These important terms help clarify some issues relating to the federal budgeting process in the United States. The ten terms were chosen based on their relevance to the most common budget activities and many of these are terms you hear rather often in budgeting discussions for other sectors outside of government. If you think of any other definitions or important terms that relate to the federal budget process in America that you would like to add to the list, I would be most grateful if you would leave a comment at the bottom of the page with your term and definition. As long as it relates to the federal budget and is not a “given” it will be a most welcome addition to this list of terms.

Appropriation

Appropriation is a term that is used related to the budgeting process. Another term that may be considered synonymous with appropriation is allocation. Both terms refer to the ways in which budgetary funds are divided and disbursed. Appropriations are approved by the legislature and are intended to fund specific programs or purposes.

Authorization

Authorization is also a part of the budgeting process, but it must be distinguished from appropriation. Authorization signifies that the legislature has approved funding for specific programs, but it has not yet allocated or disbursed the funds. Authorization also often specifies the maximum limit that could be appropriated for a specific purpose.

Commerce Clause

The Commerce Clause is included in the U.S. Constitution and permits federal legislators to regulate trade and other economic activities domestically and abroad. The exact extent to which its powers reach is a controversial point, however. One of the contemporary debates about the Commerce Clause involves attempting to understand how the Founding Fathers defined commerce and how social, cultural, and economic conditions have changed, necessitating new commerce strategies.

Reconciliation

As its name suggests, reconciliation is a process that Congress uses in order to reconcile current tax laws with the projected targets for newly approved and implemented budgets. The reconciliation process can be challenging because significant adjustments may need to be made in order to achieve congruence and parity. Even when reconciliation is accomplished, it is understood that the budget may not be adhered to strictly as contingencies not planned for emerge.

Grant

A grant is a form of economic assistance that is provided by the federal government from federal funds for specific purposes to be achieved within a clearly defined period of time. There are numerous types of federal grants, including block grants provided to states for the treatment of substance abuse, grants provided to farmers during times of drought or other hardship, and emergency grants provided in the aftermath of natural disasters so that communities can rebuild basic infrastructure. Grants are not expected to be repaid.

Ways and Means

Ways and Means is one of the committees of the U.S. House of Representatives. The committee is charged with the responsibility of overseeing almost all domestic economic matters, including taxes, tariffs, and public programs such as Social Security, unemployment, Medicare and Medicaid, and TANF. The committee is very powerful because any bill proposed regarding any of these issues must first pass through this particular committee before being brought before the rest of the House and Senate.

Direct Taxation and Indirect Taxation

There are many different kinds of taxation, including direct and indirect taxes. A direct taxes is one that an individual or corporate entity pays to the federal government; one example is federal income taxes. An indirect tax, by contrast, is a tax that is paid by an individual to a third-party before it is received and used by the state or federal government. An example of an indirect tax is a sales tax.

Fee

A fee is a premium that an individual pays in order to access a certain privilege; the fee is collected by the government or a third-party serving as an intermediary. Numerous examples of fees come to mind, including the entrance fee collected at national parks, the interest fees attached to federal student loans, and application fees paid by immigrants when requesting citizenship, residency, or any change of immigrant status.

Tenth Amendment to the Constitution

The Tenth Amendment to the Constitution established the boundaries and limits of the federal government’s powers. The Founding Fathers acknowledged that the Constitution did not—indeed, could not—anticipate all matters that might require their involvement or, on the contrary, their non-involvement. The Tenth Amendment responds to this concern by delineating the line between federal concerns and state jurisdictions.