POLS 206 Exam 3 Review TAMU Kent

The federal budget consists of...

revenue and expenditures

When expenditures>revenue, what occurs and what does it lead to?

deficit, accumulation of debt

What happened when congress first tried to levy income tax?

Supreme Court deemed it unconstitutional

Allowed congress to collect income tax

16th amendment

Who collects taxes?

IRS (Internal Revenue Service)

Higher income means higher tax rate

Progressive income tax

Corporation tax yield ______ than individual taxes

less

Alternative to current tax practices?

flat tax

what is flat tax?

everyone pays the same tax rate

What taxes contribute the most to federal revenues?

Individual income taxes

Nearly a third of federal revenue comes from what taxes? (NOT THE MOST)

Social insurance taxes

In bad economic times, tax revenue _______

decreases

Which taxes are withheld from your paycheck and matched by your employer?

Social Security and Medicare taxes

The Treasury Departments sells ______ agreeing to pay interest to the _____holders as a way to borrow money

bonds

Federal government can borrow money from itself (like Social Security funds) creating...

intragovernmental debt

The limit on how much money the government can borrow

debt ceiling

The debt ceiling is a _________________ for Congress

powerful bargaining chip

When government revenue declines, what does the government have to do?

Spend more money

National debt in the 1980s...

steadily increased

National debt in the 1990s...

leveled off

National debt after 2001...

risen sharply

What happened in 2008 that greatly increased national debt?

Financial crisis (stock market crash)

What happened in 2018 that greatly increased national debt?

tax cuts implemented

Represent tax revenue that is lost due to exemptions

tax expenditures

Charitable contributions, mortgage interest, businesses buying new equipment and facilities are...

examples of tax expenditures

Who do tax exemptions benefit

the wealthy and businesses

tax reduction is ______ with voters

popular

After substantial tax cuts, government and deficit usually...

grow

How does tax burden of the U.S compare to other democracies?

Lower compared to most

Why has government grown so big due to...

public demand, social conditions, and economic downturns

Biggest category of federal expenditures

payment to individuals

Accounts for about one-fifth of the federal budget

national defense

During wars the _____________ increases

defense expenditures

Where does money for Social Security and Medicare come from?

Today's workers

This cycle of current workers paying for current retirees' social security and medicare creates an...

intergenerational contract

Why are there fewer workers per beneficiary than in the past?

decline in birth rates and elderly living longer

Last year's budget plus a little more

incrementalism

Exception to incrementalism?

NASA

Why is budget uncontrollable?

Two-thirds is automatic

President had a limited role in budgeting until...

The Budget and Accounting Act (1921)

Prepares the annual budget to submit to the president for approval

Office of Management and Budget (OMB)

Changes to laws and authorization that enables Congress to stick to its budget ceiling

reconciliation

Laws that allow agencies to spend at least last year's budget

continuing resolution

List the steps of budget resolution in order

reconciliation, authorization bills, appropriation bills, continuing resolutions

When does the process of preparing a budget start?

A year in advance

Reasons why government fails to balance the budget

spending on programs and pork barrel projects

The government is the instigating party, charging the defendant with violating specific laws

criminal case

Dispute between two private parties

civil case

Main objective of civil cases

money

Small group sues on behalf of a larger group who have all been injured

class action suit

"friend of the court" in which they are not a party, but provide information to help the case

amicus curiae

Has only original jurisdiction and determines the facts of the case

district courts

Most action takes place in _____ courts

state

Has only appellate jurisdiction and can only review/revise the decision of a lower court

court of appeals

Picks cases it sees and reviews cases from lower courts

U.S. Supreme Court

Federal court may review the legality of an individual's incarceration

habeas corpus

Main criterion used today in selection of supreme court justices

ideology/partisanship

Historically, _______ of judicial nominees have drifted in a different ideological direction

one-fourth

Four justices must vote in favor for a case to be heard

rule of four

Formal document calling up a case to the supreme court

writ of certiorari

What happens before oral arguments in the supreme court?

Briefs are read

In Supreme Court, each side has ________ to make their arguments

30 minutes

Justices who AGREE with the vote but not the reasoning may submit their opinion (not required and may not be necessary)

concurring opinion

Justices who DISAGREE with majority opinion write their opinion (not required)

dissenting opinion

Vast majority of cases are settled on the principle of ________ "let the decision stand"

stare decisis

U.S. Supreme Court claimed the power of judicial review for itself

Marbury v. Madison (1803)

How did FDR try to combat the "Nine Old Men?"

Pack the courts

Court that:

1. Had Brown as one of its first cases

2. Expanded rights of defendants

3. Prohibited school prayer

The Warren Court

Court that:

1. Ruled Roe v. Wade

2. Upheld affirmative action

3. Made Nixon turn over tapes

The Burger Court

What is the best single predictor of voters' evaluation of how the president is doing?

Economic conditions

Percentage of Americans who are looking for work but are unable to find it

Unemployment rate

Reports the unemployment rate

Bureau of Labor Statistics (BLS)

How much the cost of goods and services change over time

Consumer price index

Young people age 16-24 have the ________ rate of unemployment compared to other ages

highest

Principle that states that government should not meddle with the economy at all

Laissez-faire

The federal government's intervention in the U.S. economy has _______ since the stock market crash of 1929

grown

Two main tools government has to steer the economy

Monetary policy and fiscal policy

Monetary policy is determined by...

- Meets in secret

- manipulates the amount of money in circulation

The Federal Reserve Board (Fed)

Determines how much the government taxes, spends, and borrows

Fiscal policy

- Proposed during the Great Depression

- Government should spend money to stimulate the economy and provide jobs if the private sector was unable/unwilling to do so

- Consumers have money -> they buy goods and services -> gets the economy rolling

- Followed by most Democrats

Keynesian economic theory

- Followed by most Republicans

- Government should cut taxes to provide incentive for people to work harder

- If people get to keep more of what they earn, they can spend it

- Cutting regulation will stimulate supply of goods

Supply-side economics

Fees for imported goods from other countries to the United States

Tariffs

While the trend from both parties was to ______ tariffs, the Trump administration wanted to ______ tariffs

reduce; increase

Conservatives use this to argue that tax cuts will increase economic growth and benefit everyone

The Laffer Curve

Does the government or the private sector affect the economy more?

private sector

- Ex: Social Security, Medicare

- Payed by working people

- Largest and most expensive public policies administered by the federal government

Entitlement programs

- Ex: Foods stamps, Medicaid

- Controversial

- Supported by general tax revenue

Means-Tested programs

Value of assets

Wealth

Amount collected in a given time

Income

What type of tax is sales tax?

Regressive

- Ex: Social Security and Aid to Families with Dependent Children (AFDC)

- Issued by FDR during the Great Depression

New Deal programs

- Food stamps

- President Johnson

- Expanded FDR's safety net (1960)

War on Poverty

Campaigned to cut welfare benefits

President Reagan

- States run own welfare programs

- Two-year limit for benefits

- Lifetime maximum of five years

- Renamed AFDC to TANF

Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA)

- Proposed by President George W. Bush

- Put one-third of Social Security funds in _____

- Did not appeal to electorate

Private investments

56% of Americans get health care from...

employers

Government pays for nearly ______ of all health care costs

half

Health insurance program for the elderly

Medicare

Health insurance program for low-income Americans

Medicaid

Health insurance program for uninsured children and pregnant women in families with incomes too high to qualify for Medicaid but too low to afford private coverage

Children's Health Insurance Program (CHIP)