1. Federal Budget and Budgetary Process

2. Budget A financial plan for the use of money personnel or resources.
The federal budget indicates the amount of money the federal government expects to receive and authorizes government spending for a fiscal (12month) year.
Federal budget for 2017 was
3.65 Trillion

3. Balanced Budget When expenditures equals revenue.
Spending equals income

4. Budget Deficit Expenditures exceed revenue
2017 deficit was approx. $443 million
Federal debt is the total amount owed
Exceeds $17 Trillion

5. Monetary Policy Tool for influencing the economy Controlled by ????
Includes ?????

6. Fiscal Policy Controlled by executive and legislative branches
President proposes the budget, congress approves it
Raising and lowering taxes and government spending programs

7. Sources of Federal Income

8. Income Taxes Income taxes permitted by the 16th amendment Progressive
Proportionate to income, as income increases so does the amount of the tax
Regressive
Levied at a flat rate without regard to the level of income or ability to pay
Poor citizens pay a higher percentage of their income as compared to wealthier citizens
About 45% of tax revenue

9. Corporate Taxes Ranges from 15 to 35%
Generate approximately 12 percent of the federal tax revenue

10. Social Security Taxes Paid by employers and employees
6.2% of the first $106,800 of earnings
Medicare an additional 1.45% for both
Regressive, levied at a fixed rate
Generate about 36% of the federal tax revenue

11. Excise Taxes
Tax on the manufacture, sale or consumption of a good or service
Imposed on the sale of gasoline, tobacco, alcohol, airline tickets, and many other goods and services
2.7% of the federal tax revenue

12. Estate and Gift Taxes Estate Tax Gift Tax
Imposed on the assets of someone who dies
Gift Tax
Imposed on a gift from a living person to another over a certain amount
About 1.2% of the federal tax revenue

13. Custom and Duties Aka Tariffs Levied on goods brought into the US
About 1.1% of the federal tax revenue (increasing under current administration)

14. Other Sale of government securities
Collection for fees for services, such as issuing patents

15. Federal Expenditures

16. Uncontrollable Spending
Neither the president or congress can control spending, it is set by law
Over 60% of all spending falls into this category

17. Entitlements
Federal programs that guarantee a specific level of benefits to persons who meet requirements set by law
Person is “entitled” to benefits if they meet the criteria set by the federal government
Spending on entitlements is mandated by the Federal law
Make up over 44% of federal
spending

18. Examples -Social Security -Medicare -Medicaid -V.A. Programs
-Unemployment Programs
-Food Stamps
-Retirement Plans for Federal Employees

19. Entitlements Provides needed benefits to American citizens
Positives
Negatives
Provides needed benefits to American citizens
Government cannot delay or avoid payment in the budget
No Congressional discretion on money allotted
2/3 of budget
Less money for discretionary spending

20. Social Security Signed into law by FDR in 1935 1965 added Medicare
Designed to lift America out of the Great Depression
Pay retirement benefits
Spouses may receive death benefits
If you are unable to continue working you may be eligible for benefits.
1965 added Medicare
Designed to assist the elderly with medical costs
Most expensive programs
in the federal budget

21. Demographic Trends that Threaten Social Security
In 1935 there was 1 beneficiary to every 25 workers
Today the ration is 1 beneficiary to every 3.3 workers
Baby boom generation incudes 76 million people,
As the baby boomers begin to retire the number of workers who fund SS will decrease while those collecting will increase
Life expectancy is increasing, leading to people collecting for longer

22. Borrowing Debt now exceeds 17 Trillion dollars
5 to 9 percent of federal expenditures goes to paying the interest on the debt
If interest rates rise so does the amount needed to pay the interest on the debt

23. Discretionary Spending
Not required by law
Defense, education, agriculture, highways, research grants, and government operations
Defense accounts for about 20% of all federal expenditures

24. The Budget Process
Proposed at the State of the Union Message in January or Separately in early February

25. Office of Management and Budget (OMB)
OMB sends instructions to agencies
Agencies send requests to OMB
OMB revises the budget

26. Congressional Budget and Impoundment Act 1974
Designed to reform the process
Regain power lost to the executive branch
Created a fixed budget calendar
Established a budget committee in both houses of congress
Created the CBO to evaluate the presidents budget, and advise congress by forecasting revenue and evaluating the probable consequences of budget decisions

27. Congressional Budget Office (CBO)
President submits budget to Congress by the first week in February
Reflects the priorities and goals of the president's policy agenda
CBO looks over and sends report to both chambers of Congress

28. Appropriations Committee
The appropriations committee holds hearings and sets budget targets
Reconciliation bills are made if budget does not meet targets

29. Finalizing the Budget
By October 1st, all appropriations bills should be passed
If they are not passed, Congress has to pass a continuing resolution where agencies run on last year’s budget or shut down

31. Barriers to a Balanced Budget
Entitlement programs now account for 60% of the total budget
Limits the options that the president and Congress have
Agencies assume a increase in their annual budget each year
Called incrementalism, makes it difficult to cut spending

32. More Barriers
Fragmented federal system enable interest groups to resist tax increases and defend favored programs

33. Consequences of a Budget Deficit
Require huge interest payments
2008, $249 billion to service the debt
Place a heavy burden on future generations
Make it difficult to fund key policy goals

34. 5.10 The Executive and the Media

35. Public support
Everything here is built on the idea that the President's success depends on grassroots support”
Ronal Regan

36. Approval levels National Poll asking
“do you approve or disapprove of the way (name of President) is handling his job as President?”
Data shows these factors increase the rating
Honeymoon periods at the beginning of an administration
Positive media coverage of activities and decisions
Foreign policy successes
Foreign crisis that produce a “rally round the flag” effect
Strong economic growth and low unemployment

37. Factors that lower approval ratings
Scandals involving the president and or his top aides
A gap between high expectations and poor job performance
Foreign wars that go badly over a protracted period of time
Weak economic growth and high unemployment

38. Lame Duck A time period in which
The president’s term is about to come to an end. Typically have less influence during a lame-duck period

39. The President and the Media
Key role in influencing public view
President is more successful than Congress in using media to set policy
Policy agenda is
Set of issues and problems that policy makers consider important
Significantly influenced by mass media and their choice of what to focus on

40. Factors that give the president an advantage
President represents the whole nations, vs congress representing districts or states
Leader of the “free world”
More powerful than any 1 member of Congress
Speaks with a single voice, in contrast to the 535 of Congress