What is the Federal Budget?

Definition: A federal budget is a financial plan for the country that is passed by Congress and approved by the President to allocate where federal funds are spent.

What Does Federal Budget Mean?

What is the definition of federal budget? Congress meets each year to pass a budget for the country. This document details where the government will spend its tax revenues during the upcoming year. Although congress is supposed to pass a budget annually, they typically don’t.

The budgeting process is long with many special interest involved and a passed budget typically has different bills being appended to it to insure money is being utilized in the specified way for specific programs.

The budget typically categorizes governmental spending in one of two categories: discretionary or non-discretionary.

Discretionary funds are amounts that can be changed by making alterations to appropriation bills drafted by congress.

Non-discretionary spending isn’t determined by congress or the president but rather by the amount of people the program serves. For example debt servicing on the national debt is mandatory and increases each eyar. The exact figure is assumed to be more than the sum of continued education grants and subsidies and environmental control.

Let’s look at an example.


An example of discretionary spending in a budget is funding for NASA, which is determined annually based on voting and the decisions of Congress. Once the figure is determined the program must operate within that number. Discretionary spending accounts for about 32% of the United States’ budget.

On the other hand, more than 65% of spending is mandatory. More than half of these programs are based on the senior and elderly population. These programs include social security and Medicare, but they expand beyond the elderly and can also provide benefits for beneficiaries of disabled or retired people. These programs can also continue to pay once the individual is decreased. Outside of senior citizens and their families comes the marginalized population or the citizens with low incomes. Food stamps and unemployment comes from Medicaid, which is an aid for individuals who don’t earn enough.

All of these expenditures are set each year within the budget.

Summary Definition

Define Federal Budgets: Federal budget means the congressional fiscal plan of government expenditures that is approved by the President.

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