25.1 The Federal Government

What are the two main parts of the federal budget?

The federal budget contains two main parts-revenues and expenditures.

What is the period of the federal government's fiscal year?

The government uses a fiscal year, a 12-month period that may or may not match the calendar year.

For what do payroll taxes pay?

The second-largest source of federal income is payroll taxes, which are deducted from a worker's paycheck to fund Social Security and Medicare.

What are proportional taxes and progressive taxes?

With a progressive tax, like our federal income tax, the tax rate increases as income increases while a proportional tax takes the same percentage of income from everyone, regardless of how much he or she earns.

Aside from income and payroll taxes, what are four other sources of federal revenue?

Excise tax, estate taxes, entry fees to national parks, and taxes on gifts.

What is the process by which appropriations bills are passed?

Appropriation bills must be approved by both houses and either signed into law or vetoed by the president by October 1st.

What is the single largest spending category in the federal budget?

Social Security was the largest single spending category.

How are mandatory spending and discretionary spending different?

Spending that does not need annual approval is called mandatory spending while discretionary spending is government expenditures that must be approved each year.