American National Government Review Sheet Test 4 POLS 206 This is a list of general topics you will need to know in order to do well on the fourth test This test covers three chapters including the topics of the budget social welfare policy and national defense policy Establishes a discretion organizational government program set goals and maximum expenditures 1 Know the budget process Budgetary Politics Stakes and Strategies o o The Players o All political actors have a stake in budget Try and tie their budget needs to national or political needs Lots of players with the president and Congress playing important roles Almost all committees are involved in the budget The Senate Finance Committee The House and Ways Committee these two committees are extremely important they write our tax codes o o Increasingly important to our budget because it determines how much revenue we bring in The President s Budget Presidents originally played a limited role in the budget Now budget requests are directed through OMB and president before going to Congress The budget process is time consuming starting nearly a year in advance The OMB the president and the agencies negotiate budget responses Congress and the Budget Reforming the Process o o o o o The Congressional Budget and Impoundment Control Act of 1974 an act designed to reform the congressional budgetary process It establishes the following Fixed budget calendar A budget committee in each House The CBO which advises Congress on the probably consequences of its decisions forecasts revenues and its counterweight to OMB Budget has to be considered as a whole A budget resolution binds Congress to a bottom line for the budget before Congress considers appropriations The current budget is reconciled program authorizations are revised to achieve required savings o o o o o o o o o The new budget is authorized and appropriated Authorization Bill listed in 6 Appropriations Bill The Success of the 1974 Reforms More Reforms Between 1974 and 1998 every budget was a deficit budget Congress misses most of its own deadlines Congress passes continuing resolutions to keep the government going until it passes a budget Omnibus budget bills often contain policies that cannot pass on their own Congress passes bills to try and control the deficits By 1990 Congress focused on increases in spending Both parties claimed victory for the budget surpluses that began in 1997 Economic downturn income tax cuts and increase military expenditures brought a return to deficits by 2001 2 Know the appropriations process Who authorizes appropriations The appropriations process is the back half of the budget process o It s part of the budgetary process it must be authorized then appropriated o It funds programs within limits est by authorization bills Congress authorizes appropriations 3 What is incrementalism The idea that last year s budget is the best predictor of this year s budget plus some an increment Agencies can safely assume they will get at least what they got last year Focus and debate on the increase over last year s budget Budgets tend to go up each year 4 What is the military industrial complex President Eisenhower a five star general coined this phrase Meant to characterize and warn against the close relationship between military hierarchy and the defense industry that supplies its hardware needs programs authorizations are revised to achieve the required savings 5 What is budget reconciliation Reconciliation budget reconciliation Makes it easier for the budget to actually pass 6 What are authorization and appropriations bills Authorization Bill maximizes expenditures Appropriations Bill establishes a discretionary government program sets goals and funds programs within limits established by authorization bills 7 Which committees write tax codes in Congress The Senate Finance Committee The House Way and Means Committee They both control how much revenue the government gets 8 What is the budget and who prepares the budget for the President and for Congress Budget Office of Management and Budget prepares the budget OMB a policy document allocating burdens taxes and benefits expenditures 9 What are uncontrollable expenditures Spending determined by the number of recipients not a fixed dollar amount Many entitlement programs where the government pays known benefits to an unknown number of recipients E g Social Security The only way to control the expenditures is to change the rules 10 What is the major reason why the national debt increases Debt increases mainly because of deficits A big government requires a lot of money to operate As the size of the government increases so does the budget When expenditures don t meet the revenue leads to federal debt 11 Know where the U S government gets its revenues Income Tax shares of individual wages and corporate revenues o o The 16th Amendment permitted Congress to levy an income tax Individual taxes are the largest single revenue source for the government 50 of the population pays 0 of taxes o o It s progressive those with more income pay higher RATES of tax on their income Social Insurance Taxes o Taxes for specific funds Social Security and Medicare The Treasury Department sells bonds this is how gov t borrows money The federal debt is the sum of all borrowed money that is still outstanding The government compete with other leaders The government does not have a capital budget Borrowing o o o o 12 What are tax expenditures Revenue losses that result from special exemptions exclusions or Tax Expenditure deductions on federal tax law Tax Reform rewriting the taxes to change the rates and who pays them o Tax Reform Act of 1986 extensive tax reform Tax loophole tax breaks or benefits for a few people 13 Know the 16th Amendment Permitted Congress to levy an income tax adopted in 1913 14 What are social welfare policies Policies that provide benefits cash or in kind to individuals based on either entitlement or means testing Entitlement programs entitled to by law regardless of need government benefits that certain qualified individuals are o Medicare elderly 65 and older permanently disabled etc Social government programs only available to individuals Security Means testing programs below a poverty line o Medicaid 15 What is income distribution Income Distribution groups The shares of the national income earned by various o Income o Wealth o One third of America s wealth Is held by one percent of the population amount of
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