Unit 11 AP Gov

Describe the process of creating the President's Budget

The president proposes/prepares the federal budget The president signs/vetoes legislation (related to taxing, spending, and borrowing) The congressional budget office to help oversee the process

Appropriations Committees and their subcommittees

The appropriations committee decides how money is appropriated...who gets what. How much to Spend on what agency. They hold hearings on specific agency requests. This is where different Agencies can go and beg/politic for their money

16th Amendment

The constitutional amendment adopted in 1913 that explicitly permitted congress to levy an income tax

The President

The decider, pres unveils the budget in early february, pres. Then lobbies congress to stick close to his Budget recommendations

Revenues

The financial resources of the government. The individual income tax and social security tax are two major sources of the federal government's revenue

Provide some examples of tax expenditures.

The gov COULD send big charity checks, permits taxpayers to deduct their contributions to charities from their income- encourages charity donations The gov COULD give money to families looking to buy a home, instead, allows homeowners to deduct from their own income the billions of dollars they collectively pay each year in mortgage interest

Laissez - Faire

"Hands free economy" .. the gov shouldn't interfere with the economy. We were close to this in the early industrial days (1880s to Teddy Rish) ... lots of regulations now, but you can still more or less do what you want...kind of. Gov has some say. Enjoy AP Econ next year, you'll learn all about it.

Supply side economics

(Reaganomics) we pay too much taxes therefore we can't spend money in the economy, so we should lower taxes so we can buy cars and things. This will help the economy.

Federal Reserve System (Primarily responsible for determining monetary policy in the US) - how does it give independence to establishing monetary policy?

(primarily responsible for determining monetary policy in the US)- how does it give independence to establishing monetary policy? It removes politics from monetary policy decision making congress/ the president can abdicate responsibility for difficult decisions by delegating decision making power The Federal Reserve Board relies on expertise when making decisions The Federal Reserve Board makes economic policies efficiently.

Budget

A policy document allocating burdens (taxes) and benefits (expenditures)

Social Security

A 1935 law passed during the Great Depression that was intended to provide a minimal level of sustenance to older Americans and thus save them from poverty

Continuing Resolutions

A continuing resolution is a type of appropriations legislation. An appropriations bill is a bill that appropriates (gives to, sets aside for) money to specific federal government departments, agencies, and programs.

Incrementalism

A description of the budget process where the best predictor of this year's budget, plus a little bit more (an increment)

Medicare

A program added to the social security system in 1965 that provides hospitalization insurances for the elderly and permits older Americans to purchase inexpensive coverage for doctor fees and other health expenses

Reconciliation

A reconciliation bill is a bill containing changes in law recommended pursuant to reconciliation instructions in a budget resolution. If the instructions pertain to only one committee in a chamber, that committee reports the reconciliation bill. If the instructions pertain to more than one committee, the House Budget Committee reports an omnibus reconciliation bill, but it may not make substantive changes in the recommendations of the other committees.

Agencies (Bureaucracy)

All agencies think they are the most important. FBI wants more money, EPA wants more money, National parks wants more money, etc. They are all going to lobby and argue for more money into Their budget. Ask for more than you need and end up getting exactly what you need. Agencies send their requests to the OMB and later get a chance to ask congressional committees directly.

Federal Debt

All the money borrowed by the federal government over the years and still outstanding. Today the federal debt is more than $9 trillion

Appropriations Bill

An appropriation bill or running bill or supply bill is a legislative motion (bill) that authorizes the government to spend money. It is a bill that sets money aside for specific spending. In most democracies, approval of the legislature is necessary for the government to spend money.

Authorization Bill

An authorization bill is a type of legislation used in the United States to authorize the activities of the various agencies and programs that are part of the federal government of the United States, distributing who gets money and for what

Deficit

An excess of federal expenditures over federal revenues

Tax Expenditures

Revenue losses that result from special exemptions, exclusions, or deductions on federal tax law

Budget Committees and Congressional Budget Office (CBO)

CBO is the congress version of OMB. It is also ¨over¨ the House and Senate budget committees.They set The congressional budget process and set limits and such for congress.

Congressional Budget and Impoundment COntrol Act of 1974

Congress used to put the budget together piecemeal... no one had any idea what the bottom line until the end. This would be like deciding what

Monetarism

Controlling the supply of money is key to economic health. Too much cash and credit leads to inflation

Inflation

Rise in price of consumer goods.

