Federal Budget

FEDERAL BUDGET THE BIG PICTURE

- Big political choices about the allocation of scarce resources - A budget as a blueprint- as a strategic plan and narrative o preferences and priorities - Policy choices include allocation among competing policies and programs

federal budget basics

- Federal budget is no different that household budget - Can run deficit when revenues and expenditure don't add up - Whats important in the budget is a one page letter that focuses on major priorities

federal income tax

- Progressive tax is a tax by which the tax rate increases as the taxable amount increases - Term applied to individual income tax, where people with more disposable incomes pay a higher %

taxes

- Raising taxes is blame avoiding - Our tax codes allows for expenditures- which allow for Americans to keep more but give gov't less

regressive TAX

- Sales tax, low income people tend to play a greater percentage of their income on taxable sales - Ex. Tom who earns $2,000 a month is friend's with Bernadette who earns $10,000, they both go to a supermarket and spend $100 sales tax is $8 or 8%, 8$ is .4% it is 0.08% of Bernadette's

reflects

- Vision of gov't under democracy is that the federal budget _______the values of a majority of americans (many disagree) - Many forces shape the federal government (ike laws or others)

mandatory spending

_________ programs are automatically funded each year without the requirement that congress and president enact legislation to pay for them -such a social security, medicare, Medicaid,a nd other programs (foodstamps, veterans, disability, benefits, insurance) - This includes interest payments on the federal debt

- Appropriations process

creates a new budget every year, specifies how much money will go to different gov't agencies, congress must pass legislation that provides legal authority to spend the money(these often cover multiple years and these authorizations allow for mandatory spending)

- Power of the purse

function of congress by constitution, includes authority to create and collect taxes and to borrow money when needed, but, constitution does not says how congress should exercise these powers or how the budget should work

five key steps in the federal budget process

1) The President submits a budget request to Congress; The president sends a budget request to Congress each February for the coming fiscal year, which begins on Oct. 1. 2) The House and Senate pass budget resolutions: After the president submits his or her budget request, the House Committee on the Budget and the Senate Committee on the Budgeteach write and vote on their own budget resolutions 3) House and Senate Appropriations subcommittees "markup" appropriations bills: The Appropriations Committees in both the House and the Senate are responsible for determining the precise levels of budget authority, or allowed spending, for all discretionary programs 4) The House and Senate vote on appropriations bills and reconcile differences: The full House and Senate then debate and vote on appropriations bills from each of the 12 subcommittees. 5) The President signs each appropriations bill and the budget becomes law: The president must sign each appropriations bill after it has passed Congress for the bill to become law. When the president has signed all 12 appropriations bills, the budget process is complete. Rarely, however, is work finished on all 12 bills by Oct. 1, the start of the new fiscal year.

BUDGET PROCESS

1) White house budget 2) Congressional budget 3) Congressional appropriatins

discretionary

Almost all defense spending is _______ as are the budget for K-12 education, bio medical research, and housing, to name just a few examples

appropriation action

Congress and president set discretionary spending each year through annual _____

spending

Each year, lawmakers determine how much the federal government will spend and where the money will be allocated among 15 cabinet departments and dozens of independent agencies and commissions. But the budget is more than just a tally of numbers. It also expresses the policy priorities of our government — and country. In 2016, total federal spending was $3.9 trillion — about one-fifth of the economy and $12,000 for each person living in the United States. That spending is divided into two large categories — discretionary spending and mandatory spending — that refer to the process used by lawmakers to make funds available.

Revenue.

The federal government finances its operations with revenues, including taxes, fees, and other receipts collected from many different sectors of the economy. In 2015, total federal receipts were $3.3 trillion, about 18% of GDP. The largest sources of tax revenue are the individual income tax and payroll taxes, followed by the corporate income tax, the excise tax, and estate and gift taxes.

Budget Process

The formulation of the budget is an annual process that involves the Congress, the White House and virtually all federal agencies. From start to finish, the process of formulating, legislating, executing and auditing the budget is complex and lasts over a period of four fiscal years