The authority to designate whether information is classified and its classification level cyber is vested in Original Classification Authorities (OCAs).
OCAs are individuals who are specifically designated by law or regulation to classify information. In the United States, for example, OCAs include the President, the Vice President, the heads of executive departments and agencies, and such other officials as the President may designate.
So, OCAs find out the damage that could be caused if the information were disclosed: This includes damage to national security, foreign relations, or the economy. The value of the information to the government: This includes the information's usefulness in carrying out government functions.