1. CONGRESS, THE PRESIDENT, AND THE BUDGET

2. Every year Congress/President must appropriate funds.
Burdens: taxes
Benefits: expenders/money spent
Budget deficits occur when expenditures exceed revenues in a fiscal year.
Almost 9% of our expenditures are used to pay interest on a debt
EXCISE TAX: a tax levied on the manufacture, transportation, sale, or consumption of a goods

3. 3 TYPES SOURCES OF FEDERAL REVENUE
PERSONAL CORPORATE INCOME TAX
SOCIAL INSURANCE TAX
BORROWING

4. INCOME TAX
Before Social Security & income tax a tax on imported goods funded the federal govt.

5. TYPES OF INCOME TAX
PROGRESSIVE INCOME TAX: more income pay more taxes a higher right FLAT TAX: everyone taxed at same rate NATIONAL SALES TAX: same sales tax in all states

6. SOCIAL INSURANCE TAX
EMPLOYEES & EMPLOYERS PAY SOCIAL SECURITY TAX
(EMPLOYEES PAY IN EACH PAY PERIOD AND THE EMPLOYERS MATCH THAT AMOUNT)
$$ IS ADDED TO THE SOCIAL SECURITY TRUST FUND FOR ELDERLY/DISABLED/WIDOWED/UNEMPLOYED

7. BORROWING
TWO WAYS OUR FEDS BORROW: 1. TREASURE DEPT. SELLS BONDS AND PAY INTEREST TO THE BONDHOLDER citizens/corporations/mutual funds/& financial institutions

8. INTRAGOVERNMENTAL DEBT: debt owed to Social Security and other trusts funds because the govt. is using it to pay off bills
Most govt. borrowing is done for day-to-day expense
Federal debt: all money borrowed that is still owed…
US Debt Clock

9. Large deficits produce reliance on foreign govts and foreign investors hold a majority of our debts The issue: federal govt vs. lowering taxes Federal govt does not have a CAPITAL BUDGET: budget for expenditures on long term items Ex: equipments/roads

10. The Congressional Budget Office performs which of the following responsibilities?
It consists of a professional staff responsible for giving Congress budget projections and priorities and balancing the Office of Management and Budget priorities.
It consists of senators and representatives who keep watch over committee spending.
It consists of members of the executive and legislative branches who oversee congressional spending.
It is made up a congressional assistants who manage the spending of their superiors.
It consists of members of the state department who are responsible for overseeing congressional spending.

11. Which of the following statements concerning economic policies in NOT correct?
The term inflation refers to overall rising price levels in the economy due ot excessive consumer demand or spikes in the costs of producing goods.
Discretionary spending deals with programs that Congress can choose whether or not to fund.
A flat tax is tax rate that escalates the more income one earns.
The term fiscal year for the federal govt. refers to the period from Oct. 1 to Sept. 30.
Mandatory spending refers to budget items Congress is required to fund.

12. The federal government may borrow money from all the following EXCEPT:
trust funds
foreign investors
commercial banks
money market funds
the United States Treasurey

13. Over the past 20 years, which of the following areas has shown the greatest increase in budgetary spending?
the defense budget
federal operations
federal grants
discretionary spending
entitlements