Download Chapter 14: Congress, The President, and the Budget The Politics of

Chapter 14: Congress, The President, and the Budget
The Politics of Taxing and Spending
I.
II.
III.
Federal Revenue and Borrowing
Federal Expenditures
The Budgetary Process
I. Federal Revenue and Borrowing
a. Expenditures
i. Government spending – Major areas are __________
______________ and __________ ______________.
b. Revenues
i. Financial resources of the government – ____________
_______________ ________ and ___________ ___________
tax are two major sources.
c. Personal and Corporate Income Tax
i. _____________ ______ – Shares of individual wages and
corporate revenues collected by the government.
ii. _____________ Amendment – Explicitly authorized Congress
to levy a tax on income.
d. Social Insurance Taxes
i. Both ___________ and _______________ pay Social Security
and Medicare taxes.
ii. In 2010, employees and employers EACH paid a Social
Security tax equal to 6.2 percent of the first $106,800 of
earnings, and for Medicare they paid another 1.45 percent on all
earnings.
1. Total social security & Medicare tax rate: __________
e. Borrowing
i. Treasury Department sells ____________ when the federal
government wants to borrow money.
ii. Federal debt – _____ the money borrowed by the federal
government over the years and still ________________.
iii. Today the federal debt is about _______________________.
f. Taxes and Public Policy
i. Tax Expenditures – Revenue ________________ from special
__________________, _______________, or
_______________________ allowed by federal tax law.
ii. Tax Reduction – In 2001, tax cut gradually lowered tax rates
over the next ten years, and in 2003, Congress reduced the tax
rates on capital gains and dividends.
II. Federal Expenditures
a. Big Governments, Big Budgets
i. Big budgets are necessary to pay for big governments.
ii. National, state, and local government spend an amount equal to
____________ of the gross domestic product (GDP).
iii. National government’s spending alone currently represent about
__________________ of the GDP.
b. The Rise of the National Security State
i. In the 1950s and 1960s the _______________ ____
________________________________ received more than
_____ of federal budget.
ii. Defense now gets about ________ of all federal expenditures.
iii. This is one reason for growth of government.
c. The Rise of the Social Service State
i. The biggest federal spender is now ___________
_____________-- programs.
1. _________________ ______________
2. __________________
3. ______________________
4. _________________________________
ii. Social Security is ________ spender, now it includes disability
benefits and Medicare, and its recipients are living longer.
iii. This is another reason for government growth.
d. Incrementalism
i. A description of the budget process where the best predictor of
this year’s budget is ____________ ___________- budget,
plus a little bit more (an increment).
ii. According to Aaron Wildavsky, “Most of the budget is a
product of previous decisions.”
e. “Uncontrollable” Expenditures
a) Expenditures determined by how many ________________
____________________ there are for a program or by previous
obligations of the government and that Congress therefore
cannot easily control.
b) ________________ _________________ benefits are an
example of uncontrollable expenditures.
c) Entitlements – Policies for which Congress has obligated itself
to pay X level of benefits to Y number of recipients.
1. ______________ ___________ & ________________
benefits are an example of entitlements.
III. The Budgetary Process
a. Budgetary Politics
i. Stakes and Strategies – Every political actor has a stake in the
budget.
ii. Think of __________________ __________________ as a
game in which players adopt various strategies.
iii. There are plenty of players in the budgetary politics game, and
they have their own strategies.
iv. The Players –
1. ______________ ____________ lobby for their needs;
2. _________________ push for higher budget requests;
3. ____________________________________________
prepares the president’s budget;
4. _____________________ makes the final decisions on
what to propose to Congress.
5. _____ ______________ in Congress write the tax codes;
6. Budget Committees and the
____________________________________________
set the parameters of the congressional budget process;
7. _______________ - ______________ committees write
new laws, which require new expenditures.
8. __________________________ Committees decide who
gets what and their subcommittees hold hearings on
agencies’ requests;
9. _______________ ___ __ ___________ approves
taxes and appropriations;
10.____________________________________________
audits, monitors, and evaluates what agencies are doing
with their budgets.
b. The President’s Budget
i. ____________________________________________ (1921)
requires presidents to propose an executive budget to Congress
and created the Bureau of the Budget to help them.
ii. In the 1970s, President Nixon reorganized the Bureau of the
Budget and renamed it the
__________________________________________________
iii. Budget timeline:
1. Spring – ____________________________________.
2. Summer – ___________________________________
3. Fall – _______________________________________
4. Winter – _____________________________________
c. Congress and the Budget
i. ____________________________________________ of 1974
was designed to reform the congressional budgetary process.
ii. It established:
1. a fixed _______________________ ______________;
2. a ______________ _________________ in each house;
3. a _______________ ______________ ____________.
iii. _____________________________________________ – To
advise Congress on the probable consequences of its decisions
and to forecast revenues.
iv. _______________ ______________________ – A resolution
binding Congress to a total expenditure level, supposedly the
bottom line of all federal spending for all programs.
v. ____________________________________ – How program
authorizations are revised to achieve required savings.
vi. __________________ _____________________ – Establish,
continue, or change programs.
vii. ______________________ ____________ – Funds programs
established by the authorization bills.
viii. Budgets were in red every year between 1974 reforms and
1998.
ix. __________________ ____________________ – Allow
agencies to spend at last year’s level when Congress can not
pass appropriations bills on time.
x. ________________ ____________ – Appropriations bills all
together in one bill and not 13 appropriations bills.
xi. The 1974 reforms have helped Congress view the entire budget
early in the process.
xii. The problem is not so much the procedure as disagreement over
how _______________ ______________ should be spent.