What happens if Congress and the president “fail too appropriate funds”
The government will come to a standstill
A policy document allocating burdens (taxes) and benefits (expenditures).
An excess of federal expenditures over federal revenues
Federal spending of revenues. Major areas of such spending are social services an the military
The financial resources of the federal government. The individual income tax and Social Security tax are two major sources of revenue
What are the major sources of federal revenue?
Personal and corporate income tax, social insurance tax, and borrowing
Shares of individual wages and corporate revenues collected by the government. The sixteenth amendment explicitly authorized Congress to levy a tax on income. See also Internal Revenue Service
The constitutional amendment adopted in 1913 that explicitly permitted Congress to levy an income tax
What is a progressive income tax?
Those with more taxable income not only pay more taxes but also pay higher rates of tax on that income.
Social security trust fund
When money is deducted form employee’s paychecks and matched by their employers and put into a trust fund that pays benefits to the elderly, the disabled, the widowed, and the unemployed
Social security taxes make up what percent of federal revenue?
When the federal government wants to borrow money, what happens?
The treasury department sells bonds, guaranteeing to pay interest to the bondholder. Citizens, corporations, mutual funds, and other financial institutions can all purchase these bonds; there is always a lively market for government bonds.
All the money borrowed by the federal government over the years and still outstanding.
About how much is the current federal debt?
More than $8 trillion according to the textbook, but over $17.5 trillion now. THAT’S TERRIFYING.
Why are many concerned about the national debt?
Government borrowing may crowd out private borrowers, both individuals and businesses, from the loan marketplace. It also makes the American government dependent on foreign investors, including other governments, to fund its debt.
Why do some argue that fears about the national debt are overblown?
They say that the national debt has relatively little to do with the overall health of the US economy. Our national debt, they argue, is a smaller percentage of our economy and of the total amount of money available for borrowing than in past years.
About how much does the federal government spend on national defense?
About $400 billion
About how much does the federal government spend on payments for individuals?
About $1.8 Trillion
About how much does the federal government spend on other non defense?
Almost $2 Trillion
About how much does the federal government spend on net interest?
Over $2.1 trillion
Social security act
A 1935 law passed during the great depression that was intended to provide a minimal level of sustenance to older americans and thus save them from poverty
A program added to the social security system in 1965 that provides hospitalization insurance for the elderly and permits older americans to purchase inexpensive coverage for doctor fees and other health expenses
What problem does social security face today?
demographic and economic realities threaten to dilute the intergenerational relationship. 50 workers supported one beneficiary in 1945, while only three workers support each beneficiary by 1990
what percent of the federal budget are social security and medicare?
the belief that the best predictor of this year’s budget is last year’s budget, plus a little bit more (an increment). According to Aaron Wildavsky, “Most of the budget is a product of previous decisions.”
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 government
policies for which congress has obligated itself to pay X level of benefits to Y number of recipients. social security benefits are an example
What is the role of federal agencies in the budgetary process?
Convinced of the importance of their mission, the heads of agencies almost always push for higher budget requests. They send their requests to the office of management and budget and later get a chance to present themselves before congressional committees as well
What is the role of the office of management and budget in the budgetary process?
The OMB is responsible to the president, its boss, but no president has the time to understand and make decision about the billions of dollars in the budget-parceled out to hundreds of agencies, some of which the chief executive knows little or nothing about. the director and staff of the OMB have considerably independence from the president, which makes them major actors in the annual budget process
What is the role of the president in the budgetary process?
the president makes the final decisions on what to propose in confess. in early february, the president unveils the proposed budget; the president then spends many a day trying to ensure that congress will stick close to the recommendations
What is the role of the house ways and means committee and the senate finance committee in the budgetary process?
write tax codes, subject to the approval of congress as a whole
What is the role of the budget committees in congressional budget office in the budgetary process?
the CBO, which is the congressional equivalent of the OMB, set the parameters of the congressinal budget process through examining revenues and expenditures in the aggregate and proposing resolutions to bind congress within certain limits.
What is the role of subject matter committees in the budgetary process?
committees of congress, ranging from agriculture to veterans affairs, write new laws, which require new expenditures. committee members may use hearings either to publicize the accomplishments of their pet agencies, thus supporting larger budgets for them, or to question agency heads about waste or overspending
What is the role of the appropriations committee in the budgetary process?
the appropriations committee in each house elides who get what
What is the role of the congress as a whole in the budgetary process?
the constitution requires that congress as a whole approve taxes and appropriations, and senators and representatives alike have a strong interest in delivering federal dollars to their constituents. a dam here, a military base there, and a job training program somewhere else-these are items that members look for in the budget
What is the role of the government accountability office in the budgetary process?
congress’ role does not end when it has passed the budget. the GOA works as congress’ eyes and ears, auditing, monitoring, and evaluating what agencies are doing with their budgets.
until 1921, what was the role of the president tin the budget process?
limited role or no role at all
budget and accounting act
required president to propose an executive budget to congress
office of management and budget (OMB)
supervises preparation of the federal budget and advises the president on budgetary matters
when must the president submit a budget to congress?
the first monday in february
what happens during the fall?
the agencies submit formal, detailed estimates for their budgets
what is the role of budget analysts?
they pare, investigate, weigh, and meet on agency requests
congressional budget impoundment control act of 1974
an act designed to reform the congressional budgetary process. its supporters hopes that it would also make congress less dependent on the presidents budget and better able to set ad meet its own budgetary goals
a resolution binding congress to a total expenditure level, supposedly the bottom line of all federal spending for all programs
a congressional process through which program authorizations are revised to achieve required savings. it usually also includes tax or other revenue adjustments
an act of congress that establishes, continues, or changes a discretionary government program or an entitlement. it specifies program goals and maximum expenditures for discretionary programs
an act of congress that actually funds programs within limits established by authorization bills. appropriations usually cover one year
have the reforms worked?
if worked means that congress has brought its spending into line with its revenues, then the reforms have been almost a total failure.
when congress cannot reach agreement and pass appropriations bills, these resolutions allow agencies to spend tat the level of the previous year
gramm rudman hollings (emergency deficit control act)
mandated maximum allowable deficit levels for each year until 1993, when the budget was supposed to be in balance
automatic across the board spending cuts, if congress failed to meet the deficit goals
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