Chapter 13 Flashcards
“Taxes are what we pay for civilization”
Justice Oliver Wendall Holmes Jr.
The feather thing?
Jean-Baptist-Colbert
Three major sources of federal revenue?
Personal income taxes, corporate income taxes, social insurance taxes
What’s an excise tax?
A tax levied on the manufacture, transportation, sale or consumption of goods (example.. Taxes on gasoline)
First peacetime income tax in _______
1894
Where was the first peacetime income tax declared unconstitutional?
Pollock v. Farmer’s Loan and Trust Co (1895)
IRS- _____ tax returns each year
$140 million
In 2012, corporate taxes yielded about 10 cents of every federal revenue dollar, compared with _____ cents from individual income taxes
47
The social security trust funds pay benefits for who?
Elderly, disabled and the widowed
And helps support state unemployment programs
Why have social insurance taxes grown so fast?
Baby boomers are about to retire
In 1957 social insurance taxes accounted for-
12% of federal revenues now they account for more than a third.
What happens when fed gov wants to burrow money?
The Treasury Department sells bonds guaranteeing to pay interest to bind holders
What’s the intragovernmental debt?
This debt is what the Treasury owes various social security and other trust funds because the government uses for its general purposes revenue collected from social insurance taxes designated to fund social security and other specific programs
What amount is national debt?
$17.5 trillion
____ percent of all federal expenditures go to paying interest in the national debt
Six
When the economy is strong the governments competing to burrow money may lead to ___________
An increased interest rates
Who holds the majority of the debt?
Foreign investors
In bad economic time, when tax revenues decrease, what increases?
Deficits
What the limit called of how much federal government can burrow?
Debt ceiling
What’s a capital budget?
A budget for expenditures on items that will serve for the long turn such as equipments, roads and buildings.
If an airline wants to buy a plane, they issue bonds and these debts do not ______
Count against the operating budget
In contrast when the fed gov purchases new jets for the Air Force, these purchases are counted as current expenditures and _______
Run up the deficit
Give an example of a tax expenditure?
Don’t have to pay as much money in taxes because donated money to charity
The office of management of budget estimated that the total tax expenditures of 2013 will be about ______
$1 trillion
An amount equal to more than one third of the total federal receipts
Who reduced a tax cut bill that was passed in July 1981 which reduced the federal tax bills by 25%
President Reagan
Also made rich pay less so decreased tax revenue
Massive deficit in 1980s began because of what?
The 1981 tax cuts because the government continued to spend while reducing its revenue
In 2001 who lowered tax rates over the next 10 years?
George W. Bush
Some claim that cutting taxes is a useful way to what?
Limit government expansion or “starve the beasts”
Government grows faster when?
Following substantial tax cuts
America has one of the ________ tax burdens
Smallest
In 1932 when FDR came to power in the midst of the Great Depression how much was the government spending?
A little over $3 billion a year
Today they spend that in a single morning
American governments, national state and local spend an amount equal to one third of the ________
GDP
Who found that the public sector expands principally in response to the public’s preferences and changes in economic and social conditions, such as economic downturns, urbanization or pollution, that affect the public’s level of demand for government activity?
William Berry and David Lowery
What are two developments associated in government growth of America?
The rise of the national security state
The rise of the social service state
Who coined the phrase ‘military-industrial complex’ and what did it characterize?
Dwight D. Eisenhower
The close relationship between the military hierarchy and the defense industry that supplies its hardware needs
In 1950s and 1960s _______ received most federal dollars
Department of defense because of war and stuff
What are constant dollars
Dollars adjusted for inflation
The budget of the DOD now constitutes ______
One fifth of all federal expenditures
Stealth bombers-
Over $2 billion each
The biggest part of the budget belongs to?
Income security expenditures
Who passed social security act?
FDR
Who was the first social security check sent to?
Ida Fuller of Brattleboro, Vermont— a payment of $22.54 for the month
In 2012 the average check of retired worker was $1,217 a month
LBJ’s ________ program helped include _______
Great society
Medicare which provides both hospitals and physicians coverage to the elderly
About ______ receive payments from social security
56 million Americans
1940 SS was financed by ___% tax on payrolls now it is financed by ___%
3
More than 15
Who said “it was going broke fast” about the SS
Scholar Paul Light
Congress responded by increasing insurance taxes
What’s the largest policy of fed gov?
Social security
What do liberals and conservatives think about programs like the social security?
Liberals favor them to assist individuals
Conservatives see them as a drain
“Most of the budget is a product of previous decisions.”
Aaron Wildavsky
Caiden
Who observed the the budget for NASA was hardly incremental
Paul Shulman
Who has the constitutional right to add or subtract money from an agency?
Congress
How much did Medicare cost in 2013 for the year?
