37 terms

The Economy, the Federal Budget, Social Welfare, and Entitlements

balanced budget
public policy that advocates that the federal budget spend as much money as it receives. Attempt made to pass a constitutional amendment mandating this policy failed
block grant
a form of fiscal federalism where federal aid is given to the states with few strings attached
congressional budget office (CBO)
set up by the Congress, this office evaluates the cost of legislative proposals
consumer price index
a primary measure of inflation determined by the increase in the cost of products compared to a base year
continuing resolution
emergency spending legislation that prevents the shutdown of any department simply because its budget has not been enacted
culture of poverty
the establishment of an income level by government that references the point at which an individual is considered to be living in poverty
deficit spending
the government's meeting budgetary expenses by borrowing more money than it can pay back
direct tax
money paid directly to the government in the form of income taxes
discount rates
interest levels established by the federal reserve that affect the ability of the consumer to borrow money. Raising and lowering rates is used as a tool to combat inflation
distributive policy
results in the government giving benefits directly to people, groups, farmers, and businesses. Typical policies include subsides, research and development funds for corporations, and direct government aid for highway construction and education
those benefits guaranteed by law paid to individuals by the federal government, such as Social Security
federal reserve system
federal body that regulates the money suply by controlling open-market operations; buying, and selling of government securities; and establishing reserve requirements, the legal limitations on money reserves that banks must keep against the amount of money which they have deposited in Federal Reserve Banks and through discount rates, and the rate at which banks can borrow money from the system.
flat tax
proportional tax on income after a specific threshold has been reached
fiscal policy
policy that determines how the economy is managed as a result of government spending and borrowing and the amount of money collected from taxes
food stamp program
federally funded program that gives food cupons to low-income people based on income and family size
gross domestic product
currently the key economic measure that anaylzes an upward or downward economic trend of the monetary value of all the goods and servies produced within the nation on a quarterly basis
gross national product
the total of all goods and services produced in a year
income distribution
The way all the income earned in a country is divided among different groups of income earners.
indirect tax
money paid to the government as a result of purchased goods
french term literally meaning "hands off". Used to describe an economic philosophy of nongovernment intervention in economic matters such as regulation of business or establishing tariffs
mandatory spending
those appropriation items in a budget that must be allocated. In the federal budget, the majority of spending items are mandatory and include Social Security, Medicare, Medicaid, payment of the national debt, and certain components of defense spending
a shared program between federal and local governments that covers hospital and nursing home costs of low-income people
program that covers hospital and medical costs of people 65 years of age and older as well as disabled individuals receiving Social Security
monetary policy
policies developed by the Federal Reserve Board, such as raising or lowering interest rates, aimed at creating and maintaining a healthy economy
norris-la guardia act (1932)
act that prohibited employers from punishing workers who joined unions and gave labor the right to form unions
office of management and budget (OMB)
its director, appointed with the consent of the Senate, is responsible for the preparation of the massive federal budget, which must be submitted to the Congress in Januaray each year. Besides formulating the budget, they also oversee congressional appropriations
open market
buying and selling of government securities, which affects the money supply and cost of money
poverty line
references the point at which an individual is considered living in what has been called a "culture of poverty"
price supports
the government's price guarantees for certain farm goods. The government subsidizes farmers not to grow certain crops and also buys food directly and stores it, rather than let the oversupply in the market bring the prices down
progressive tax
a tax based upon the amount of money an individual earned, such as an income tax. Became legal as a result of the ratification of the 16th Amendment to the Consititution
redistributive policy
programs that take benefits from some (taxes) and give to others; medicaid, food stamps
regressive tax
a tax that is imposed on individuals regardless of how much they earn, such as a sales tax
regulatory policy
policy that results in government control over individuals and busineses. Ex/ protection of the environment and consumer protection
safety net
a minimum government guarantee that ensures that individuals living in poverty will receive support in the form of social welfare programs
social welfare
entitlement programs such as Social Security and programs such as Aid to dependent Children paid for by the federal government
wagner act
National Labor Relations Act of 1935, it gave workers involved in interstate commerce the right to organize labor unions and engage in collective bargaining and prevented employers from discriminating against labor leaders and taking action against union leaders
an alternative to the traditional welfare, where an individual is trained to work instead of receiving welfare