POLS 206American National GovernmentReview Sheet-Test 4This 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. 1) Know the budget process- Establishes a discretion organizational government program; set goals and maximum expendituresBudgetary Politics- Stakes and Strategieso All political actors have a stake in budgeto Try and tie their budget needs to national or political needs- The Playerso Lots of players, with the president and Congress playing important roleso 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 Increasingly important to our budget because it determines how much revenue we bring inThe 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 responsesCongress and the Budget- Reforming the Processo The Congressional Budget and Impoundment Control Act of 1974: an act designed to reform the congressional budgetary processo 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 OMBo Budget has to be considered as a wholeo A budget resolution binds Congress to a bottom line for the budget before Congress considers appropriationso The current budget is reconciled – program authorizations are revised to achieve required savingso The new budget is authorized and appropriated Authorization Bill (listed in #6) Appropriations Bill- The Success of the 1974 Reformso Between 1974 and 1998, every budget was a deficit budgeto Congress misses most of its own deadlineso Congress passes continuing resolutions to keep the government going until itpasses a budgeto Omnibus budget bills often contain policies that cannot pass on their own- More Reformso Congress passes bills to try and control the deficitso By 1990, Congress focused on increases in spendingo Both parties claimed victory for the budget surpluses that began in 1997o Economic downturn, income tax cuts, and increase military expenditures brought a return to deficits by 20012) 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 appropriations3) 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 year4) 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 needs5) What is budget reconciliation?- Reconciliation: programs authorizations are revised to achieve the required savings; [budget reconciliation]- Makes it easier for the budget to actually pass6) What are authorization and appropriations bills?- Authorization Bill: establishes a discretionary government program; sets goals and maximizes expenditures- Appropriations Bill: funds programs within limits established by authorization bills7) 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 gets8) What is the budget and who prepares the budget for the President and for Congress? - Budget: a policy document allocating burdens (taxes) and benefits (expenditures)- Office of Management and Budget prepares the budget (OMB).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 rules10) 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 debt11) Know where the U.S. government gets its revenues.- Income Tax: shares of individual wages and corporate revenueso The 16th Amendment permitted Congress to levy an income taxo *Individual taxes are the largest single revenue source for the governmento 50% of the population pays 0% of taxeso It’s progressive – those with more income pay higher RATES of tax on their income - Social Insurance Taxeso Taxes for specific funds Social Security and Medicare- Borrowingo The Treasury Department sells bonds – this is how gov’t borrows moneyo *The federal debt is the sum of all borrowed money that is still outstandingo The government compete with other leaderso The government does not have a capital budget12) What are tax expenditures?- Tax Expenditure : Revenue losses that result from special exemptions, exclusions, or deductions on federal tax law- Tax Reform: rewriting the taxes to change the rates and who pays themo Tax Reform Act of 1986 – extensive tax reform- Tax loophole: tax breaks or benefits for a few people13) Know the 16th Amendment?- Permitted Congress to levy an income tax; adopted in 191314) What are social welfare policies?- Policies that provide benefits, cash or in-kind, to individuals, based on either entitlement or means testing- Entitlement programs: government benefits that certain qualified individuals areentitled to by law, regardless of needo Medicare (elderly – 65 and older, permanently disabled, etc.), Social Security- Means testing programs: government programs only available to individuals below a poverty lineo Medicaid15) What is income
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