What is the practical significance of the US not having passed a budget in over 2 years? How are spending decisions made in this situation?
Answer by Sisyphus
The short answer is continuing resolutions, which extend authorized federal spending at the currently established baseline rate. This is how budget crises have been met for decades, but this is the first period in American history where no budget has been passed at all despite the Constitutional mandate to do so. The reason for doing so has been to trap the spending surge of 2008 (around a trillion dollars) as a continuing feature of the budget without actually having to vote to do so, violating a host of political promises not to do so. The thinking is that constituents will not or can not hold Congresscritters responsible for break a promise if they were never forced to vote to break it.
The federal departments have to look at their baseline and determine how they can meet Congress' directed goals for the Department, the President's whims, and arrange more money to be tacked into continuing resolutions if they cannot. This approach is rife with unintended consequences as some spending areas were high to meet temporary requirements and others were low owing to whatever phase of ramp up or ramp down a given activity was in. At the budget level it rapidly becomes ridiculous on stilts, even for budgets delayed only three or four months from the start of fiscal year.
And, of course, all of the money is colored. Operations, development, equipment, analysis, and so on, categories that are not supposed to overlap and grow and shrink over time in their 7 year budget projections. These rules can be expected to be kicked to the curb with this multi-year suspension of any attempt to manage the spending process.
But rejoice! A Clinton era reform means that the spending is never reconciled to the budget. The damage is not knowable.