The federal budget is the result of a complex process involving both houses of Congress and the President. Because the Constitution does not give in-depth details about the procedures by which Congress prepares the budget, most of the modern appropriations practices have developed over time through experience and expedience. Political parties, lobbyists and other interests have a significant effect on the budget process.
In anticipation of the new fiscal year, which begins on October 1, the president sends Congress a budget request in February. The president's budget request is a proposal of taxes and fund allocations he wishes to see implemented.
Both houses of Congress thoroughly review the budget request. The House Committee on the Budget and the Senate Committee on the Budget draft budget resolutions, which set spending limits for federal agencies. A joint conference between the House and Senate then creates a compromise budget resolution based on the two documents. The House and Senate each vote on the compromise resolution.
The House and Senate Appropriations Committees determine budget authority levels for discretionary programs. The Appropriations Committees break down into subcommittees, each of which deals with a different area of the federal government, such as defense spending, education, etc. The subcommittees draft appropriations bills, making sure to stay within the spending limits of the budget resolution.
The full Appropriations Committee approves the appropriations bills, and then the House and Senate form another joint conference to create compromise bills. Once approved, the finalized appropriations bills are sent to the president. When all 12 appropriations bills are signed, the budget is complete.