$1.4 trillion
The distribution of the governments budget is a process that start and end with who?
With the president and has congress in the middle
Who’s definition of politics is “who gets what, when and how.”
Harold Lasswell
That’s how public budgets are ^^
Why do presidents try to use budgets?
To manage their economy and leave their imprint on Congress’s policy agenda
Who said “If some superfluity no be given Congress to lop, they will cut into the very flesh of the public necessities”
President John Adams
When does the budget cycle begin?
In the executive branch a full 19 months before the fiscal year begins
What was the Budget and Accounting Act?
It was passed to reduce the debt after WWI
It required presidents to propose and executive budget to Congress and created the Bureau of the Budget to help them.
In the 1970s who reorganized the Bureau of the Budget and what name did he give it?
President Nixon
The Office of Management and Budget (OMB)
Who is the director of the OMB?
A president appointee requiring senate approval
Which now supervises preparation of the federal budget and advises the president of budgetary matters
By law, the president must submit a budget by when?
The first Monday in February
Process begins almost a year before
By when has the president decided the overall policies and priorities and goals for the budget?
Summer
During the fall is when agencies submit estimates
Who must authorize all federal appropriations?
Congress
What is the extreme,y powerful trump card that congress holds in national policymaking:
The power of the purse
What is an important part on the process of establishing a budget?
Setting limits on expenditures on the basis of revenue projections
When are both houses expected to agree on a budget resolution?
April
What are two ways that certain changes can be made in budgetary law?
Reconciliation
Authorization bill
How long do appropriation bills usually fund a program for?
One year and cannot exceed the amount of money authorized for a program
In fact the May appropriate less than authorized
When will a continuing resolution be used?
If congress is not able to reach an agreement in time
Who argues that government grows in democracy because of the equality of suffrage
Economists Allan Meltzer and Scott Richard
What’s the research development budget at the DoD?
$175 billion
Who were elected twice because they promised not to spend money?
George W Bush
Reagan
Democracy may encourage government spending but
It does not compel it
The most common criticism of gov is that it fails to balance what
Budget
What is the scope of government
Budget
One can characterize policy making as what
“Politics of scarcity”
Budget
A policy document allocating burdens (taxes) and benefits (expenditures).
Deficit
An excess of federal expenditures over federal revenues.
Expenditures
Government spending. Major areas of federal spending are social services and national defense.
Revenues
The financial resources of the government. The individual income tax and Social Security tax are two major sources of the federal government’s revenue.
Income tax
Shares of individual wages and corporate revenues collected by the government. The Sixteenth Amendment explicitly authorized Congress to levy a tax on income.
Sixteenth Amendment
The constitutional amendment adopted in 1913 that explicitly permitted Congress to levy an income tax.
National debt
All the money borrowed by the federal government over the years and still outstanding. Today the national debt is about $17.5 trillion.
Tax expenditures
Revenue losses that result from special exemptions, exclusions, or deductions allowed by federal tax law.
Social Security Act of 1935
Created both the Social Security program and a national assistance program for poor families, usually called Aid to Families with Dependent Children.
Medicare
A program added to the Social Security system in 1965 that provides hospitalization insurance for the elderly and permits older Americans to purchase inexpensive coverage for doctor fees and other medical expenses.
Incrementalism
A description of the budget process in which the best predictor of this year’s budget is last year’s budget, plus a little bit more (an increment). According to Aaron Wildavsky, “Most of the budget is a product of previous decisions.”
Uncontrollable expenditures
Expenditures that are determined by how many eligible beneficiaries there are for a program or by previous obligations of the government and that Congress therefore cannot easily control.
Entitlements
Policies for which Congress has obligated itself to pay X level of benefits to Y number of recipients. Social Security benefits are an example.
House Ways and Means Committee
The House of Representatives committee that, along with the Senate Finance Committee, writes the tax codes, subject to the approval of Congress as a whole.
Senate Finance Committee
The Senate committee that, along with the House Ways and Means Committee, writes the tax codes, subject to the approval of Congress as a whole.
Congressional Budget Office
Advises Congress on the probable consequences of its decisions, forecasts revenues, and is a counterweight to the president’s Office of Management and Budget.
Budget resolution
A resolution binding Congress to a total expenditure level, supposedly the bottom line of all federal spending for all programs.
Reconciliation
A congressional process through which program authorizations are revised to achieve required savings. It usually also includes tax or other revenue adjustments.
Authorization bill
An act of Congress that establishes, continues, or changes a discretionary government program or an entitlement. It specifies program goals and maximum expenditures for discretionary programs.
Appropriations bill
An act of Congress that actually funds programs within limits established by authorization bills. Appropriations usually cover one year.
Continuing resolutions
When Congress cannot reach agreement and pass appropriations bills, these resolutions allow agencies to spend at the level of the previous year.
