A budget deficit occurs when expenditures exceed
Most of today’s federal debt was run up by government borrowing during
Approximately what percentage of the annual federal budget pays interest on the national debt?
Which is NOT a major source of federal revenue?
the income tax was unconstitutional
In Pollock v. farmer’s loan and trust co. (1895), the U.S. Supreme Court ruled that
explicitly permitted Congress to levy an income tax
The sixteenth amendment, ratified in 1913,
A(n) _____ is a policy document allocating taxes and expenditures, or a series of goals with price tags attached.
a policy document allocating burdens (taxes) and benefits (expenditures)
A budget is
Congress was officially given the power to levy an income tax through the
a policy statement that allocates burdens and benefits by attaching price tags to policy goals
The federal government’s budget is mainly
translating financial resources into human purposes
According to Aaron Wildavsky, budgeting is a process most concerned with
establishing the annual tax rates that Americans of different incomes must pay
What is NOT a responsibility of the IRS?
provide the largest source of federal revenue
individual income tax, social insurance receipts, borrowing, and corporate income tax
In order of decreasing amounts, the sources of federal revenue include
income taxes which account for much less federal revenue than individual income taxes
Corporations today pay
those with more income pay higher rates of tax on their income
The income tax is generally progressive, meaning that
paid for by employees and employers
Social Security taxes are
are earmarked for a specific purpose
Social insurance taxes
Social Security Taxes
The fastest growing source of federal revenue has been
The government borrows money principally by
financial institutions, citizens, corporations, mutual funds
Who can purchase US government bonds?
consists of all the money borrowed over the years by the national government and still outstanding
The federal debt
has increased due to the budget deficit caused by the difference between revenues and expenditures
The federal debt in the US
its day to day expenses
Unlike state and local governments, the federal government is borrowing primarily for
_____ are revenue losses attributable to provisions of the federal tax laws which allow a special exemption, exclusion, or deduction.
tax exemptions, deductions, and exclusions
Tax expenditures consists of
The federal income tax deduction for mortgage interest on an owner-occupied home is an example of a
a tax deduction for the mortgage interest paid by homeowners
An example of a tax expenditure is
The Office of Management and Budget estimates that the total tax expenditures is more than _____ of the federal government’s total receipts.
middle and upper income people and corporations
Tax expenditures tend to most benefit
Corporate taxes were increased.
What is false about President Reagan’s 1981 tax cut?
It provided new tax incentives for personal saving and investment.
What is true about President Reagan’s 1981 tax cut?
It increased the number of tax expenditures available to businesses
What was not a provision of Reagan’s 1985 tax simplification program?
Beginning in 1985, federal income taxes were _____ to the cost of living, so that government no longer got a larger percentage when inflation pushed incomes into higher brackets while the tax rates stayed the same.
high income families
President Reagan’s 1981 tax cuts were most beneficial to
raise the income tax rate for families in the highest income brackets
In 1993, Congress agreed to president Clinton’s proposal to
The US government’s annual budget is now approximately
Compared to most other countries with developed economies, the national, state, and local governments in the US tax
one of the smallest
Compared to other western nations, america’s total government expenditure as a percentage of the GDP is
Which of the following countries have the smallest total tax revenues as a percentage of their gross domestic product?
The federal budget consumes _____ of America’s GDP
In order of decreasing amounts, federal expenditures include
America’s national, state, and local governments spend an amount equal to _____ of the GDP.
the Department of Defense
During the 1950s and early 1960s, over half the federal budget was spent every year on
increase in social service expenditures and decline in defense spending
From the mid 1960s to the early 1980s, the biggest change in government spending was the
the close relationship between defense officials and the corporations that supply their hardware needs
The military industrial complex refers to
decreased in the 1990s
The budget of the Department of Defense
The purchasing of military hardware is known as
income security programs
The biggest expenditure in the federal budget today is
The Social Security Act, which set up the Social Security system, was passed in
The social security act was passed under the administration of president
In 1965, _____ was added to the social Security programs to provide hospital and physician coverage to the elderly
provides both hospital and physician coverage to the elderly
income security expenditures
The biggest slice of the federal budget pie belongs to
over 15 percent
By 1990 the Social Security system was financed by a payroll tax of
provides small increases in the current budget over the previous year’s budget
A major feature of incremental budgeting is that it
giving an agency a little more than it had last year
An example of incremental budgeting is
Agencies must justify their entire budget request
What is not a feature of incremental budgeting?
_____ refers to the concept that in the spending appropriations process, the best predictor of this year’s budget is last year’s budget plus a little bit more.
The most prevalent model of budgetary decision making in practice is
An agency or program must prove it still merits its very existence every year
What is not associated with incremental budgeting?
Budget items mandated by a law or by a previous obligation are known as
Social Security payments are an example of a(n)
an expenditure that is required by current law or a previous government obligation to people automatically eligible for some benefit
An “uncontrollable” expenditure in the federal budget is defines as
Social Security programs, interest on the national debt, and military pensions are examples of
the Social security system
The biggest uncontrollable expenditure in the federal budget is
An estimated ____ of the federal budget is considered uncontrollable, unless Congress changes a law or existing benefit levels.
Approximately what percentage of the federal budget is uncontrollable?
The ultimate power to determine how much the government will tax and spend, and what it will spend taxes for, lies with
Ways and Means
In the House, it is the _____ Committee that writes tax codes, subject to the approval of Congress as a whole.
they want the almost inevitable budget cuts to be bearable
Agencies invariably pad their budget requests because
In the Senate, the _____ Committee is responsible for writing tax codes, subject to the approval of Congress as a whole.
The budget cycle begins in the executive branch _____ months before the fiscal year begins.
is a presidential appointee requiring approval of the Senate
The director of the Office of Management and Budget
Office of Management and Budget
The ____ is responsible for supervising preparation of the federal budget and advising the president on budgetary matters.
agencies of the executive branch sent their budget requests to the secretary of the treasury, who forwarded them on to Congress, with the president playing little or no role in the entire process
Until Congress passed the Budget and Accounting Act of 1921,
Before the president submits her budget to congress the OMB coordinates the requests of
Office of Management and Budget
The heads of executive agencies send their budget requests to the
General Accounting Office
Agencies’ behavior and budgets are audited, monitored, and evaluated for Congress by the
The Office of Management and Budget parcels out money to government agencies and is accountable to the
The OMB is one of the few government agencies created by the Constitution (totally false)
What is false about the OMB?
the president makes revisions and submits it to Congress
Once the Office of Management and Budget has prepared the federal budget,
According to the Constitution, all federal appropriations must be authorized by
The Office of Management and budget
The Congressional budget and Impoundment control act of 1974 did not set up
Congress agree on a budget according to a fixed schedule, with target figures for the total budget size
The Congressional Budget and Impoundment Act of 1974 requires that
Congressional Budget Office
The congressional equivalent of the Office of Management and Budget is the
force Congress to consider the budget as a whole rather than in terms of individual appropriations
One of the important purposes of the Congressional Budget Act of 1974 is to
advise Congress on the consequences of its budget decisions
The main purpose of the Congressional Budget Office is to
To set a limit on total government spending, both houses of Congress are required to pass a(n) _____ every April, binding Congress to a total expenditure level, or bottom line, of all federal spending for all programs.
sets limits on expenditures based on revenue projections
A budget resolution
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