Chapter 10 Flashcards
federal budget
an annual plan outlining proposed revenues and expenditures for the coming year
mandatory spending
spending authorized by law that continues without the need for annual approvals of Congress
Discretionary Spending
programs that must receive annual authorization
Steps to Establish the Federal Budget (4)
- Executive Formulation
- Action by the House
- Action by the Senate
- Final Approval
Executive Formulation
president establishes the general budget guidelines for a multiyear period
federal budget deficit
an excess of expenditures over revenues
federal budget surplus
budget that shows a positive balance after expenditures are subtracted from revenues
Action by the House
Congress has the power to approve, modify, or disapprove the president’s proposed budget
appropriations bill
an act of Congress that allows federal agencies to spend money for specific purposes
Action by the Senate
Senate can approve the bill or draft its own version
Final Approval
Congress sends compromised bill and then sends it to the president
Major Spending Categories (6)
- Social Security
- Department of Defense
- Income Security
- Medicare
- Medicaid
- Occupational Safety and Health Administration
Medicaid
a joint federal-state medical insurance program for low income people
Occupational Safety and Health Administration
monitors occupational safety and health in the workplace
balanced budget amendment
a constitutional amendment that requires that annual spending does not exceed revenues
State Government Expenditures (5)
- intergovernmental expenditures
- public welfare
- retirement and insurance funds for state employees
- higher education
- highway construction and road improvement
Local Government Expenditures (7)
- elementary and secondary education
- public utilities
- hospitals
- police department
- highways, universities, and gov’t buildings
- public welfare
- housing and community development
deficit spending
spending in excess of revenues collected
federal debt
total amount borrowed from investors to finance the government’s deficit spending
balanced budget
an annual budget in which expenditures equal revenues
trust funds
special accounts used to fund specific types of expenditures like Social Security & medicare
crowding-out effect
the higher-than-normal interest rates that heavy gov’t borrowing causes
Gram-Rudman-Hollings
failed because it could get around the law by enacting passed bills 2-3 years later and the economy started to decline during that time
Budget Enforcement Act of 1990
enacted the “pay-as-you-go” provision, which was a requirement that new spending proposals or tax cuts must offset by reductions elsewhere
