Economic Public Policy Questions
The Federal Reserve Board ("The Fed")- what do they do?
-Conducting the nation's monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices. -Supervising and regulating banks and other important financial institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers. -Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets. -Providing certain financial services to the U.S. government, U.S. financial institutions, and foreign official institutions, and playing a major role in operating and overseeing the nation's payments systems.
What some of the regulating agencies of Government Regulation and what they regulate?
A regulatory agency (also regulatory authority, regulatory body or regulator) is a public authority or government agency responsible for exercising autonomous authority over some area of human activity in a regulatory or supervisory capacity. Such as: Consumer Product Safety Commission (CPSC): enforces federal safety standards. Environmental Protection Agency (EPA): establishes and enforces pollution standards Federal Communications Commission (FCC): regulates interstate and foreign communication by radio, telephone, telegraph, and television. Federal Deposit Insurance Corporation (FDIC): insures bank deposits, approves mergers, and audits banking practices. Federal Reserve System (the FED): regulates banking; manages the money supply. Federal Trade Commission (FTC): ensures free and fair competition and protects consumers from unfair or deceptive practices. Food and Drug Administration (FDA): administers federal food purity laws, drug testing and safety, and cosmetics.
In the budget process what is the role of Congress?
After the president submits his or her budget request, the House Committee on the Budget and the Senate Committee on the Budget each write and vote on their own budget resolutions. Then 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. And finally, the full House and Senate then debate and vote on appropriations bills from each of the 12 subcommittees. Then submits the finalized bills to the president to sign. Congress works with COB: Close Of Business Governmental
How much of our budget do Entitlements take up?
As of 2015 in spent $2.24 Trillion on Entitlements, and it took up 86.96% of the Mandatory Spending budget.
How much is spent on Discretionary Spending?
Discretionary spending refers to the portion of the budget that is decided by Congress through the annual appropriations process each year. These spending levels are set each year by Congress. Congress allocated $1.11 trillion in discretionary spending in fiscal year 2015. View Image: https://media.nationalpriorities.org/uploads/discretionary_spending_pie%2C_2015_enacted.png
Who better not be the next U.S. President???
Donald Trump
What are Entitlements?
Entitlement Programs of the federal government include Medicaid, Medicare, Social Security, Unemployment and Welfare Programs. Entitlement programs are rights granted to citizens and certain non-citizens by federal law.
Define the Fiscal policy.
Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply.
What is the trade policy GATT?
General Agreement on Tariffs and Trade (GATT) was a multilateral agreement regulating international trade. According to its preamble, its purpose was the "substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis." It was negotiated during the United Nations Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). GATT was signed by 23 nations in Geneva on October 30, 1947 and took effect on January 1, 1948. It lasted until the signature by 123 nations in Marrakesh on April 14, 1994 of the Uruguay Round Agreements, which established the World Trade Organization (WTO) on January 1, 1995.
Define Discretionary Federal Spending.
In public finance, discretionary spending is government spending implemented through an appropriations bill. This spending is an optional part of fiscal policy, in contrast to entitlement programs for which funding is mandatory.
In the budget process what is the role of The President?
In the beginning, the President submits a budget request to Congress each February for the coming fiscal year, which begins on Oct. 1. After Congress does all their work in between (See question: In the budget process what is the role of Congress? for explanation of Congress' role.) 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. President works with OMB: Office of Management and Budget
Define Keynesian Economics.
Keynesian economics are the various theories about how in the short run, and especially during recessions, economic output is strongly influenced by aggregate demand and total spending in the economy.
Define the Monetary policy.
Monetary policy is the macroeconomic policy laid down by the central bank. It involves management of money supply and interest rate and is the demand side economic policy used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity.
How much is spent on Non-Discretionary Spending?
Non-Discretionary mandatory spending makes up nearly two-thirds of the total federal budget. Social Security alone comprises more than a third of mandatory spending and around 23 percent of the total federal budget. Medicare makes up an additional 23 percent of mandatory spending and 15 percent of the total federal budget. A projected $2.45 trillion in mandatory spending will go in fiscal year 2015. View Image: https://media.nationalpriorities.org/uploads/mandatory_spending_pie%2C__2015_enacted.png
Define Non-Discretionary Federal Spending.
Not subject to or influenced by someone's discretion, judgment, or preference. Non-discretionary spending is spending that is required by a budget, contract, or other commitment. A non-discretionary law is one that is enforced absolutely, and not at the discretion of authorities.
What are the sources of federal revenue?
Some of the sources of federal revenue include individual income tax, payroll tax, corporate income tax, excise taxes, and social insurance tax.
Define Supply-Side Economics.
Supply-side economics is a macroeconomic theory which argues that economic growth can be most effectively created by investing in capital, and by lowering barriers on the production of goods and services.
What is the Budget and Impoundment Control Act of 1974?
The 1974 Congressional Budget and Impoundment Control Act modified the role of Congress in the federal budgetary process. It created standing budget committees in both the House and the Senate, established the Congressional Budget Office, and moved the beginning of the fiscal year from July 1 to October 1.
What were the Bush Tax Cuts of 2001?
The 2001 tax cut legislation, titled the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), was the most sweeping of the Bush tax cuts and set the stage for later legislation. Key features were a reduction in the top four income tax rates and the creation of a new 10 percent bracket.
What kind of impacts did the Bush Tax Cuts have?
