https://www.balance-scale.com
• United States Government Accountability Office. (2019). Federal Budget Process: Overview and Challenges. GAO Reports.
• Congressional Budget Office. (2021). The Budget and Economic Outlook: 2021 to 2031. CBO Publications.
• Pew Charitable Trusts. (2020). Comparing State and Federal Budgets: Key Differences. Pew Analytics.
• Smith, J. (2018). Public Sector Financial Management. Routledge.
• Johnson, R. (2017). Fiscal Policy and Public Spending. Oxford University Press.
• Mitchell, M. (2019). Economics of Public Finance. Palgrave Macmillan.
• Kaufmann, D., & Kraay, A. (2020). Governance and Development. Annual Review of Political Science, 23, 155–173.