Chapter 13: The Budget Flashcards
Budget
a policy document allocating burdens and benefits
taxes as burdens, expenditures as benefits
Revenue
financial resources of the government
e.g. taxes
Why is budget fought over in Congress?
every member wants to invest in something that will benefit themselves
Expenditures
government’s spending
Deficit
expenditures exceed revenues in a fiscal year
government spends more than what they made
Who decides the budget?
the process is divided between Congress and the president
Fiscal Policy
government decisions regarding taxing and spending
What aspects of the budget does the President control?
- suggest their own budget
- sign or veto budget into law
Income Tax
shares of individual wages and corporate revenues collected by the government
Income taxes did not always exist. Why were they established?
- first during Civil War - only existed during the way since it was expensive
- 1900s - government grew larger, so they needed more money to spend
Sixteenth Amendment
1913
permanently established income taxes
Social Insurance Taxes
deducted from employees’ paychecks and matched by their employers
What are examples of social insurance taxes?
- Social Security
- Medicare
When the government needs to borrow money, what do they do? How do they spend the borrowed money?
- the Treasury Department sells bonds
- farm subsidies, military pensions, aid states and cities
the government pays back the bonds with an interest rate
Who can buy bonds?
citizens, corporations, and foreign governments
National Debt
all the money borrowed over the years that is still outstanding
What is the difference between “deficit” and “debt”?
- deficit - overspending
- debt - accumulated deficits
Who holds most of the federal government’s public debt?
foreign investors
largest is Japan
What does the federal government mainly spend on?
- social services
- national security
What is the relationship between democracies and budgeting?
almost all democracies have seen increases in governmental spending
What propels voters of different incomes to vote for a candidate?
politicians who promise benefits to their voters
must fulfill these promises to get reelected
What is the most common criticisms of the government?
the government fails to balance the budget
