Chapters 13 Notes Review Federal Budget

Social Security, Unemployment Insurance, Medicare, Medicaid, Food Stamps (SNAP), Child Health Insurance Program (CHIP), and the Earned Income Credit are all ______________________. Entitlement Programs

national security and social services The two conditions most responsible for the growth of the federal budget are ___________________________ and ___________________________. national security and social services

the progressive tax system of the U.S. The reason over 40% of Americans don’t pay income taxes is due to _____________________________. the progressive tax system of the U.S.

OMB or Office of Management and Budget Which office prepares the president’s budget? OMB or Office of Management and Budget

Which two government programs make-up major parts of “uncontrollable expenditures” in the Federal Budget? Why are they uncontrollable? Social Security and Medicare. Because senior citizens feel entitled to those benefits as they have paid into the systems for their entire working careers. Also, they vote in the highest percentages and politicians are aware that.

A type of legislation used in the U. S A type of legislation used in the U.S. to authorize the activities of the various agencies and programs that are part of the federal government of the U.S.  Authorization Bill

Bill that authorizes the government to spend money Bill that authorizes the government to spend money. It sets money aside for specific spending. Appropriations Bill

Type of tax where the rate you pay increases as you earn a higher income. Progressive Tax

Type of tax where each taxpayer pays the same rate regardless of income level. Flat Tax

What is the problem with a Flat Tax. Poor people cannot afford to pay the tax as easily as the wealthy.

Continuing Resolution This is a type of appropriations legislation. If a regular appropriations bill isn’t passed the continuing resolution will keep funding at the same level as before for a specific time period. Continuing Resolution

Budget Deficit National Debt What is the situation where government spending exceeds tax revenues? Over a number of years, this overspending is known as ___________________. Budget Deficit National Debt

They sell Treasury Bonds aka Treasury Securities How does the government pay for its spending when tax revenues are insufficient? They sell Treasury Bonds aka Treasury Securities

Why is our increasing national debt ($20.5 Trillion) a major problem. It can raise interest rates, crowd-out private investment, cause inflation, and reduce public spending on education, infrastructure, entitlements, etc.

What is Intra-Governmental debt and who owns most of that debt? Debt owed to the government itself. It is mainly owned by trust funds like Social Security and Medicare.

What is the situation called where the government cannot sell any more Treasury Securities to pay for its overspending? The Debt Ceiling

What happens when the Debt Ceiling is reached and it isn’t increased? The government can only use tax revenues to pay for its spending. This could result in choosing between paying employees, social security, or interest on the national debt.

What are the biggest reasons for the growth in U. S What are the biggest reasons for the growth in U.S. government spending? The growth in Social Security and Medicare payments to a growing number of recipients (baby boomers!).

What is the Rise of the National Security State? The growth defense spending due to Cold War, War on Terror, the U.S.’s role as worldwide policeman, military pensions, the Military-Industrial Complex, and cost overruns.

What is the Intergenerational Contract and why is it under threat? The consensus agreement that the benefits to retired generations will be paid for by current working generations. It’s under threat due to the growing number of elderly (baby boomers!) and a lack of younger workers.

What are the biggest reasons for the growth in U. S What are the biggest reasons for the growth in U.S. government spending? The growth in Social Security and Medicare payments to a growing number of recipients (baby boomers!).

Why has the growth of democracy in the U. S Why has the growth of democracy in the U.S. contributed to the growth in government and spending? With universal suffrage, Americans with lower incomes have more power and can vote to redistribute wealth from the rich to the poor. Politicians pay attention to these people in order to gain their vote and get reelected..

What would be good arguments for why corporate elites actually like big government? They like government bailouts (such as GM, Chrysler, and big banks) and government contracts for defense industries.

Part of the U. S. budget process Part of the U.S. budget process. A form of concurrent resolution passed by both houses & president, but doesn’t have the force of law. It sets the congressional budget. Reconciliation

Continuing Resolution This is a type of appropriations legislation. If a regular appropriations bill isn’t passed the continuing resolution will keep funding at the same level as before for a specific time period. Continuing Resolution