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AP government Chapter 14

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Yee Yip

on 29 April 2013

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Transcript of AP government Chapter 14

Chapter 14 The Congress,
the President, and
the Budget: The Politics of Taxing and Spending Federal Expenditures The Budgetary Process Budgetary Politics The President's Budget Congress and the Budget Incrementalism Rise and Decline of the
National Security State The Rise of the Social Service State - 37% of GDP is spent by government
- Big budgets are necessary to pay for
big governments
- Many scholars believe that the public
sector expands principally in response to
changes in the public’s preferences and
to economic and social conditions that
affect the public’s level of demand for
government activity

Income Tax Borrowing Social Insurance Taxes Sources of Federal Revenue -briefly established during civil war and in 1894,
immediately declared unconstitutional 
(Pollock v. Farmer's Loan and Trust Co.)
- in 1913, sixteenth amendment ratified
explicitly permits CONGRESS power to levy an income tax
-income tax is generally progressive, higher income
receives a higher tax rate - social security taxes
money deducted from paycheck and matched by employers

- earmarked for special purposes such as
elderly and unemployed 

- The money is earmarked for the Social
Security Trust Fund. - treasury department sells Bonds to
supplement government income.
Interest guaranteed
- increases federal debt
-federal debt, all money borrowed over 
- government lacks income and capital
budget, must borrow to create funds for
long term expenditures - overruns or under estimations are common
- In the 1950s and early 1960s, the most expensive part
of the federal budget was military budget
- Payrolls, pensions, research, development, and
procurement are the major parts of the defense
- The defense budget now only constitutes about one-
sixth of all federal expenditures.
- social welfare expenditures are the most expensive
part of the federal budget
- income security expenditures holds largest budget
money to the elderly poor and needy
- 1935 FDR social security act: intended to provide a
minimal level of sustenance to older Americans,
saving them from poverty
- Social Security and Medicare was added in 1965
Social Security: money is taken from the working members of the population and spent on the retired members.
Medicare: both hospital and physician coverage
- incrementalism: theory stating past estimate
is previous years budget plus en extra
- Incremental budgeting has the following features:
1) very little attention is focused on the budgetary
2) agencies can usually assume they will get at least
what they got the previous year
3) most of the debate on the budget is focused on
the proposed increment
4) the budget for any given agency grows by a
little bit every year.
- Every political actor has a stake in the budget
- Budgetary politics resembles a game in which players
choose among strategies- stakes a strategies a game
of competitions for funds
-interest groups
-office of management and budget
- the president
-tax committees in congress
- budget committees
- the Congressional Budget Office
-Appropriations committee
-The Congress
- General Accounting Office. - various agencies of the executive branch sent their
budget requests to the secretary of the treasury,
who in turn forwarded them to the Congress
- The Budget and Accounting Act of 1921 required
presidents to propose an executive budget to
Congress and created the Office of Management
and Budget to help them
takes almost a year to prepare a presidential budget
due the first Monday of February
Back and forth between agencies and the OMB concerned the amount of money necessary to run the agency. - reforming the process
congressional budget and impound control act of 1974
authorization bill, congressional act that establishes or aids a discretionary government program
- the success of the 1974 reforms
continuing resolutions, allowing organization to spend at previous years budget Zac
Didi Taxes and Public Policy - tax loopholes
commonly deduction of expenses that are common among the wealthy
- tax expenditures
a special exemption exclusion or deduction of tax
- tax reform act of 1986
eliminated or reduced value of many tax deductions, removed several million low-income individuals from the tax rolls, greatly reduced the number of tax brackets. - policies that automatically create
eligible groups for benefit
- often called entitlements
- The biggest uncontrollable expenditure
is the Social Security system
- About two-thirds of the federal budget
is uncontrollable "Uncontrollable Expenditures" Big Governments, Big Budgets Budgeting - popular opinion and desires drive financial planning
- corporations against government interference
pleaded for bailouts
- Parties must appeal to a majority of the voters
- Many politicians willingly cooperate with the desire
of the working-class voters to expand their benefits. - corporations support a big government that offers
them contracts, subsidies, and other benefits
low-income and wealthy voters alike have voted for parties and politicians who promised them benefit
- Government also grows by responding to groups
and their demands Democracy and Budgeting The Budget and the Scope of Government - The budgetary process can limit
- The budget can be a force for reining in the
government as well as for expending its
- America’s large budget deficits have been as
much a constraint on government as they
have been evidence of a burgeoning public
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