Government Budgeting, Revenues, and Expenditures: Key Concepts and Policies

budget

A policy document allocating burdens (taxes) and benefits (expenditures). A budget is a plan that shows how the government will get and spend money.

expednitures

Government spending. Major areas of federal spending are social services and national defense. Expenditures are the money the government spends

What are revenues?

The financial resources of the government.

What are two major sources of the federal government's revenues?

Individual income tax and Social Security tax.

What does the government collect as revenues?

Money.

income tax

Income tax is money taken from what people earn.

16th Amendment

adopted in 1913 that explicitly permitted congress to levy an income tax.

deficit

When there is more federal money spent than the government's actual revenue

national debt

The money borrowed by the national government has not been paid back yet

tax expenditures

Revenue losses that result from special exemptions, exclusions, or deductions on federal tax law.

Social Security

A law that provides support to older Americans, disabled, and the children of disabled.

Medicare

A medical program added to social security that provides health insurance for the elderly that covers medical bills and has other benefits.

incrementalism

A budgeting method where the government makes small changes to last year's budget instead of starting from scratch.

What are uncontrollable expenditures?

Government spending that Congress cannot easily change.

What is an example of uncontrollable expenditures?

Interest on the national debt.

entitlements

governemtn rpograms that proide befnits to those who meet the eligbility requirements

House Ways and Means Committee

The House committee responsible for creating tax laws and raising government revenue.

Senate Finance Committee

The Senate committee that oversees taxation, revenue, and entitlement programs.

Congressional Budget Office

a nonpartisan federal agency established to provide objective economic analysis, budgetary information, and cost estimates for Congress, supporting informed legislative decisions on spending and revenue

budget resolution

Congress' budget blueprint with overall revenue targets for the year

reconciliation

fast-tracked congressional process to pass budget-related legislation with simple majority votes

authorization bill

a bill which authorizes(grants permission to agencies for programs themselves to exist

appropriations bill

a bill which allocates a certain budget for a program after it is authorized

What is the Balanced Budget Amendment?

A proposed constitutional amendment.

What does the Balanced Budget Amendment require the federal government to do?

Spend no more money than it collects in revenue.

Budget Control Act 2011

A law passed to reduce the federal deficit by placing limits on government spending.

Citizens United v. Federal Election Commission

A Supreme Court case that ruled corporations and unions can spend unlimited money on political campaigns, as long as it is independent of candidates.

Conference Committee

A temporary, bipartisan group of House and Senate members formed to resolve differences between versions of the same bil

Continuing Resolution (CR)

Continuing Resolution extends funding for federal agencies until new appropriation bills become law.

Debt

Total amount of money that is owed from borrowing to cover budget deficits over time

Debt Ceiling

The amount by which the debt being held that the U.S may borrow to fund for programs, such as Social Security, Medicare etc.

Disbursements

The act of paying out money from a certain fund to provide for a specific purpose (loans and grants, etc).

Discretionary Spending

The unneeded expenses that the government pays, which is not to provide for mandatory needs or services.

What are earmarks in the context of funding?

Earmarks are funds that are designated for a specific purpose.

What does it mean to assign funding to a specific area or sector?

It means to allocate resources for a particular use or project.

Excise Taxes

Taxes placed on specific goods or activities, such as gasoline, tobacco, alcohol, or airline tickets. These taxes are often included in the price you pay and are sometimes used to discourage certain behaviors.

Federal Debt

Money collected by the federal government through taxes and borrowing is used to pay for national programs and services such as defense, education, and healthcare.

Fiscal year

A twelve-month accounting period used by the federal government to plan, track, and manage its budget and spending rather than using the calendar year.

What does GAO stand for?

Government Accountability Office

What type of agency is the Government Accountability Office?

An independent, nonpartisan agency

Who does the Government Accountability Office work for?

Congress

What are the main functions of the GAO?

Monitoring, auditing, and evaluating how federal agencies spend taxpayer money

What does GDP stand for?

Gross Domestic Product

What does GDP measure?

The total dollar value of all finished goods and services produced within a country's borders during a specific time period.

What is the typical time period for measuring GDP?

Usually one year.

Mandatory Spending

The Federal money that is spent based on existing laws for specific programs.

Office of Management and Budget (OMB)

A federal office within the Executive Branch that helps the President prepare the federal budget and oversees how executive agencies use their funds.

Omnibus

A single, large bill that combines many different measures or funding items into one package.

President's Budget

A plan proposed by the U.S. President that shows how the government expects to collect and spend money for the next year.

What is a progressive tax system?

A tax system where people with higher incomes pay a higher percentage of their income in taxes.

Who pays a higher percentage of their income in a progressive tax system?

People with higher incomes.

Who pays a lower percentage of their income in a progressive tax system?

People with lower incomes.

Social Insurance

Government programs funded through taxes that provide financial protection against specific risks.

What is a subsidy?

Direct assistance from the federal government to individuals or businesses.

What is the purpose of a subsidy?

To help defray the costs of certain activities.

Surplus

Excess revenue - when income exceeds expenses

Trust Fund

Money held by a third party in trust and earmarked for specific outlay in services to selected beneficiaries

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