pump primer name what you believe are the main sources of federal revenue (income) for the federal...
Post on 27-Dec-2015
214 Views
Preview:
TRANSCRIPT
Pump Primer
Name what you believe are the main sources of federal revenue (income) for the federal government.
13
13The Budget: The Politics of Taxing and Spending
Biblical Integration
• Scripture reveals the importance of being trustworthy, especially with money placed in your control. Since money is a necessary part of this world it must be handled in a way that is pleasing unto God. (Luke 16:11-12)
13
Video: The Big Picture 13
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Edwards_Ch13_The_Budget_Seg1_v2.html
13Learning Objectives
Describe the sources of funding for the federal government and assess the consequences of tax expenditures and borrowing
Analyze federal expenditures and the growth of the budget
13.1
13.2
13Learning Objectives
Outline the budgetary process and explain the role that politics plays
Assess the impact of democratic politics on budgetary growth and of the budget on scope of government
13.3
13.4
Video: The Basics 13
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Seg2_TaxesSpending_v2.html
Federal Revenue and Borrowing
Personal and Corporate Income Tax
Social Insurance Taxes
Borrowing
Taxes and Public Policy
13.1
FIGURE 13.1: The federal budget: An overview
13.1
The federal budget consists of revenues and expenditures.
When expenditures exceed revenues, the budget runs a deficit. The accumulation of debt over time creates the national debt. Data are estimates for fiscal year 2013.
Budget • A policy document allocating burdens (taxes) and
benefits (expenditures).
Deficit • Excess of federal expenditures over federal
revenues.
13.1Federal Budget
Expenditures Government spending – Major areas are social
services and national defense.
Revenues Financial resources of the government – Individual
income tax and Social Security tax are two major
sources
13.1Federal Budget
Sixteenth Amendment (1913) Established an income tax
• Progressive Tax• More you make more you pay
10-35% current tax rates IRS
Created to collect and process tax payments
Today, it received over 140 million individual income tax returns per year
13.1Personal and Corporate Income Tax
Who pays taxes? (2009) 42% (made so little money) paid no taxes Richest 1% paid 37% Richest 10% paid 70% Bottom 50% paid 2%
Flat tax Everyone, regardless of income pays the same tax
rate
13.1Personal and Corporate Income Tax
FIGURE 13.2: Federal revenues 13.1
Explore the Budget: How High Are Your Taxes?
13.1
http://media.pearsoncmg.com/long/long_edwards_mpslgia_16/pex/pex13.html
Social Insurance Taxes
Social Security
Medicare Both withheld from your pay and matched by employers
Provide 1/3 of federal revenue
13.1
Borrowing
Tax revenue does not cover expenditures
Bonds Sold by Treasury Department Agrees to pay interest to the bondholder
Borrowing from itself Takes from Social Security to pay military pensions or
farm subsidies Creates intra-governmental debt
13.1
Borrowing
National debt = $18 trillion and growing every minute (http://www.usdebtclock.org/)
6% of federal spending = interest payments Debt ceiling
A limit on how much money the government can borrow
Economic downturn
Spending increases when revenue declines Government services increase
Unemployment Food stamps
13.1
FIGURE 13.3: Total national debt 13.1
Video: In the Real World 13.1
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Seg5_TaxesSpending_v2.html
Taxes and Public Policy
Tax Reform Act of 1986 Eliminated or reduced the value of many tax
deductions Removed several million low-income individuals
from the tax rolls Changed the system of 15 separate brackets to
just two generally lower rates (15% and 28%).
13.1
Taxes and Public Policy
Tax expenditures Revenue lost due to exemptions
Charitable contributions Mortgage interest Business equipment Benefit the wealthy and businesses
Tax reduction Popular with voters Benefits the wealthy more than the average American –based on
income taxes
13.1
TABLE 13.1: Tax expenditures: The money government does not collect
13.1
13.1 What percentage of federal spending is simply interest payments on the national debt?a. 6%
b. 3%
c. 11%
d. None
13.1
13.1 What percentage of federal spending is simply interest payments on the national debt?a. 6%
b. 3%
c. 11%
d. None
13.1
Explore the Simulation: You Are the President During a Budget Crisis
13.1
http://media.pearsoncmg.com/long/long_longman_media_1/2013_mpsl_sim/simulation.html?simulaURL=22
Federal Expenditures
Big Governments, Big Budgets
Rise of the National Security State
Rise of the Social Service State
Incrementalism
“Uncontrollable” Expenditures
13.2
FIGURE 13.4: Federal expenditures 13.2
Big Governments, Big Budgets Big government needs big money
¼ of GDP is govt. spending
Why has government grown? Increased demand for government services
Public demand Changes in economy Changes in social conditions Economic downturns Urbanization and industrialization Pollution
13.2
Rise of the National Security State Permanent military establishment
Cold War Military-industrial complex – 50s and 60s keep military
spending high
Dept. Of Defence (DoD) spending half of federal budget during Cold War Decreased until 9/11 1/5 of federal budget today
13.2
Rise of the National Security State Military expenses
7 million pensions Procurement - purchase of military hardware Cost overruns
13.2
FIGURE 13.5: Trends in national defense spending
13.2
Stealth bomber 13.2
Rise of the Social Service State Income security expenditures
Social Security– Social safety net– Created by FDR (1935) to reduce elderly
poverty– Disability Insurance (1965)
Medicare– Johnson’s Great Society programs (1965)– Prescription drugs (2003)
13.2
Rise of the Social Service State Income security expenditures
Intergenerational contract-- Workers of current era pay the benefits for
retirees More beneficiaries than workers
– Decline of birth rates– Elderly live longer– Ratio of workers»1940 – 40 workers per retiree »Today – 3 workers per retiree
13.2
13.2
FIGURE 13.6: Trends in social service spending
13.2
Video: Thinking Like a Political Scientist
13.2
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Seg4_TaxingSpending_v2.html
Incrementalism
Best predictor of this year’s budget is last year’s Incremental increase for each agency
Exceptions Shift of priorities
-- NASA
13.2
“Uncontrollable” Expenditures Why is the budget uncontrollable?
