The Budget Flashcards
deficit
an eccess of federal expenditures over revenues for one year
budget
a policy document allocating burdens (taxes) and benefits (expenditures)
expenditures
government spending of revenues
revenues
the financial resources of the government
sources of federal revenue
income tax Social Insurance (social security and medicare) borrowing excise taxes (retail) corporate income taxes
income tax
shares of individual wages and corporate revenues collected by the gov’t
16th amendment
authorizes congress to levy an income tax
progressive tax
tax rates increase with income
flat tax
flat tax rate for everyone
social insurance taxes
(social security and medicare)
money is deducted from employees paychecks and matched by employers for elderly, displayed, unemployed, widows, etc.
borrowing
treasury department sells bonds to citizens, corporations, institutions and other governments often used for day to day needs (dependent)
federal debt
all the money borrowed by federal gov’t over the years & still outstanding today
Tax expenditures
revenue loses that result from special exemptions, exclusions or deductions on federal law
-charitable contributions
-mortgage interest
-business expences
benefits middle & upper class corporations
Tax Reductions
in 1981 Regan passed huge tax reduction policy to cut taxes, but it mainly helped higher income families and contributed to deficits in the 80s and 90s
Tax Reform Act 1986
-reduced value of tax deductions
-removed low-income individuals
from the tax rolls
-changed from 15 separate brackets to two lower rates
(later added more higher brackets)
military industrial complex
relationship between military establishment and technology
national security state
cold war results in permanent military establishment and increased until the 80s and came back after 9/11
1/5 of the budget
(veterans, pentagon, research, etc)
Social Service State
largest portion of the budget
education, environment, minorities, poverty, hospitals
Social Security Act
a law passes in 35 during the great depression that was intended to provide a minimal level of sustenance to older americans
medicare
a program added to the social security system in 65 that provides hospitalization insurance for the elderly and permits americans to purchase inexpensive coverage for doctor fees and other health expenses
social security trust fund depletion
more old people and less workers to support them so it has become more of a burden to pay for social security
Incrementalism
a description of the budget process where the best predictor of this year’s budget is last year’s budget plus a little extra (an increment) “most of the budget is a product of previous decisions”
Uncontrollable Expenditures
expenditures that are determined not by a fixed amount of money appropriated by congress but by how many eligible beneficiaries there are for a program or by previous obligations of the gov’t
entitlements
policies for which congress has obligated itself to pay X level of benefits to Y number of recipients (social security benefits)
cause of incrmentalism
policymakers don’t focus on the base and more on the amounts of money agencies have
agencies get the same money as last year
most debate is focused on the increment
budgets tend to grow
strategies
everyone has strategies like asking for more money, interest groups advocate, etc.
players: interest groups
work with agencies to advocate for their interests
players: agencies
push for higher requests and send to OMB and president
players: OMB
responsible to the president but make major decisions
players: President
makes final decisions and tries to keep congress close to recomendations
players: Tax committees in congress
create taxes used to spend money House Ways and Means Committee and Senate Finance Committee
players: CBO
Congressional Budget Office
congress equivalent of OMB and sets parameters of congressional budget process (limits, examining expenditures and revenues)
players: subject matter committees
want larger budgets for related agencies
players: appropriations committees
decides who gets what in each house
takes new and old policies & decides how much to spend and does hearings for agencies
players: congress
approves taxes and appropriations
players: GAO
Government Accountability Office
audits, monitors, and evaluates agencies
House ways and Means Committee
In the House
with the senate finance committee writes the tax codes and is subject to congresses approval
Senate Finance Committee
with the House ways and Means Committee writes the tax codes and is subject to congresses approval
Budget and Accountability Act
required president to propose an executive budget to congress and created the Bureau of the Budget. it was reorganized and named the OMB
preparation of the budget
starts a year in advance and must be submitted the first Monday in February
the OMB communicates with the president and agencies to prepare the budget the president approves the budget and it goes to congress
Congressional Budget and Impoundment Control Act
An act designed to reform the congressional budgetary process. It supporters hoped it would make congress less dependent on the presidents budget and better able to set and meet its own budgetary goals -helps congress includes: a fixed budget calendar a budget committee in each house The Congressional Budget Office
reconciliation (helps to cut spending)
a congressional process through which program authorizations are revised to achieve required savings (includes tac and revenue adjustments)
Budget Resolution
a resolution binding congress to a total expenditure level, supposedly the bottom line of all federal spending for all programs
Authorization (helps to cut spending)
and act of congress that establishes, continues, or changes a discretionary gov’t program or entitlement
Appropriations
an act of congress that actually funds programs within limits established by authorization bills that usually covers 1 year
continuing resolution
when congress cannot reach agreement and pass appropriations bills, these resolutions allow agencies to spend at the same level as last year (when congress can’t make decisions in time)
Balanced Budget and Emergency Deficit Control Act
Gramm-Rudman-Hollings
Designed to reduce the federal budget deficit. The law did so primarily by setting deficit limits and authorizing across-the-board spending reductions to reach them. Although the Supreme Court ruled that a key part of this mechanism was unconstitutional, the basic concepts embodied in the statute have continued to influence the process for adopting the federal budget.
sequestrations
across the board budget cuts
