Ch 2: Logic of the Budget Process Flashcards
Most important budget question
On what basis does budget go to one program over another
Two categories of government spending
Transfer payment to individuals
Government purchase of goods and services
Examples of transfer payments
Social security
Medicaid
Unemployment/worker’s comp
Food stamps
Transfer payments comprise _____% of government expenditures in US
40%
GDP
Monetary value of all finished goods and services made within a country during a specific time period
T or F, Government purchases and gross investment contribute to GDP
True
Percent of GDP that can be attributed to fed/state/local government spending
30-35%
A budget is
a financial plan that focuses on financial implications of a particular response within certain operating conditions
It translates policy objectives into costs to achieve certain objectives
T or F, a budget is a revenue or spending forecast
False–it represents the intended response of an organization to expected conditions
A good budget includes
a fiscal and a managerial plan
Governments cannot use price and profit to allocate resources because…
Governments have non-revenue concerns
Spending is limited by capacity to tax
Governments are almost perfect monopolies
Governments have mixed motives
Governments prepare budgets to
Elaborate on executive’s plans
Facilitate legislative review and approval of plans
Control/review for implementation
Control
Fiscal discipline and control
Planning
Response to strategic priorities
Management
Efficient implementation of the budget
Budget cycle includes these four steps
- Executive preparation
- Legislative Consideration
- Execution
- Audit
Circular A-11 is
Federal instructions for budget developed by OMB
Agency budget estimates are based on
expected service demands
expected external changes or trends
Federal budget elements include
timetable
indication of available funds
priorities
forecasts
service population trends
Legislative budget steps
Appropriation bills go to subcommittees
Agencies defend requests in subcommittee hearings
Lower and upper houses approve appropriations
Conference committee approves unified approp bills
Executive signs bills into law
T or F, President has line item veto of the budget
False, but most state governors do
An appropriation provides
authority for spending budgeted funds
T or F, outlays and budget authority are the same
F
GAO
Government Accountability Office
Supervises audits of agencies–both performance and financial
