Chapter 14 Review Flashcards
Progressive Tax
The different abilities to pay example: income tax
Flat Tax
Tax where everyone has the same rate/same expenditure example: sales tax
Why do some economists believe that we should be concerned about the national debt?
- Government borrowing crowd out private borrowers leads to higher interest rates
- Makes the USA more dependent on foreign investors
How interest groups play a part in the budgeting process
Lobby congressional committees or even the president to support the budget that they want
How agencies play a part in the budgeting process
Support their budget because they believe that their “mission” is important, sends requests to office management to get on a congressional committee
How office of management and the budget (OMB) play a part in the budgeting process
Help the president make decisions about the budget. Who gets what.
How the president play a part in the budgeting process
Makes the final decisions about what to propose to Congress
How tax committees play a part in the budgeting process
Write the new tax codes to provide financing for the budget
How budget committees and the congressional budget office play a part in the budgeting process
Set congressional limits on how much revenue the government can collect
How subject-matter committee play a part in the budgeting process
Write new laws that provide agency funding
How the appropriations committee and their subcommittees play a part in the budgeting process
Decide who gets what
How congress as a whole play a part in the budgeting process
Must approve taxes and appropriations (spending) want to deliver money to their constituents
How the government play a part in the budgeting process
Works as Congress’s eyes and ears auditing, monitoring and evaluating what agencies do
Incrementalism
The belief that the best predictor of this years budget is last years budget, plus a little bit more (an increment). According to Aaron Widavsky, “most of the budget is a product of previous decisions”
Procurements
Process by which the government obtains military equipment
Entitlements
Policies for which congress has obligated itself to pay X level of benefits to Y number of recipients (social security is an example)
Military-industrial complex
Characterize the close relationship between the military hierarchy and the defense industry that supplies it’s hardware needs
Social insurance taxes
Social security (pay role deductions)
Sequestration
Automatic across the board spending cuts
Tax reduction
Amount that you pay (rate)
Tax reform
Changes in method of collecting taxes (IRS code)
Differences between tax reduction and tax reform
Tax reduction is what you actually pay and the tax reform is the change that happens in methods of taxes
What federal expenditures make up the largest portion of the US budget?
Payments for individuals/entitlements (social security)
How do the expenditures of the US government compare to those of other modern government?
US spends less than modern countries
When was social security created? By whom? Why? What has been added since 1930’s?
Franklin D Roosevelt, to provide a minimal level of sustenance to older Americans saving them from poverty. 1950 Disability was added, 1965 Medicare was added, 2003 Prescription drugs were added
What predictions are being made about social security by the year 2018?
That there will be fewer workers to fund social securities, more retires, extended income from tax collect
Why is it so difficult to cut the US budget?
You can’t decide what is not important, incrementalism (they always increase the budget from the year before)
