AP Government Chapter 14 Indeph

What happens if the President and Congress fails to appropriate the funds?
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Terms in this set (58)
What happens if the President and Congress fails to appropriate the funds?
The government will come to a standstill. The army will be idled, Social Security offices will close, and food stamps will not be distributed to the poor.
**Budget
A policy document that allocates burdens (taxes) and benefits (expenditures).
Image: **Budget
**Deficit
An excess of federal expenditures over federal revenues. In other words it occurs when government spends more money than it receives in taxes in the fiscal year.
Image: **Deficit
**Expenditures
Federal spending of revenues. Major areas of federal spending are social services and national defense/military.
Image: **Expenditures
**Revenues
The financial resources of the federal government. The individual income tax and Social Security tax are two major sources of the federal government's revenue.
Image: **Revenues
What are the three major sources of federal revenues?
- Personal and Corporate income tax
-Social insurance tax
-Borrowing
Americans are required every April 15th to mail what?
Income tax forms
**Income tax
Shares of individual wages and corporate revenues collected by the government. The 16th amendment explicitly authorized Congress to levy a tax on income.
Image: **Income tax
Pollock v. Farmer's Loan and Trust Co. (1895)
Declared income tax unconstitutional due to criticized of being a "communist march."
**The 16th Amendment
The constitutional amendment adopted in 1913 that explicitly permitted Congress to levy an income tax.
Image: **The 16th Amendment
*Internal Revenue ServiceA service that was established to collect income tax.*In 1998, Congress passed a law designed to rein in the IRS and make it what?A consumer-oriented agency*Progressive income taxThose with more taxable income not only pay more taxes, but also pay higher rates of tax on that income.*Flat taxEveryone is taxed at the same rate.*National sales taxDisbanding the income tax altogether and rely on a sales tax.*Social Security taxMoney is deducted from employees' paychecks and matched by their employers that pays into the Social Security Trust Fund.*Social Security Trust FundPays for the benefits to the elderly, the disabled, the widowed, and the unemployed.How does the Federal Government borrow money?The Treasury Department sells bonds, guaranteeing to pay interest to the bondholder.**Federal Debtall the money borrowed by the federal government over the years and still outstanding . Today the federal debt is more than $19 trillion*Capitol BudgetA budget for expenditures on items that will serve for the long term.A tax loophole is usually similarly defined as what?A tax break or tax benefit.What is the IRS Code?Specifies what income is subject to taxation, contains many legal exemptions, deductions, and special cases.**Tax expendituresRevenue losses that result from special exemptions, exclusions, or deductions on federal tax law.Budget Act of 1974Defined tax expenditures as "revenue losses attributable to provisions of the federal tax laws which allow a special exemption, exclusion, deduction."What are some loopholes to some in tax expenditures?-Business-related deductions -Tuition tax credits -Capital gains tax rates*Indexing taxesGovernment no longer received a large share of income when inflation pushed incomes into higher brackets while the tax rates stayed the same in the beginning of 1985.The Tax Reform Act of 1986This eliminated or reduced the value of many tax reductions, removed several million low-income individuals from the tax rolled, and greatly reduced the number of tax brackets.What are the two major reasons why the budget is so high and hard to control?-Policies and programs on which the government spends money changes overtime. -Expenditures keep rising.How much does American governments take up in GDP?1/3 and alone would be 20%What are the two conditions associated with government growth in America?1.) The rise of the national security state 2.) The rise of the social service stateWhich President coined the phrase "military industrial complex"President EisenhowerWhat was the cause that resulted in a permanent military establishment and expensive military technology?The Cold War**Social Security ActA 1935 law that passed during the Great Depression that was intended to provide a minimal level of sustenance to older Americans and thus save them from poverty.*Income security expendituresA bundle of policies extending direct and indirect aid to the elderly, the poor, and the needy.**MedicareA program added to the Social Security system that provides hospitalization insurance for the elderly and permits Americans to purchase inexpensive coverage for doctor fees and other health expenses.**IncrementalismThe belief that the best predictor of this year's budget is last year's budget, plus a little more (an increment). According to Aaron Wildavsky, "Most of the budget is a product of previous decisions."What are several features for incremental budgeting?-Very little attention is focused on the budgetary base--the amounts agencies have had over the previous years. -Usually, agencies can safely assume they will get at least the budget they had the previous year -Most of the debate and most of the attention of the budgetary process are focused on the proposed increment. -The budget for any given agency tends to grow by a little bit every year.The Allowance TheoryA government budget works like an allowance. Congress acts as a parental role where the agencies act as the children. The agencies must withstand to make their given allowance last until the end of the fiscal year.**Uncontrollable expendituresExpenditures that are determined not by fixed amount of money appropriated by Congress but by how many eligible beneficiaries there are for programs or by previous obligations to the government.**EntitlementsPolicies for which expenditures are uncontrollable because Congress has in effect obligated itself to pay X level of benefits to Y number of recipients. Social Security benefits are an example.What are the main actors in the budgetary process?-The interest groups -The agencies -The Office of Management and Budget (OMB) -The President -The Tax Committees in Congress -The Budget Committees and the Congressional Budget Office (CBO) -The subject-matter committees -The Appropriations Committees and their subcommittees -The Congress as a whole -The Government Accountability Office (GAO)**House Ways and Means CommitteeThe House of Representatives committee that, along with the Senate Finance Committee, writes the tax codes, subject to the approval of Congress as a whole.**Senate Finance CommitteeThe Senate committee that, along with the House Ways and Means Committee, writes the tax codes, subject to the approval of Congress as a whole.When does the budget cycle start and where?The budget starts in the executive branch in 19 months before the fiscal year begins.*Budget and Accounting Act of 1921Required presidents to propose an executive budget to Congress and created the Bureau of the Budget (BOB) which changed to the Office of Management and Budget (OMB) which advises the president about the budget and supervises the budget preparation.By law, when does the president must summit a budget?First Monday in February, usually a year before.**Congressional Budget and Impoundment Control Act of 1974An 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.What did the Congressional Budget and Impoundment Control Act of 1974 establish?-A fixed budget calendar (Having by law deadlines). -A budget committee in each house (Recommends target figures to Congress for the total budget size by April 1st of each year and by April 15th Congress is to agree on the total size of the budget). -A Congressional Budget Office (CBO) [Advises Congress].*Congressional Budget OfficeAdvises Congress on the probable consequences of its decisions, forecasts revenues, and is a counterweight to the president's Office of Management and Budget.**Budget ResolutionA resolution binding Congress to a total expenditure level, supposedly the bottom line of all federal spending for all programs.**ReconciliationA congressional process through which program authorizations are revised to achieve required savings. It usually also includes tax or other revenue adjustments.**Authorization BillAn 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.**Appropriations BillAn act of Congress that actually funds programs within limits established by authorization bills. Appropriations usually cover one year.**Continuing ResolutionsWhen Congress cannot reach agreement and pass appropriations bills, these resolutions allow agencies to spend at the level of the previous year.*Balanced Budget and Emergency Deficit Control Act of 1987Known as Gramm-Rudman-Hollings which mandated maximum allowable deficit levels for each year until 1993, when the budget was supposed to be in balance.*SequestrationsIf Congress failed to meet the deficit goals, automatic across-the-board spending cuts were to be ordered by the president (a number of programs, including Social Security and interest on the national debt, were exempt from this process).What 3 categories did discretionary spending was divided into?1.) Domestic 2.) Defense 3.) InternationalWhat will occur if there is a violation within one of these categories?Violations of these strictures would lead to across-the-board sequestration within the affected category.

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