Assignment 2 Topics: Federal Budgets and Revenue Forecasting

Notes for Assignment 2 from Lectures 2 & 3

incrementalist view

open to more smaller changes (ex: slightly upgrading last year’s budget)

budget and accounting act

established: supplemental appropriations, Office of Management and Budget, Government Accountability Office

congressional budget and impoundment act

established: fiscal year from Oct 1-Sep 30, Congressional Budget Office (CBO), house and senate budget committees

congressional budget office (CBO)

develop plan for budget, help stay within budget

balanced budget and emergency deficit control act

established: deficits targets, formula sequestration to enforce targets (declared unconstitutional because OMB made final budget decisions if deficits arise)

budget enforcement act

estbalished: mandatory and discretionary spending categories, pay as you go requirement, discretionary spending controls/caps

line item veto act

established presidential power to veto discretionary or direct spending or tax benefits in signing bill on join resolution (unconstitutional b/c congress can’t give the president this power)

pay as you go act

can’t bring up entitlement programs or tax cuts w/o paying for it

budget control act

established: firm discretionary spending caps through fiscal year 2021

discretionary powers

spending for both defense and nondefense spending

mandatory spending

spending according to definitions of eligibility and benefit (don’t go through appropriation process)

appropriations authority

federal agencies may incur obligations and make payments from treasury for speciifc purposes

contract authority

allows agencies to enter into binding contracts even before obligations are incurred

borrowing authority

allows agency to incur and liquidate obligations from borrowed funds from (treasury, public, or federal funding bank)

loan & loan guarantee authority:

allows agency to pledge and pay all or part of principal and interest to a lender if the borrower defaults

entitlement authority

allows authority to make payments for which budget authority is not provided in advance to any person of government, if the US government is obligated to make payments to persons or government who meet the requirements established by law (tldr: there is no appropriation budget for entitlement programs)

office of tax analysis (in the department of treasury)

who prepares revenue forecasts?

revenue baseline

what does revenue forecasting predict?

static component

taxpayers do not alter their behaviors

dynamic component

taxpayers respond when tax laws change

executive, legislature, joint committee, professional manager

who prepares the budget?

rosy scenarios

unrealistic economic activity

one-s-hots

government sells property

interbudget maniupulation

take captial budget off budget

bubbles and timing

get revenue before end of fiscal year

ducking the decision

playing the intergovernmental system

magic asterisk

savings to be identified later/we’ll make cuts laterp

punt the pension

taking money out employees wages and spending it

securitization