Wednesday, August 3, 2011

For the Federal Government, 2012 Starts October 1, 2011

And There is No 2012 Budget 

The detailed mechanics of the Federal budget used to be something only a few dedicated policy wonks would know, and that is because like The Dismal Political Economist, they had few other things in life to occupy their thoughts.  Now, thanks to a divided and dysfunctional government all of America knows about things like “debt ceiling”, “default”, “budget triggers” and all sorts of other terms they really did not want to know.

What is still not generally known is that the Federal government is on a fiscal year.  A fiscal year differs from a calendar year and is set up so that budgeting and reporting takes place in an appropriate time frame.  For example, school districts have a fiscal year that usually starts July 1 and goes to June 30, so that all of the financial accounting takes place in a single school year. 

Circle Oct 1 - Big Day!

The Federal government has a fiscal year that starts on    October 1.  So when the discussion turns to budgets, and spending and deficit for the year, it is a year that begins on October 1 and ends on September 30.  That’s right, 2011 for the Federal government ends in less than two months and 2012 begins on October 1. 

In a normal process, the President proposes a budget for the coming fiscal year in February.  The Congress debates the budget during the spring and summer and authorizes and appropriates the spending levels in time for the government to continue operating from October 1 onward. 

These times, as one might imagine are different.  The spending levels for 2011 were never fully approved and the Federal government limped along on temporary measures. 

Congress was months late in approving a spending bill for fiscal 2011, which started Oct. 1. Lawmakers missed their usual deadlines when Democrats controlled both the House and Senate last year, and agreement on a full-year planned stalled this year, with each party running one chamber of Congress. While the two parties battled over GOP demands for spending cuts, lawmakers approved a series of short-term measures to fund the government.

Finally in April, more than 6 months into the year and after numerous threats to shut down the government by Republicans in the House, the Congress and the President reached agreement on spending for 2011.

So what about 2012?  The President did send a FY 2012 budget to the Congress in February 2011.  Then the President abandoned that budget and the Senate voted it down 97 to 0.  Then they got embroiled in the finishing 2011 sspending  (see above) and then they got embroiled in the debt ceiling.  

Now it is approaching the beginning of 2012, with no spending approvals in place.  Congress and the President are about to take (sarcasm alert!) their "well deserved" vacation.  So unless Congress decides that it has had enough fighting and that it just wants peace and quiet, the new budget battle and government shutdown threats and discord over spending and taxes starts October 1 at a theater near you.

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