The Bush tax cuts contributed, along with underlying economic conditions, to a historic decline in federal tax revenue. In 2000 total federal tax revenue was as high in proportion to the U.S. economy as it had ever been. By 2004 federal tax revenue in proportion to the economy had fallen to its lowest level in almost fifty years. By 2000, however, total federal tax receipts had reached 20.9 percent of GDP, their highest level since 1970 and matched only in 1944.Buy by 2004, federal tax receipts had fallen to 16.3 percent of GDP, which is not only the lowest level since 1970, but the lowest since 1959. In 2000 individual income taxes were 10.3 percent of GDP, their highest level ever. By 2004 individual income taxes had dropped to 7.0 percent of GDP, their lowest level since 1951. Total federal tax revenue declined by 4.6 percent of GDP from 2000 to 2004; of that total, 3.3 percentage points.
What were the Reagan Tax Cuts in 1981?
The Economic Recovery Tax Act of 1981 was a federal law enacted in the United States in 1981. It was an act "to amend the Internal Revenue Code of 1954 to encourage economic growth through reductions in individual income tax rates, the expensing of depreciable property, incentives for small businesses, and incentives for savings, and for other purposes". Included in the act was an across-the-board decrease in the marginal income tax rates in the United States by 23% over three years, with the top rate falling from 70% to 50% and the bottom rate dropping from 14% to 11%. This act slashed estate taxes and trimmed taxes paid by business corporations by $150 billion over a five-year period. Additionally the tax rates were indexed for inflation, though the indexing was delayed until 1985.
What is the Federal Trade Commission Act 1914?
The Federal Trade Commission Act was originally passed in 1914 with President Woodrow Wilson's enthusiastic support. In its current form, the act states that "unfair methods of competition ... and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful."
What is the Gramm-Rudman-Hollings Bill of 1985?
The Gramm-Rudman-Hollings Balanced Budget and Emergency Deficit Control Act of 1985 and the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 were "the first binding spending constraints on the federal budget".
What is the trade policy NAFTA?
The North American Free Trade Agreement (NAFTA) is an agreement signed by Canada, Mexico, and the United States, creating a trilateral rules-based trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada-United States Free Trade Agreement between the U.S. and Canada. NAFTA has two supplements: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).
What is the Sherman Antitrust Act 1890?
The Sherman Anti-Trust Act, approved July 2, 1890, was the first Federal act that outlawed monopolistic business practices. The Sherman Antitrust Act of 1890 was the first measure passed by the U.S. Congress to prohibit trusts.
The Federal Reserve Board ("The Fed")- what are they?
The Structure and Functions of the Federal Reserve System. The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. The members of the Board of Governors are nominated by the President of the United States and confirmed by the U.S. Senate. By law, the appointments must yield a "fair representation of the financial, agricultural, industrial, and commercial interests and geographical divisions of the country," and no two Governors may come from the same Federal Reserve District.
What is the trade policy WTO?
The World Trade Organization (WTO) is an intergovernmental organization which regulates international trade. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The WTO deals with regulation of trade between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments.
What is the budget process?
The budget process can be condensed into 5 steps. Step 1: The President Submits a Budget Request, Step 2: The House and Senate Pass Budget Resolutions, Step 3: House and Senate Subcommittees "Markup" Appropriation Bills, Step 4: The House and Senate Vote on Appropriations Bills and Reconcile Differences, and finally, Step 5: The President Signs Each Appropriations Bill and the Budget Becomes Law.
Define Reaganomics.
The economic policies of the former US president Ronald Reagan, associated especially with the reduction of taxes and the promotion of unrestricted free-market activity.
What is the largest source of federal revenue?
The individual income tax has been the largest single source of federal revenue since 1950, averaging 8 percent of GDP. Payroll taxes swelled following the creation of Medicare in 1965.
What kind of impacts did the Reagan Tax Cuts have?
The most impact and significant change of the Act was the indexing of the tax code parameters for inflation. Following enactment in August 1981, the first 5% of the 25% total cuts took place beginning in October. An additional 10% began in July 1982, followed by a third decrease of 10% beginning in July 1983. As a result of Tax Act of '81 and other tax acts in the 1980s, the top 10% were paying 57.2% of total income taxes by 1988, up from 48% in 1981, the bottom 50% of earners share dropping from 7.5% to 5.7% in the same period. The total share borne by middle income earners of the 50th to 95th percentiles decreased from 57.5% to the 48.7% between 1981 and 1988. In addition to changes in marginal tax rates, the capital gains tax was reduced from 28% to 20%. Afterwards revenue from the capital gains tax increased 50% by 1983 from $12.5 billion in 1980 to over $18 billion in 1983. In 1986, revenue from the capital gains tax rose to over $80 billion; following restoration of the rate to 28% from 20% effective 1987.
Define Monetarism.
The theory or practice of controlling the supply of money as the chief method of stabilizing the economy. A monetarist is an economist who holds the strong belief that the economy's performance is determined almost entirely by changes in the money supply. Monetarists postulate that the economic health of an economy can be best controlled by changes on monetary supply, or money, by a governing body.
What is Legislation? (What does it do? How does it apply to this topic?)
Those who have the formal power to create legislation are known as legislators; a judicial branch of government will have the formal power to interpret legislation; the executive branch of government can act only within the powers and limits set by the law. It relates because economics deals with the executive branch constantly.