Keynesian economic theory

Democrats like this, gov spending and deficits can help the economy in bad times. Giv pumps $ into the economy, people have that money and spend it and we all live happily ever after

Congress as a whole

Entire congress must approve all taxes and appropriations. Pork barrel comes into play her. Lots of This revolves around elections and getting money back home so politicians can keep their jobs,

Uncontrollable expenditures

Expenditures that are determined not by a fixed fixed amount of money appropriated by Congress but by how many eligible beneficiaries there are for a program or by previous obligations of the government.

Expenditures

Government spending of revenues. Major areas of federal spending are social services and national defense

Mandatory Spending

In United States fiscal policy, mandatory spending is spending on certain programs that are required by existing law. In the United States, mandatory spending refers to budget authority and ensuing outlays provided in laws other than appropriations acts, including annually appropriated entitlements.

Discretionary 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.

Gross Domestic Product (GDP)

Monetary value of all US's goods and services...how much $ we are worth

Describe the difficulties that exist when trying to control the economy

Our economy is crazy complicated. Economic policy is created slowly and impacts the country's economy slowly, therefore the president does very little to actually impact current economic conditions, although they often get the credit/ blame...

Budget Resolution

Part of the United States budget process. It is in the form of a concurrent resolution passed by both the House of Representatives and the Senate but is not presented to the President and does not have the force of law. It sets out the congressional budget.

Entitlement programs - what are they and provide some examples (may not be in textbook) - more entitlement programs, more spending, bigger budget.

Policies for which congress has obligated itself to pay X level of benefits and to Y number of recipients. Social security benefits are an example.

Monetary policy- MONEY

Regulating the money supply Controlling inflation/ deflation Adjusting interest rates to regulate the economy Adjusting bank reserve requirements The cost of money

Interest Groups

Remember the Iron Triangle. The sierra club is going to lobby for more money for national parks and The EPA. Boeing lobbies for more defense money.

Immigration Policy- Simpson Mazzoli Act

Required employers to attest to their employee's immigration status; Made it illegal to hire or recruit illegal immigrants knowingly; Legalized certain seasonal agricultural illegal immigrants, and; Legalized illegal immigrants who entered the US before January 1, 1982, and had resided there continuously with the penalty of a fine, back taxes due, and admission of guilt; candidates were required to prove that they were not guilty of crimes, that they were in the country before january 1, 1982, and that they possessed minimal knowledge about US history, government, and the English language

Income Tax

Shares the individual wages and corporate revenues collected by the government. The sixteenth amendment explicitly authorized congress to levy a tax on income.

How does the economy impact voting

Strong economy we like the president (Reagan, Clinton) Weak economy, we don't like the president (HW, Bush, Carter) Truman: voters vote their pocketbooks

The Government Accountability office (GAO)

The GAO keeps an eye on the money that congress appropriates. They oversee what agencies are Doing with their money. If they are not spending it wisely, they might not get any next time.

The Office of Management and Budget (OMB)

The OMB works for the president, they are responsible for creating his budget, he can guide them, but The pres doesn't know much about all of the different agencies, so the OMB works independently (mostly) to create the budget for the president

Security and Exchange Commission

The SEC... they are a bureaucratic organization that regulates the stock market. Looks for things like insider trading and making sure that companies provide accurate information about their finance. Think about all the bad things that led to the 1929 crash...this is SUPPOSED to fix it.

Tax Committees in Congress (Ways and Means and Senate Finance)

These guys write the tax codes and get congress to approve it. This is important because the tax codes And gov revenue determine how much money the country has and how much it can borrow; therefore Affecting how much the country can spend in the budget

Fiscal Policy-FINANCES

This describes the impact of the federal budget (taxes, spending, and borrowing) controlled by congress and the president

Consumer Price Index

This measures inflation. Cost of living index, very complicated. Take economic numbers with a grain of salt.

Iron Triangles

Understand how bureaucracies and interest groups and congress all work together to make sure money is where they want it to be...interest groups have a large role in this through lobbying and research and providing information

Unemployment

Unemployment rate is calculated by people who want to work but can't find a job... this allows gov't to play with the numbers a little. How do you know who wants to work and who doesn't. Lots of variables.

Subject Matter Committees

When these committees write new laws, they need money to carry out those laws. Politicians will use These committees to sell their new laws and politic ways to get them more money, either by selling Their programs or by pointing out waste in other laws, agencies, and programs

Discretionary Spending

most anything that is not entitlement. Gov has discretion over how much is spent