occurs when expenditures exceed revenues in a fiscal year. Over the past 30 years, the national government has run up large annual budget _____
In 1913, _______was added to the Constitution, explicitly permitting Congress to levy an income tax. Today corporate taxes yield only about ten cents of every federal revenue dollar, compared with 49 cents coming from individual income taxes.
all of the money borrowed over the years and still outstanding-exceeds $6.8 trillion. Nine percent of all federal expenditures go to paying off the _____
the difference between what the government actually collects in taxes and what it would have collected without special exemptions
1981 tax cuts
Many blamed the massive deficits of the 1980s and 1990s at least partially on the ______, as government continued to spend more but reduced its revenues
Tax Reform Act of 1986
In 1993, President Clinton proposed, and Congress approved, a plan to raise the income tax rate for families in the highest income bracket. The _______ was one of the most sweeping alterations in federal tax policy in history. It eliminated or reduced the value of many tax deductions, removed several million low-income individuals from the tax rolls, and greatly reduced the number of tax brackets.
2001 tax cut
When budget surpluses materialized (briefly) in the late 1990s, cutting taxes was once again a popular rallying cry for some politicians, including George W. Bush. Congress enacted a ______ that gradually lowered tax rates over the next ten years. When deficits immediately reappeared, critics charged that the president was fiscally irresponsible.
President Eisenhower coined the phrase ______ to characterize the close relationship between the military hierarchy and the defense industry that supplies its hardware needs. The Pentagon wants weapons systems and arms makers want contracts, so they tend to be mutually supportive.
Social Security Act
(passed in 1935) was originally intended to provide a minimal level of sustenance to older Americans.
the best predictor of this year's budget is last year's budget plus a little bit more-that is
one that is mandated under current law or by a previous obligation. About two-thirds of the federal budget is _____
About two-thirds of the federal budget is uncontrollable-based on expenditures that are determined not by how much Congress appropriates to an agency but by how many eligible beneficiaries there are for a particular program. Such policies are called ____
power of the purse
According to the Constitution, all federal appropriations must be authorized by Congress-a control sometimes called the _____
Budget and Accounting Act
requiring presidents to propose an executive budget to Congress and creating the Bureau of the Budget to help them (1921)
Office of Management and Budget
In the 1970s, President Nixon reorganized the Bureau of the Budget and renamed it the ____. It now supervises preparation of the federal budget and advises the president on budgetary matters.
Congressional Budget and Impoundment Act of 1974
designed to reform the congressional budgetary process. The act established a fixed budget calendar in which a timetable mandated by law was set for each step in the budgetary process
Congressional Budget Office
advises Congress on the probable consequences of its budget decisions, forecasts revenues, and is a counterweight to the president's OMB
In April of each year, both houses of Congress are expected to agree upon a ______ which binds Congress to a total expenditure level that should form the bottom line of all federal spending for all programs
a process by which program authorizations are revised to achieve required savings; it frequently also includes tax or other revenue adjustments
an act of Congress that establishes a discretionary government program or an entitlement, or that continues or changes such programs
In response to growing frustration at its inability to substantially reduce annual budget deficits, Congress enacted the Balanced Budget and Emergency Deficit Control Act (1985), better known as the _____. As amended in 1987, the act mandated maximum allowable deficit levels for each year until 1993-at which point the budget was supposed to be in balance. If Congress failed to meet the deficit goals, sequestrations were to be ordered by the president.