Chapter 14: Objectives/Notes

Explain the impact that "uncontrollable" expenditures and entitlements have on the federal budget.

1. About two-thirds of the federal budget is uncontrollable—based on expenditures that are determined not by how much Congress appropriates to an agency but by how many eligible beneficiaries there are for a particular program. 2. Although Congress legally can control such expenditures, it could do so only by changing a law or existing benefit levels. 3. Cutting benefits or tightening eligibility restrictions would provoke a monumental outcry from millions of older voters.

Outline the steps in developing the congressional budget process.

1. According to the Constitution, all federal appropriations must be authorized by Congress—a control sometimes called the "power of the purse." 2. The Budget Committees in each house are supposed to recommend target figures to Congress for the total budget size by April 1 of each year. 3. By April 15, Congress is to agree on the total size of the budget, which guides the Appropriations Committees in juggling figures for individual agencies.

Ascertain the importance of budget resolution, reconciliation, authorization, and appropriations.

1. In April of each year, both houses are expected to agree upon a budget resolution which would bind Congress to a total expenditure level that should form the bottom line of all federal spending for all programs. 2. Budget reconciliation revises program authorizations to achieve required savings. 3. Authorizations specify program goals, and set the maximum amount that discretionary programs may spend. 4. An additional measure, termed an appropriations bill, must be passed to actually fund programs established by authorizations bills. The appropriations bills cannot exceed the amount of money authorized for a program, but they may appropriate less than was authorized.

Evaluate the ways in which the budget affects the scope of government.

1. In many ways, the budget is the scope of government—the bigger the budget, the bigger the government. 2. The budget can be a force for reining in the government as well as for expanding its role. 3. One could accurately characterize policy-making in the American government since 1980 as the "politics of scarcity" — scarcity of funds for programs like health care reform and education. 4. America's large budget deficit is as much a constraint on government as it is evidence of a burgeoning public sector.

Explain how political scientists sometimes use the term incrementalism to describe the spending and appropriations process.

1. Incrementalism means that the best predictor of this year's budget is last year's budget plus a little bit more (an increment). 2. There is a never-ending call for budgetary reform. 3. Causes of incrementalism: (a) The support of relevant interests for spending programs makes it difficult to pare the budget. (b) The budget is too big to review from scratch each year. (c) More and more of federal spending has become "uncontrollable."

Identify the key players and decision makers in the budgetary process.

1. Interest Groups 2. Federal Agencies 3. The Office of Management and Budget (OMB) 4. The President 5. Tax Committees in Congress 6. The Budget Committees and the Congressional Budget Office (CBO) 7. The Subject Matter Committees 8. The Appropriations Committees and their subcommittees 9. The Congress as a whole 10. The General Accounting Office (GAO)

Discuss how the rise of the national security state and the rise of the social service state are associated with government growth in America.

1. National Security State: President Eisenhower coined the phrase "military industrial complex" to characterize the close relationship between the military hierarchy and the defense industry that supplies its hardware needs. The Pentagon wants weapons systems and arms makers want contracts, so they tend to be mutually supportive. 2. Social Sevice State: Since the inception of Social Security in 1935 and other social service programs, the rise of the social service state has contributed to America's growing budget in health, education, job training, and scores of other areas.

Explain how public opinion is a key element in the budgeting process.

1. Public budgets are the supreme example of Harold Lasswell's definition of politics as "who gets what, when, and how." 2. Budget battles are fought over contending interests, ideologies, programs, and agencies.

Determine how tax expenditures benefit middle- and upper-income tax payers and corporations.

1. Tax expenditures amount to subsidies for some activity, such as deductions for contributions to charities, deductions by homeowners for mortgage interest, and business deductions of investment in new plants and equipment at a more rapid rate than they can deduct other expenses 2. On the whole, tax expenditures benefit middle- and upper-income taxpayers and corporations. Poor people (who tend not to own homes) cannot take advantage of most such provisions.

Outline the steps involved in developing the president's budget.

1. The OMB now supervises preparation of the federal budget and advises the president on budgetary matters. A. Preparation of the budget: by law, the president must submit a budget by the first Monday in February. B. By summer, the president has decided on overall policies and priorities and has established general targets for the budget. C. During the fall, the agencies submit formal, detailed estimates for their budgets. D. In the winter, the budget document is readied for final presidential approval.

Identify the major sources of federal revenue.

1. The three major sources of federal revenues are the personal and corporate income tax, social insurance taxes, and borrowing. 2. Only a small portion comes from excise taxes (such as tax on gasoline) and other sources.

Identify the major recipients of federal tax expenditures.

Individuals receive most of the tax expenditures, and corporations get the rest.