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A budget deficit occurs when expenditures exceed

the 1980s

Most of today's federal debt was run up by government borrowing during


Approximately what percentage of the annual federal budget pays interest on the national debt?

excise taxes

Which is NOT a major source of federal revenue?

the income tax was unconstitutional

In Pollock v. farmer's loan and trust co. (1895), the U.S. Supreme Court ruled that

explicitly permitted Congress to levy an income tax

The sixteenth amendment, ratified in 1913,


A(n) _____ is a policy document allocating taxes and expenditures, or a series of goals with price tags attached.

a policy document allocating burdens (taxes) and benefits (expenditures)

A budget is

Sixteenth Amendment

Congress was officially given the power to levy an income tax through the

a policy statement that allocates burdens and benefits by attaching price tags to policy goals

The federal government's budget is mainly

translating financial resources into human purposes

According to Aaron Wildavsky, budgeting is a process most concerned with

establishing the annual tax rates that Americans of different incomes must pay

What is NOT a responsibility of the IRS?

provide the largest source of federal revenue

Income taxes

individual income tax, social insurance receipts, borrowing, and corporate income tax

In order of decreasing amounts, the sources of federal revenue include

income taxes which account for much less federal revenue than individual income taxes

Corporations today pay

those with more income pay higher rates of tax on their income

The income tax is generally progressive, meaning that

paid for by employees and employers

Social Security taxes are

are earmarked for a specific purpose

Social insurance taxes

Social Security Taxes

The fastest growing source of federal revenue has been

selling bonds

The government borrows money principally by

financial institutions, citizens, corporations, mutual funds

Who can purchase US government bonds?

consists of all the money borrowed over the years by the national government and still outstanding

The federal debt

has increased due to the budget deficit caused by the difference between revenues and expenditures

The federal debt in the US

its day to day expenses

Unlike state and local governments, the federal government is borrowing primarily for

tax expenditures

_____ are revenue losses attributable to provisions of the federal tax laws which allow a special exemption, exclusion, or deduction.

tax exemptions, deductions, and exclusions

Tax expenditures consists of

tax expenditure

The federal income tax deduction for mortgage interest on an owner-occupied home is an example of a

a tax deduction for the mortgage interest paid by homeowners

An example of a tax expenditure is

30 percent

The Office of Management and Budget estimates that the total tax expenditures is more than _____ of the federal government's total receipts.

middle and upper income people and corporations

Tax expenditures tend to most benefit

Corporate taxes were increased.

What is false about President Reagan's 1981 tax cut?

It provided new tax incentives for personal saving and investment.

What is true about President Reagan's 1981 tax cut?

It increased the number of tax expenditures available to businesses

What was not a provision of Reagan's 1985 tax simplification program?


Beginning in 1985, federal income taxes were _____ to the cost of living, so that government no longer got a larger percentage when inflation pushed incomes into higher brackets while the tax rates stayed the same.

high income families

President Reagan's 1981 tax cuts were most beneficial to

raise the income tax rate for families in the highest income brackets

In 1993, Congress agreed to president Clinton's proposal to

2.75 trillion

The US government's annual budget is now approximately


Compared to most other countries with developed economies, the national, state, and local governments in the US tax

one of the smallest

Compared to other western nations, america's total government expenditure as a percentage of the GDP is


Which of the following countries have the smallest total tax revenues as a percentage of their gross domestic product?

Fifty percent.

The federal budget consumes _____ of America's GDP


In order of decreasing amounts, federal expenditures include

20 percent

America's national, state, and local governments spend an amount equal to _____ of the GDP.

the Department of Defense

During the 1950s and early 1960s, over half the federal budget was spent every year on

increase in social service expenditures and decline in defense spending

From the mid 1960s to the early 1980s, the biggest change in government spending was the

the close relationship between defense officials and the corporations that supply their hardware needs

The military industrial complex refers to

decreased in the 1990s

The budget of the Department of Defense


The purchasing of military hardware is known as

income security programs

The biggest expenditure in the federal budget today is


The Social Security Act, which set up the Social Security system, was passed in


The social security act was passed under the administration of president


In 1965, _____ was added to the social Security programs to provide hospital and physician coverage to the elderly

provides both hospital and physician coverage to the elderly


income security expenditures

The biggest slice of the federal budget pie belongs to

over 15 percent

By 1990 the Social Security system was financed by a payroll tax of

provides small increases in the current budget over the previous year's budget

A major feature of incremental budgeting is that it

giving an agency a little more than it had last year

An example of incremental budgeting is

Agencies must justify their entire budget request

What is not a feature of incremental budgeting?


_____ refers to the concept that in the spending appropriations process, the best predictor of this year's budget is last year's budget plus a little bit more.


The most prevalent model of budgetary decision making in practice is

An agency or program must prove it still merits its very existence every year

What is not associated with incremental budgeting?

uncontrollable expenditures

Budget items mandated by a law or by a previous obligation are known as


Social Security payments are an example of a(n)

an expenditure that is required by current law or a previous government obligation to people automatically eligible for some benefit

An "uncontrollable" expenditure in the federal budget is defines as

uncontrollable expenditures

Social Security programs, interest on the national debt, and military pensions are examples of

the Social security system

The biggest uncontrollable expenditure in the federal budget is

two thirds

An estimated ____ of the federal budget is considered uncontrollable, unless Congress changes a law or existing benefit levels.

two thirds

Approximately what percentage of the federal budget is uncontrollable?


The ultimate power to determine how much the government will tax and spend, and what it will spend taxes for, lies with

Ways and Means

In the House, it is the _____ Committee that writes tax codes, subject to the approval of Congress as a whole.

they want the almost inevitable budget cuts to be bearable

Agencies invariably pad their budget requests because


In the Senate, the _____ Committee is responsible for writing tax codes, subject to the approval of Congress as a whole.


The budget cycle begins in the executive branch _____ months before the fiscal year begins.

is a presidential appointee requiring approval of the Senate

The director of the Office of Management and Budget

Office of Management and Budget

The ____ is responsible for supervising preparation of the federal budget and advising the president on budgetary matters.

agencies of the executive branch sent their budget requests to the secretary of the treasury, who forwarded them on to Congress, with the president playing little or no role in the entire process

Until Congress passed the Budget and Accounting Act of 1921,

executive agencies

Before the president submits her budget to congress the OMB coordinates the requests of

Office of Management and Budget

The heads of executive agencies send their budget requests to the

General Accounting Office

Agencies' behavior and budgets are audited, monitored, and evaluated for Congress by the


The Office of Management and Budget parcels out money to government agencies and is accountable to the

The OMB is one of the few government agencies created by the Constitution (totally false)

What is false about the OMB?

the president makes revisions and submits it to Congress

Once the Office of Management and Budget has prepared the federal budget,


According to the Constitution, all federal appropriations must be authorized by

The Office of Management and budget

The Congressional budget and Impoundment control act of 1974 did not set up

Congress agree on a budget according to a fixed schedule, with target figures for the total budget size

The Congressional Budget and Impoundment Act of 1974 requires that

Congressional Budget Office

The congressional equivalent of the Office of Management and Budget is the

force Congress to consider the budget as a whole rather than in terms of individual appropriations

One of the important purposes of the Congressional Budget Act of 1974 is to

advise Congress on the consequences of its budget decisions

The main purpose of the Congressional Budget Office is to

budget resolutions

To set a limit on total government spending, both houses of Congress are required to pass a(n) _____ every April, binding Congress to a total expenditure level, or bottom line, of all federal spending for all programs.

sets limits on expenditures based on revenue projections

A budget resolution

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