Who Makes Fiscal Policy?

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In the United States, fiscal policy is set by a consensus agreement between both houses of Congress. The process is very complicated, beginning with an extended period in which at least four, and possibly many more budgets may be proposed by various parties.

The budget-making process usually begins early each February when the President's proposed budget is delivered to Congress. This budget is a set of requests that have no force in law and are not binding on Congress in any way. In the event that Congress eventually does pass a comprehensive budget, the President does not sign it, so the involvement of the Executive Branch is largely one of persuasion. During this preliminary period, alternate budget proposals may be submitted to the House and Senate finance committees by various members of those bodies. These budgets are also nonbinding, and the committees are under no obligation to consider them.

Sometime in spring, the House and Senate Budget committees meet to hold hearings and resolve disparities between their respective budgets. Republicans and Democrats from each chamber sometimes have their own budget plans. In May the proposed budget is delivered to each chamber for a full vote. If no comprehensive budget agreement is reached, the government is funded by continuing resolutions that authorize spending for a set period. Unlike the budget, these are signed by the President.