Ch 4: Federal Budget Structures Flashcards
Categories of federal spending
Social security & unemployment: 30%
Medicare and health: 27%
Military: 16%
Education: 3%
Interest on debt: 6%
Percentage of federal revenue that comes from personal income taxes
49%
Percentage of revenue that comes from corporate income taxes
6.6%
Means tested income security programs
food stamps
SSI
TANF
Earned income tax credit
WIC
Child care assistance
Refugee assistance
LIHEAP
Non-means tested income security program
Unemployment
T or F, the federal budget is in a deficit most years
True–only five years with no deficit since 1968
The “power of the purse” belongs to
Congress
Article 1, Section 9 of the Constitution
“No Money shall be drawn from the Treasury but in Consequence of Appropriations made by Law; and a regular Statement and Account of Receipts and Expenditures of all public Money.”
Federal funds cannot be spent until
Congress passes and the president signs an appropriation
T or F, until late 1800s, agencies submitted budgets directly to congress
True, president was not involved and there was no national budget. WWII deficits began to change the conversation about budgeting
Budget and Accountability act of 1921
Established:
OMB, originally called Bureau of Budget
GAO
Disallowed agency submission of appropriation requests directly to congress
Congressional Budget and Impoundment Control Act of 1974
Established Congressional Budget Office
Established house and senate budget committees:
Authorization
Appropriation (with 12 subcommittees)
Budget (to develop congressional budget)
Financing (taxes, Social Security, Medicare, etc)
Senate: Finance Committee
House: Ways and Means Committee
Balanced Budget and Emergency Deficit Control Act of 1985
Established deficit targets
If targets were not met, a sequestration process reduced spending by formula
Replaced by Budget and Enforcement Act in 1990
Budget and Enforcement Act of 1990
Created mandatory and discretionary spending categories
Mandatory-payments determined by eligibility rules and entitlement authority
Discretionary spending-determined by appropriation bills
Placed dollar limits on mandatory spending and enacted PAYGO requirements
Statutory Pay as you Go Act of 2010
Can’t approve new taxes, fees or mandatory spending if doing so increases the projected deficit
Revenue cuts must be offset by spending cuts
Spending increases requires revenue increases
OMB determines if it’s been violated. If so, President issues required sequestration
Budget Control Act of 2011
Set discretionary spending caps through FY 2021
Created a joint committee on deficit reduction Sequestration will occur if caps not met
Federal agencies start preparing budgets
about 18 months before FY begins (April)
OMB compares budget requests to
Presidential program objectives
Expenditure caps set by President
Dept of Treasury revenue forecasts
Economic estimates
President submits budget to Congress on
First Monday in February
Four committee paths in the congressional fiscal process
Authorizations
Appropriations
Budget
Financing
The Congressional Budget and Impoundment Control Act, 1974 was passed in response to
Nixon’s abuse of impoundment authority. He refused to release funds.
Impoundments became subject to congressional review
Types of budget authority
Appropriations
Back door spending-contracting, borrowing
Continuing resolution
Supplemental appropriation
Mandatory and net interest spending is _____% of the budget
69.9%
Discretionary spending is _____% of the budget
30.1%
Of this, 54% of it is national defense spending
