Federal Budget & The Economy Notes

Fiscal Policy

The federal government’s efforts to manage the economy through its power to tax and spend.

Power of the purse

The authority held by Congress over taxation, borrowing, and spending.

Mandatory Spending

Spending that is required by law, which includes entitlement programs such as Social Security, Medicare, and Medicaid.

Discretionary Spending

Spending that the government can adjust on an annual basis; includes defense and non-defense spending such as education and infrastructure.

Keynesian Economics

An economic theory advocating for government spending to stimulate the economy, particularly during recessions.

Supply-Side Economics

An economic theory focusing on tax cuts and deregulation to increase productivity and investment.

Monetarism

An economic theory that emphasizes the role of governments in controlling the amount of money in circulation.

Fiscal Year

The federal government's accounting period, running from October 1st to September 30th.

Troika

The term referring to the trio of key economic advisors consisting of the Council of Economic Advisers, Treasury Secretary, and Director of the Office of Management and Budget.

Interest payments on the national debt

Mandatory expenditures that are used to pay interest owed on national borrowing.

Federal Reserve (FED)

The independent central bank of the United States, responsible for managing monetary policy.

Budget Calendar

The schedule that outlines when the federal budget is prepared, submitted, and enacted.

Entitlement Programs

Programs that provide benefits to individuals meeting eligibility criteria, such as Social Security and Medicaid.

Discount Rate

The interest rate at which banks can borrow from the Federal Reserve.

Open Market Operations

The buying and selling of government securities by the Federal Reserve to influence the money supply.

Veto Power

The President's constitutional power to reject legislation passed by Congress.

Social Security

A federal program that provides retirement and disability benefits, classified under mandatory spending.