Budget and the Economy Flashcards
(46 cards)
Budget:
a policy document allocating burdens (taxes) and benefits (expenditures).
Deficit:
an excess of federal expenditures over federal revenues
Expenditures:
government spending of revenues; major areas of federal spending are social services and national defense
Revenues:
the financial resources of the government. The individual income tax and social security tax are two major sources of the federal government’s revenue
Three major sources of federal revenues are
personal and corporate income tax
social insurance taxes
borrowing
Income tax:
shares of individual wages and corporate revenues collected by the government; 16th amendment
Federal debt:
all the money borrowed by the federal government over the years and still outstanding; more than 9 trillion today
Most of the government’s income comes from
taxes
Tax expenditures:
Tax expenditures: revenue losses that result from special exemptions, exclusions, or deductions on federal tax law
ex of tax deductions
charitable donations, mortgage deductions
Two conditions associated with government growth in America are the rise of the
national security state and the rise of the social service state.
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
Medicare:
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
Incrementalism:
a description of the budget process where the best predictor of this year’s budget is last year’s budget plus a little bit more
Uncontrollable expenditures:
expenditures that are determined by how many eligible beneficiaries there are for a program or by previous obligations of the government
Entitlements:
policies for which Congress has obligated itself to pay X level of benefits to Y number of recipients
House Ways and Means Committee + Senate Judiciary Committee:
write the tax codes; subject to approval of Congress as a whole
CBO
Advises congress on the probable consequences of its decisions, forecasts revenues, and is a counterweight to the President’s OMB
Congressional Budget and Impoundment Control Act of 1974:
an act designed to reform the congressional budgetary process. Its supporters hoped that it would also make Congress less dependent on the president’s budget and better able to set and meet its own budgetary goals.
Budget resolution:
a resolution binding Congress to a total expenditure level, supposedly the bottom line of all federal spending for all programs
Budget reconciliation:
a congressional process through which program authorizations are revised to achieve required savings
Authorization bill:
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.
Appropriation bill:
an act of Congress that actually funds programs within limits established by authorization bills. Usually cover one year
Continuing resolutions:
when congress cannot reach agreement and pass appropriation bills, these resolutions allow agencies to spend at the level of the previous year
