Every year, the president and Congress engage in the annual federal budget process to fund all aspects of the federal government. This complex process seems to get more complicated every year, so we thought it would be helpful to provide a refresher on the federal budget process.
By law, on or before the first Monday of February, the president is required to submit a detailed budget request to Congress for the next fiscal year, which starts Oct. 1. It is not uncommon for the president to request additional time, especially in transition years when a new president is elected. It is also important to note that the request has no power of law and is a recommendation for Congress’ consideration.
The budget request consists of mandatory spending—or entitlement programs such as Medicare and Social Security—and discretionary spending, which is subject to annual congressional approval. In a normal year after Congress receives the president’s budget, it proposes targets for spending and tax revenues in a budget resolution. The House and Senate Committees on Appropriations then divide discretionary spending into 12 separate appropriations bills for subcommittee consideration. Each subcommittee conducts hearings on the programs under its jurisdiction. The Flexible Packaging Association (FPA) routinely weighs in during the hearing process to advocate for programs of importance to members, such as additional funding for advanced recycling.
After subcommittee and full committee markups, the House and Senate vote on each bill and conduct a conference to reconcile differences between them. A final conference bill must again pass each chamber before it is sent to the president for signature or veto. All of the appropriations bills are supposed to be signed by the president by Oct. 1. But this rarely happens, requiring the passage of one or more continuing resolutions (CRs) to keep the government open.
Biden’s FY23 Budget Priorities
President Joe Biden submitted his $1.6 trillion president’s budget request (PBR) for fiscal year 2023 (FY23) to Congress on March 28, well past the required date. The delay was due in part to the fact that Congress did not complete its work on the fiscal year 2022 (FY22) budget until mid-March—nearly six months after the start of the fiscal year—as well as the ongoing pandemic.
Historically, presidents’ budgets reflect the Administration’s priorities, and this budget is no different. Many themes that were included in the now-stalled Build Back Better (BBB) package are echoed in the PBR including “ensuring an equitable, effective, and accountable government that delivers results for all.” The PBR also supports continued security assistance to Ukraine, bolsters cybersecurity, strengthens the military, and proposes $81.7 billion to prepare for future pandemics.
FPA reviews the annual president’s budget request for programs of interest to the flexible packaging industry. Some of the highlights include funding for the U.S. Environmental Protection Agency (EPA) and business tax proposals.
EPA Initiatives
The PBR includes $11 billion for the EPA, an increase of about $1.5 billion from FY22. According to detailed EPA budget justification materials, EPA priorities include:
- The budget allocates $1.1 billion to improve air quality and reduce localized pollution, reduce radiation exposure, and improve indoor air for communities across the country. This includes $152 million to support the development and implementation of national emission standards to reduce air pollution from vehicles, engines, and fuels. The budget supports $299 million to assist air pollution control agencies in creating and implementing programs for the National Ambient Air Quality Standards (NAAQS) and to establish standards for reducing air toxins.
- The Administration is committed to increasing efforts to deliver environmental justice in communities. The budget supports the President’s Justice40 commitment to ensure at least 40% of the benefits of federal investments in climate and clean energy reach historically overburdened and underserved communities. The budget invests more than $1.45 billion across the agency’s programs that will help create good-paying jobs, clean up pollution, advance racial equity, and secure environmental justice for all communities. To elevate environmental justice as a top agency priority, EPA has proposed a new national environmental justice program office.
- The budget provides $124 million for TSCA efforts to deliver on the promises made by the bipartisan Lautenberg (Chemical Safety) Act. These resources will support EPA-initiated chemical risk evaluations and protective regulations in accordance with statutory timelines.
- PFAS are a group of man-made chemicals that threaten the health and safety of communities across the nation. As part of the President’s commitment to tackling PFAS pollution, the budget provides approximately $126 million in FY 2023 for EPA to increase its understanding of human health and ecological effects of PFAS, restrict uses to prevent PFAS from entering the air, land, and water, and remediate PFAS that have been released into the environment. EPA will continue to act on the Agency’s PFAS Strategic Roadmap to safeguard communities from PFAS contamination.
Tax Proposals
The PBR also includes suggested tax increases as revenue proposals that could impact businesses. Many of the proposals were included in the House-passed BBB. Per the Department of Treasury’s Greenbook, proposals to reform business and international tax codes include:
In addition, the revenue proposals also include provisions for increasing taxes on individuals and pass-through entities.
Next Steps
By the time this column goes to print, Congress should have completed the hearing and markup process for the FY23 federal budget and, in some cases, may have voted on and passed several annual appropriations bills—at least out of one chamber. After input from 535 Members (435 House Members and 100 Senators), the House and Senate bills will look much different than the PBR.
The end of the fiscal year on Sept. 30 is just around the corner. However, it is highly unlikely that Congress will complete its work on the FY23 appropriations bills by then. Those members of Congress running for re-election—the entire House and one-third of the Senate—want to be home in their districts and states to campaign. Republicans are hoping to win back the House—and maybe the Senate—and would prefer to have the opportunity to include Republican priorities in the annual appropriations bills. The Democrats running in competitive districts are trying to distance themselves from progressive priorities. As such, there is not a lot of incentive to rush to complete the budget bills.
The expectation is that Congress will pass the all-too-common CR to avoid a federal government shutdown and keep it funded at current-year levels. A CR is better than the alternative. However, many observers would argue that running the government by continuing resolution is bad for our country, creating uncertainty and ultimately costing the government more in the end.