Gov 14 The Federal Budget and Social Security
F. CUSTOM DUTIES
1. Custom duties or tariffs are taxes levied on goods brought into the United States from abroad.
D. EXCISE TAXES
1 . An excise tax is a tax on the manufacture, sale, or consumption of a good or service.
E. ESTATE AND GIFT TAXES
1. An estate tax is a levy imposed on the assets of someone who dies. A gift tax is a levy imposed on a gift from a living person to another. 2. Estate taxes currently generate 1 .2 percent of federal tax revenue.
INTRODUCTION. A. KEY TERMS
1. Budget ~ A financial plan for the use of money, personnel, and property. ~ The federal budget for 2010 is$ 3.6 trillion.
D. CONSEQUENCES OF BUDGET DEFICITS
1. Budget deficits require huge interest payments. In 2008, the federal government paid $249 billion just to service the debt.
FEDERAL EXPENDITURES. A. UNCONTROLLABLE SPENDING
1. Congress and the president have no power to directly change uncontrollable spending. 2. Over 60 percent of all federal spending now falls into the uncontrollable category.
B. CORPORATE TAXES
1. Corporations pay a tax that ranges from 15 percent to 35 percent of taxable income. 2. Corporate income taxes generated approximately 12 percent of federal tax revenue.
B. DISCRETIONARY SPENDING
1. Discretionary spending programs are not required by law. 2. Defense, education, agriculture, highways, research grants, and government operations are all examples of discretionary programs.
C. SOCIAL INSURANCE TAXES
1. Employers and employees each pay a Social Security tax equal to 6.2 percent of the first $106,800 of earnings.
C. BUDGET BARRIERSTO ACHIEVING A BALANCED BUDGET
1. Entitlement programs now account for over 60 percent of the total federal budget. Th is limits what the president and Congress can do to achieve a balanced budget.
SOCIAL SECURITY A. BACKGROUND
1. Franklin D. Roosevelt signed the Social Security Act into law in 1935. 2. In 1965, Congress added Medicare to the Social Security program. Medicare is designed to assist the elderly with medical costs.
B. POLICY TOOLS FOR INFLUENCING THE ECONOMY
1. Monetary policy ~ Monetary policy is controlled by the Federal Reserve Board. ~ Monetary policy includes regulating the money supply, controlling inflation, and adjusting interest rates.
B. CONGRESS AND THE BUDGET
1. The Congressional Budget and lmpoundment Control Act of 1974 ~ Designed to reform the congressional budgetary process and regain power previously lost to the executive branch.
SOURCES OF FEDERAL INCOME. A. INDIVIDUAL INCOME TAX
1. The Sixteenth Amendment (1913) permitted Congress to levy an income tax.
THE BUDGETARY PROCESS. A. THE PRESIDENT AND THE BUDGET
1. The president initiates the budget process by submitting a proposed budget to Congress.
B. DEMOGRAPHIC TRENDS THAT THREATEN THE FUTUREOF THE SOCIAL SECURITY PROGRAM
1. When the Social Security program began, there were 25 workers for every 1 beneficiary. Today the ratio is 3.3 workers for every 1 beneficiary.
Section 2 Preparing the Federal Budget
The federal budget expresses important political choices by the president's administration. The law requires the president to propose to Congress the budget for the entire federal government each fiscal year.
Section 3 Managing the Economy
The federal government plays an increasing role in managing the nation's economy.
Section 1 Raising Money
Two major sources of government revenue are taxes and borrowing. The individual income tax is the federal government's biggest single source of revenue.