US federal budget: Terms and concepts explained

US federal budget: Terms and concepts explained

Photo credit: Wikimedia commons

Photo credit: Wikimedia commons

Your go-to guide for terms and concepts necessary to the US federal budget:

Budget Resolution – A very simple document that gives Congress’s budget plan. It includes how much Congress is supposed to spend in each of the 19 spending categories and how much revenue the government is planning to collect for the next 5+ years.

Country Ownership – Aid recipients lead their own development agenda. Since people and countries are the ones developing themselves (aid doesn’t develop on its own), ownership is imperative to making aid effective.

Development Aid – Development aid’s primary purpose is to address underlying socioeconomic factors that could lead to crisis or emergency.

Discretionary – Discretionary spending is subject to annual approval by Congress. It is reviewed by the House and Senate appropriations subcommittees, who then submit a bill to the full committee to review and send to the floor. The appropriations bills all need presidential approval.

Foreign Aid – Foreign aid is money that the US uses to support other countries for a variety of purposes, including (but not limited to) military, diplomatic and development. USAID helps navigate all of the players involved with this.

Humanitarian Aid – Humanitarian Aid is assistance (either material or logistical) is usually provided in response to natural or man-made disasters. It’s primary purpose is to save lives, alleviate suffering and maintain human dignity.

International Affairs Budget – The International Affairs Budget accounts for the majority of the diplomatic, development and military aid dollars (non-defense spending). This pays for everything from embassy salaries to fighting drug wars to children’s health programs. The International Affairs Budget is also known as the “150 account” – named for its location in the federal budget.

Mandatory – Mandatory spending is devoted to entitlement programs, which includes programs such as Medicare, Medicaid, Social Security, SNAP, federal civilian and military benefits, veterans’ disability benefits and unemployment insurance. These programs are not controlled by annual appropriations and make up over half of the federal spending. Mandatory spending is ongoing and remains in place until changed or requires periodic renewal.

Millennium Challenge Corporation (MCC) – The Millennium Challenge Corporation works with responsible governments around the world to sign 5-year compacts that fund programs that the country itself chooses through a consultative process. It was established in 2004 to deliver aid under the idea that aid is most effective when it rewards countries for good governance, economic freedom and investments in people.

Official Development Assistance (ODA) – ODA accounts for all official aid around the world. It falls under the umbrella of foreign aid and is mostly made up of development aid. It is tracked by the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD). This is considered to be one of the more generous measures of development assistance, as it sometimes includes aid for political, diplomatic and strategic purposes.

Poverty-focused development aid – This term is often used to describe US aid that specifically targets the lives and livelihood of poor people. It is distinguished separately from aid provided for diplomatic or security purposes.

Sequestration – Sequestration is an order to reduce parts of the budget by a designated amount, calculated by the Office of Management and Budget, in order to ultimately reduce the national deficit.

US Agency for International Development (USAID) – USAID was created to be the primary vehicle for delivering US poverty-focused development aid.

Each of these explanations were pulled from Oxfam’s Foreign Aid 101Center on Budget and Policy Priorities, Sequestration Order for Fiscal Year 2016 and the Washington Post’s guide to the federal budget process.

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