■ 2/3 of budget automatic
Not fixed, Congress could adjust it downward
■ Interest
Fixed, no discretion to allocate less money
■ Entitlements Everyone over 65 is entitled to Medicare. Social
Security and veterans’ benefits must also be paid to everyone who is eligible
Congress could alter with passage of legislation
-- Raise eligibility from 65 to 70.
13.2
13.2 Why does the federal government have so little discretion over its own budget?
a. Federal law forbids Congress from tampering with president’s budget
b. The president is obliged by the Constitution to sign whatever budget bill Congress sends him
c. Entitlements create uncontrollable obligations
d. All of the above
13.2
13.2 Why does the federal government have so little discretion over its own budget?
a. Federal law forbids Congress from tampering with president’s budget
b. The president is obliged by the Constitution to sign whatever budget bill Congress sends him
c. Entitlements create uncontrollable obligations
d. All of the above
13.2
Video: In Context 13.2
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Seg3_TaxingSpending_v2.html
The Budgetary Process
Budgetary Politics
The President’s Budget
Congress and the Budget
13.3
Budgetary Politics
Stakes and strategies■ Budget determines “Who gets what, when, and how” • Actors adopt strategies
– How programs benefit a senator’s state or district
Players Large cast Roles carefully scripted
13.3
Government shutdown 13.3
FIGURE 13.7: The players in the budgetary process
13.3
The President’s Budget
Presidents used to play limited role Budget and Accounting Act (1921) Prepares budget with help of OMB
Budget schedule Due first Monday in February Process begins a year in advance OMB begins soliciting requests from agencies Jockeying and negotiations continue until the last
minute
13.3
Congress and the Budget Power of the purse■ Congress has Constitutional power to authorize federal
appropriations
Budget resolutionReconciliation – changes to laws, which enables
Congress to stick to its budget ceilingAuthorization bills - establish or change government
programs Appropriations bills - to fund programs Continuing resolutions - laws that allow agencies to
spend at last year’s levels
13.3
Congress and the Budget Congressional Budget and Impoundment Control
Act of 1974 ■Designed to reform the congressional budgetary
process■Fixed budget calendar■Budget committee in each house■Congressional budget office■Problem - not procedural, more disagreement
over how scarce resources should be spent
13.3
FIGURE 13.8: The budget process 13.3
FIGURE 13.9: Fluctuating deficits 13.3
13.3 What type of bill must follow an authorization bill?
a. Continuing resolution
b. Reconciliation bill
c. Appropriations bill
d. None of the above
13.3
13.3 What type of bill must follow an authorization bill?
a. Continuing resolution
b. Reconciliation bill
c. Appropriations bill
d. None of the above
13.3
Understanding Budgeting
Democracy and Budgeting
The Budget and the Scope of Government
13.4
Growth in government tied to democracy
Do elites oppose big government? Bailouts Contracts and subsidies
Interest groups want their piece, too Zoologists, for example, want aid from the National Science
Foundation
13.4Democracy and Budgeting
Americans tax and spend less compared to
other democracies
Americans want lower taxes but more pork Cut taxes = re-elected Cut programs and benefits to their constituents =
defeated Bring pork barrel projects home to their states and
districts = re-elected Result = Deficits
13.4Democracy and Budgeting
Arches National Park 13.4
The Budget and the Scope of Government
The size of the budget is the scope of government Bigger the government, bigger the budget When country has need, govt. pays
Politics of scarcity Never enough funds Limits on revenues can limit the
13.4
13.4 What feature of American government tends to promote its growth?
a. Republicanism
b. Federalism
c. Democracy
d. All of the above
13.4
13.4 What feature of American government tends to promote its growth?
a. Republicanism
b. Federalism
c. Democracy
d. All of the above
13.4
Discussion Question
Why is the federal budget process so highly politicized? Who are the main stakeholders in budget decision-making? Why does the federal budget tend to increase each year?
13
Video: So What? 13
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Edwards_Ch13_The_Budget_Seg6_v2.html
Further Review: On MyPoliSciLab
Listen to the Chapter
Study and Review the Flashcards
Study and Review the Practice Tests
13
top related