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Published byKenneth Smith Modified over 8 years ago
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Congress, the President, and the Budget
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The debt and the deficit Budget deficit – spending > revenues in a year Budget deficit – spending > revenues in a year Budget surplus – spending < revenues in a year Budget surplus – spending < revenues in a year When we run a deficit, we have to borrow $; we borrow $ by selling bonds When we run a deficit, we have to borrow $; we borrow $ by selling bonds National debt – the sum of all the $ the U.S. owes National debt – the sum of all the $ the U.S. owes
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Revenues 16 th amendment created the income tax 16 th amendment created the income tax Progressive taxes – tax rate increases with income (income tax) Progressive taxes – tax rate increases with income (income tax) Social Security taxes – used for Soc. Sec.; paid by both employees and employers Social Security taxes – used for Soc. Sec.; paid by both employees and employers Most tax revenue comes from individual income taxes Most tax revenue comes from individual income taxes Tax expenditures – tax deductions, credits, etc. that reduce individuals’ taxes Tax expenditures – tax deductions, credits, etc. that reduce individuals’ taxes Taxes in U.S. are among the lowest in the world Taxes in U.S. are among the lowest in the world
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Expenditures Social Security, Medicare & Medicaid, defense, interest on the debt, other discretionary spending Social Security, Medicare & Medicaid, defense, interest on the debt, other discretionary spending Uncontrollable (mandatory) spending – dependent on # of people who qualify; $ is not controllable by Congress (Soc. Sec., other entitlements, interest on the debt) Uncontrollable (mandatory) spending – dependent on # of people who qualify; $ is not controllable by Congress (Soc. Sec., other entitlements, interest on the debt) Discretionary spending -- $ Congress can control (defense, education) Discretionary spending -- $ Congress can control (defense, education)
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The Budget Process Depts. and bureaucratic agencies submit requests to OMB (Office of Management & Budget – in the EOP) Depts. and bureaucratic agencies submit requests to OMB (Office of Management & Budget – in the EOP) OMB puts together budget OMB puts together budget President makes changes & submits to Congress President makes changes & submits to Congress Congress has the final say Congress has the final say Taxes – House sees it first; Ways and Means and then Senate Finance Taxes – House sees it first; Ways and Means and then Senate Finance
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Terms to know Entitlements Entitlements Authorization bill Authorization bill Appropriations bill Appropriations bill Budget resolution Budget resolution Continuing resolution Continuing resolution
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