Final

Question 1

multiple levels of meaning attribution

Answer 1

Things have meaning and power on multiple levels such as technical, managerial, political, and societal. Moving parts on one level will often shift things at another level, meaning budgeting is happening on different dimensions simultaneously.

Question 2

budget reform requires a change in the political system

Answer 2

Budget reform will require a return to relative consensus. We’ve reached extreme political polarization where there is always a clear “winner” and “loser” (at least politically.)

Question 3

classical budgeting

Answer 3

Classical budgeting was critical in growing a powerful federal government and budget during the 20th century. It deems balanced budgets as economically beneficial, and used an incremental approach where this year’s budget is primarily based on last years budget.

Question 4

Gramm-Rudman-Hollings Act

Answer 4

This act defined firm decreasing deficit targets, including automatic sequestration of funds if targets were not met.

Question 5

Keynesian Economics and the economy

Answer 5

Keynes proposed that during a recession the government should increase expenditures to boost and stabilize the economy. This is in opposition to other dominant influences of the 20th century, such as the focus on balancing the budget and decreasing deficits

Question 6

Monetary Policy

Answer 6

The Federal Reserve manipulates the supply of money available to the public and can encourage or discourage lending based on terms. generally a less political process.

Question 7

Fiscal Policy

Answer 7

Fiscal policy refers to the governments decisions in regard to taxation and spending. EXTREMELY political.

Question 8

Vertical Equity

Answer 8

Vertical equity is deciding to what level the tax amounts should be stratified among groups with DIFFERENT ability to bear the burden. How do you decide where and how much breaks are?

Question 9

Means-tested Programs

Answer 9

These programs are available to families or people who fall below a certain income threshold, such as Medicaid

Question 10

Polarization and a balanced budget

Answer 10

With increased deficit, as well as increased publicity of the deficit during the 20th century, the deficit was both the cause and tool of political

Question 11

line item veto

Answer 11

This is the power to veto a particular provision of a bill without cancelling the entire bill

Question 12

Camel’s Nose strategy

Answer 12

This strategy writes in small seemingly innocuous elements that then open the floodgates for bigger, perhaps less desirable outcomes. Can you explain a metaphor with another metaphor?

Question 13

Zero Based Budgeting (ZBB)

Answer 13

In theory this describes a budget where it is not at all based on previous years or previous appropriations, which is impossible in practice. However, this idea is to not assume yearly, proportional increments to all programs, hopefully making the budget more responsive and potentially more open to creative solutions.

Question 14

Budget and Impoundment Control Act of 1974

Answer 14

This act was passed in response to Nixon’s overreach when he refused to release appropriated funds for certain programs he opposed. The act reestablishes Congress’ “power of the purse,” and also created the House and Senate Budgeting committees.

Question 15

Base/Fair Share

Answer 15

This is the assumption that once money is appropriated to a certain program, that program has reasonable assumption that they will receive proportional increases as the years go on.

Question 16

3 reasons the federal budget is unlike your uncle’s hardware store budget

Answer 16

1. Mixed, and sometimes conflicting motives- on one hand we’re trying to cure cancer and on another we are subsidizing tobacco farming. 2. A private business is not responsible for stabilizing the economy. 3. Private businesses have essentially one metric of success which is profit, while public entities have much more complicated metrics such as equity, public good.

Question 17

OMB and CBO

Answer 17

OMB (Office of Management and Budget): makes sure agency appropriations requests fit within the president’s budget and ensures agencies do not spend more than is appropriated to them.
CBO (Congressional Budget Office): helps Congress develop a plan for the budget, helps Congress stay within budget, and helps Congress consider issues of budget and economic policy

Question 18

Budget and Accounting Act of 1921

Answer 18

that’s a no from me dog

Question 19

Rescission, deferral

Answer 19

rescissions refer to when the president requests that appropriated funds not be spent at all, while deferrals refer to when the president wishes to delay spending.

