Budget Resolutions and Reconciliation

Prior to 1974, the entire budget process consisted of three steps: authorization, appropriations and raising revenue. The problem with that system was that the three parts were separate; there was no unifying mechanism in the budget. The Budget and Impoundment Act of 1974 sought to unify the budget process by creating the House and Senate Budget Committees. These committees have two functions. First, they produce a budget resolution which outlines the amount of money the government will spend in the coming fiscal year in several categories. The budget resolution does not have the force of law; it does not require the President's approval. Second, the committee writes a reconciliation bill. If the spending in the appropriations bills exceeds the levels in the budget resolution, the committee must specify which appropriations to cut. In some years, the reconciliation bill is the most significant piece of legislation enacted because it makes major changes in government spending.

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