Later in the fall, all agencies, health-related and otherwise, submit their proposals, along with detailed justification of their spending priorities, to the Office of Management and Budget. The OMB reviews them, gives feedback, requests revisions, and incorporates the revised estimates into the president's overall budget proposal. At this stage, the president's input is influential, and political leanings come into play as OMB staff decide what information to use and how best to present each case.
The president's budget proposal is written as a persuasive, non-technical document with few detailed numbers. Its purpose is to set out the president's priorities and the major themes for the next fiscal year through a series of recommendations. Congress is not bound to adhere to the president's budget, however, and indeed often diverges from it considerably.
Within the budget proposal, federal spending is divided into 20 "budget functions." Health-related spending falls primarily into four of these functions: health, international affairs, Medicare, and veterans' benefits and services. These broad functions define the president's overall spending targets for each area. While the budget proposal does not specify spending amounts for individual programs unless they are part of a special initiative, it does differentiate mandatory spending from discretionary spending.
Mandatory spending (sometimes known as direct spending) refers to funding allocations that are already required by law. These include most major entitlement programs, such as Medicare, Social Security, and Food Stamp programs. The mandatory spending portion of the budget is controlled by the annual "authorization" process.
Discretionary spending refers to funding allocations that reflect new priorities introduced by the president or the Congress, presumably to answer the needs of the electorate. The discretionary spending portion of the budget is controlled through an annual "appropriations" process.