Question 20

deficit vs. debt

Answer 20

The federal deficit is the amount by which the government’s expenses exceed its tax revenues. The national debt is the total of all deficits in the past, minus the amount the government has repaid since

Question 21

General Fund

Answer 21

The general fund pays for usual and ongoing town expenses

Question 22

Special Fund

Answer 22

A special revenue fund is established to finance and operate dedicated smaller-scale projects.

Question 23

Entitlements

Answer 23

entitlements are payouts that individuals or families qualify for based on things like income, age, or even having a particular disease

Question 24

what distinguishes a “tax” from any other source of government revenue?

Answer 24

they are compulsory

Question 25

Budget Enforcement Act of 1990

Answer 25

An act created to control the deficit. Created “mandatory” and “discretionary” sections of the budget

Question 26

Off-budget

Answer 26

Refers to the spending of certain federal entities that Congress wants to keep out of the regular budgeting process. Off-budget spending is protected from budget caps and PAYGO requirements. They are not included in the deficit that is added to the federal debt. Examples include the Social security trust fund and US Postal Service.

Question 27

Continuing Resolution

Answer 27

If appropriations are delayed past the start of the new fiscal year, Congress will pass a continuing resolution to provide agencies with funds for a short period of time at the previous year’s rates.

Question 28

Line-Item Budget

Answer 28

This budget focuses on individual line item expenditures rather than overall programmatic spending or programmatic outcomes. It does a great job in the realms of control and accountability, but does poorly if you want to allow for discretion or measure the success of a program.

Question 29

Performance Budget

Answer 29

Putting performance information alongside budget numbers will improve public decisions and will keep agencies focused on productive use of funds. Traditional performance budgets emphasize agency activity performance objectives and accomplishments, not the purchase of resources. (Mikesell 268) Really similar to program budgets but factors in performance evaluation.

Question 30

Program Budget

Answer 30

Program budgets focus on what agencies are doing that is valued by the public. The focus is on the value of a program’s contributions rather than spending on individual items.

Question 31

What is the criteria for a Capital Budget?

Answer 31

1. expensive 2. nonrecurring 3. they have future impacts and thus require a high level of care

Question 32

Incrementalism

Answer 32

Incrementalism is the reality that budgeting shifts are generally slow and incremental, and largely based of previous years’ decisions

Question 33

Regressive Tax

Answer 33

Regressive taxes place a higher burden on low income earners.

Question 34

Dillon’s Rule

Answer 34

Dillon’s Rule states that localities can only exercise powers explicitly given to them by the state

Question 35

Pareto Criterion

Answer 35

The Pareto Criterion holds that if at least one person is better off from a policy action and no person is worse off, then the community as a whole is unambiguously better off for the policy. Mikesell 31.
A change is only efficient if one person benefits and no one is harmed by the change, if someone is harmed and another person benefits, the change or shift is not pareto efficient

Question 36

Automatic Stabilizers

Answer 36

Automatic stabilizers offset fluctuations in economic activity without direct intervention by policymakers. When incomes are high, tax liabilities rise and eligibility for government benefits falls, without any change in the tax code or other legislation

Question 37

Discounting

Answer 37

Adjusts sums to be received in the future to their present-value equivalent, the amount that will accumulate to that future sum if invested at prevailing interest rate (Mikesell 328)

Question 38

Ability to Pay vs. Benefits Recieved

Answer 38

these are two ways of approaching equity. ability to pay is taxation based on the financial ability of the family or indivudal to bear the burden of the tax. Benefits recieved would put the burden on the ones recieving the benefits

Question 39

Equity VS. Equality

Answer 39

equality is having the same thing, while equity is having the amount of thing that makes sense based on individual or situational needs. me paying the same amount of taxes as someone who makes $300k a year is equal, but not equitable.

Question 40

Public vs. Private Good

Answer 40

Pure public goods are non-rival and non-excludable. Public goods are either not supplied by the market or not sufficiently supplied by the market.
Pure private goods are rival and excludable.

