10.27.15

BUDGET BULLETIN: How Back-End Spending Impacts the Budget

WASHINGTON, DC – The Senate Budget Committee today released its October 27, 2015, issue of the Budget Bulletin focused on back-end spending and its impacts on the federal budget. The Budget Bulletin provides regular expert articles by Senate Budget Committee analysts on the issues before Congress relating to the budget, deficits, debt, and the economy.

Read the full Senate Budget Bulletin here.

Excerpts follow:

How Back-End Agency Spending Impacts the Budget

Congress acts on the “front end” when it authorizes or amends entitlement legislation, i.e., laws consisting of direct spending with formula-driven benefits for individuals who meet specific eligibility criteria. The cost of such programs is typically uncapped, and although it can be estimated in advance, is not known until after the fact. Therefore, agencies empowered to administer entitlement programs often impact that ultimate program cost on the “back end.”

Federal agencies not only act to implement new laws but also on their own initiative to exercise previously reserved authority. Agencies frequently reinterpret existing legislative language and invoke discretionary authority not previously exercised or exercised in a different manner. In its annual report to Congress, the White House Office of Management and Budget refers to formal rules that have a substantial, direct impact on the federal budget as “transfer rules” for producing income transfers “usually from taxpayers to program beneficiaries.”

The basis for agency discretionary authority is congressional statutes that require or allow federal agencies to exercise professional judgment in carrying out programs. Particularly when programs are entitlements, agency decisions can have significant budgetary consequences.

 

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