POLS /25/04 The Federal Budget and Process

Notes Take Chapter 16 Quiz Take Chapter 16 Quiz

What is a Budget? A sum of money allocated for a particular purpose. A sum of money allocated for a particular purpose. Set of decisions concerning the allocation of resources to meet goals of the public. Set of decisions concerning the allocation of resources to meet goals of the public. Schedule of projected revenues, expenditures, and capital outlays. Schedule of projected revenues, expenditures, and capital outlays.

Revenues by Source 2002

Comparing National Tax Burdens

2002 Expenditures by Type

Budget Concepts Balanced Budget – Revenues and Expenditures are equal. Balanced Budget – Revenues and Expenditures are equal. Budget Deficit – Expenses exceed revenues forcing the government to issue debt. Budget Deficit – Expenses exceed revenues forcing the government to issue debt. Budget Surplus – Revenues exceed expenditures, allowing government to pay-down debt. Budget Surplus – Revenues exceed expenditures, allowing government to pay-down debt. Pork Barrel Spending - Legislation that appropriates gov’t money for local projects of questionable value that may ingratiate a legislator with his or her constituents. Pork Barrel Spending - Legislation that appropriates gov’t money for local projects of questionable value that may ingratiate a legislator with his or her constituents.

Budget Surplus and Deficit

Growth in National Debt

Social Security Deficits

Budget Agencies OMB - Office of Management and Budget OMB - Office of Management and Budget –Created by Nixon, was previously the treasury department CBO – Congresssional Budget Office CBO – Congresssional Budget Office –Was created in 1974 by the Congressional Budget and Impoundment Control Act to give congress same level of detail as President

Budget Process OMB and President create initial budget to be submitted to the Congress OMB and President create initial budget to be submitted to the Congress House of Representatives considers budget and makes adjustments House of Representatives considers budget and makes adjustments Senate then considers budget Senate then considers budget Final details are worked out in joint committee Final details are worked out in joint committee

Budget Calendar Table 1. Congressional Budget Process Timetable DeadlineAction to be completed First Monday in FebruaryPresident submits budget to Congress. February 15CBO submits report on economic and budget outlook to Budget committees. Six weeks after President's budget is submitted Committees submit reports on views and estimates to respective Budget Committee. April 1Senate Budget Committee reports budget resolution. April 15Congress completes action on budget resolution. June 10House Appropriations Committee reports last regular appropriations bill. June 30House completes action on regular appropriations bills and any required reconciliation legislation. July 15President submits mid-session review of his budget to Congress. October 1Fiscal year begins.

Budget Calendar

Monetary Policy Monetary Policy Link Monetary Policy Link Monetary Policy Link Monetary Policy Link Inflation - An increase in the general price level of goods and services; alternatively, a decrease in purchasing power of the dollar. Inflation - An increase in the general price level of goods and services; alternatively, a decrease in purchasing power of the dollar. Inflation Recession - A downturn in economic activity, broadly defined by many economists as at least two consecutive quarters of decline in a nation's gross domestic product (GDP) Recession - A downturn in economic activity, broadly defined by many economists as at least two consecutive quarters of decline in a nation's gross domestic product (GDP) CPI – Consumer Price Index - a measure of the average change in prices over time in a market basket of goods and services. CPI – Consumer Price Index - a measure of the average change in prices over time in a market basket of goods and services.