Question 41

Horizontal Equity

Answer 41

People with similar ability to bear the burden paying the same amount would be horizontal equity. Problems with application- if one family of similar means buys large amounts of luxury goods then that could be why they pay more.

Question 42

Laffer Curve describes what?

Answer 42

Laffer curve describes the non-linear relationship between increased taxation and tax revenue. While raising taxes will increase revenue, there is also a point past which people will just change their behavior to avoid higher taxes, thus decreasing tax revenue. Rather than linear, it is more of a bell curve.

Question 43

Tax Circuit Breakers

Answer 43

An aspect of property taxes that allows for those in areas where the property values have drastically increased to keep their property taxes relatively the same as in years past (prior to the price surge) or the higher property taxes paid are relieved by breaks in sales or income taxes

Question 44

Impoundment

Answer 44

fuck this particular question

Question 45

Statutory vs. Effective Tax Rate

Answer 45

Statutory rate is the base rate of tax that someone would pay based on income. Effective tax rate is the actual tax after any available deductions or tax credits for things like children or low income

Question 46

Corporate income tax: forward shifting, backward shifting, absorption

Answer 46

1. Forward shifting. The business increases its prices to reflect the tax.
2. Backward shifting. The business reduces the price it pays to owners of the resources it purchases, including the wages paid workers, prices paid suppliers of raw materials, and so on.
3. Absorption. The business may return a lower profit to its owners.

Question 47

Tax Incidence

Answer 47

Tax incidence is an economic term for understanding the division of a tax burden between stakeholders, such as buyers and sellers or producers and consumers. Tax incidence can also be related to the price elasticity of supply and demand. When supply is more elastic than demand, the tax burden falls on the buyers. If demand is more elastic than supply, producers will bear the cost of the tax.

Question 48

Ad Valorem

Answer 48

“at value” taxation which is one of many ways to levy taxes. Other examples would include weight, materials, etc.

Question 49

16th Amendment

Answer 49

The 16th Amendment allows congress to tax any source of income without redistributing to states and without regard to the census

Question 50

Excise Taxes

Answer 50

An excise tax is a legislated tax on specific goods or services at purchase such as fuel, tobacco, and alcohol.

Question 51

If all decisions are political, why

budget bother bringing cost/benefit analysis into the mix?

Answer 51

The analysis augments the political influence of underrepresented potential beneficiaries and identifies the position of cost bearers, it also allows for an illustration of economic efficiency which is a public goal, and it forces those in charge to focus on the value of competing alternatives

Question 52

reasons why defense budgeting is “different”

Answer 52

There is some issue in deciding what should count as defense spending, as well as difficult comparing year to year budgets due to secrecy of missions etc. We also are responsive to other country’s defense budgets- if they increase their budgets should we increase ours? There is also an inherent long-term lens in defense when people take many years to train.

Question 53

economic effects of taxation

Answer 53

It’s a big consideration to avoid taxes that impact economic activities in whatever scale you’re looking at. You want people to continue their normal economic activities.

Question 54

reasons/utility of an income tax

Answer 54

high yield, low rates, redistributing resources into entitlements, equitable because as your income changes, your rate changes. incentivizing or disincentivizing certain behaviors.

Question 55

What does Wildavsky mean when he writes that “entitlements are the base”

Answer 55

Entitlements now make up more than half of the federal budget, and are also growing faster than other parts of the budget. ?????

Question 56

ways to measure wealth

Answer 56

property, investments, income, expenses (kids especially),

Question 57

difference between a general and an earmarked tax

Answer 57

General taxes are part of the overall budget, while earmarked taxes go to specific programs or sectors. An example would be a city using a sales tax on marijuana and earmarking a certain amount for capital construction projects (Denver does this).

Question 58

what does it mean when an item is relatively insensitive to price

Answer 58

An item that is relatively insensitive to price will maintain similar levels of demand regardless of if the price goes up or down

Question 59

why will a normative theory of budgeting be virtually impossible to acheive

Answer 59

A normative theory of budgeting would require a utopian lack of conflict which is impossible to achieve.