Chapter 14:

The Congress, the President, and the Budget:

The Politics of Taxing and Spending

http://www.usdebtclock.org/

Balancing the Budget!? Is it possible?

The public typically seeks a balanced budget, little or no tax cuts in government programs AND tax relief

Who bears the burdens of paying for government?

Who receives the benefits?

Appropriating Funds

Every year Congress and the President must appropriate funds

The Budget

• A policy document allocating burdens and benefits

• A series of goals with price tags attached

The Federal Deficit

• A deficit occurs when expenditures exceed revenues in a fiscal year

• The national government spends more money than it receives in taxes

Budget ExpendituresAbout 6% of all current budget expenditures go to pay just the interest on this debt (text says 11%)

http://m.gpo.gov/budget/#main

16th Amendment

Income Tax became legal over the Supreme Court’s decision that individual income tax was unconstitutional

http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2013-nominal-and-inflation-adjusted-brackets

Social Security

• Both employers and employees contribute to Social Security taxes

• Earmarked to Social Security Trust Fund that pays benefits to the elderly, disabled, widowed, and unemployed

Borrowing• When the federal government

wants to borrow money, the Treasury Department sells bonds, guaranteeing to pay interest to the bondholder

• Citizens, corporations, mutual funds, and other financial institutions can all purchase these bonds

• http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

Large Deficits and other Nations

Large deficits also make the American government dependent on foreign investors, including other governments to fund its debt—not a favorable position for a superpower

Payroll taxes generally fall into two categories: deductions from an employee’s wages and taxes paid by the employer based on the employee's wages. The first kind are taxes that employers are required to withhold from employees' wages, also known as withholding tax, pay-as-you-ear tax (PAYE), or pay-as-you-go tax (PAYG) and often covering advance payment of income tax, social security contributions, and various insurances (e.g., unemployment and disability). The second kind is a tax that is paid from the employer's own funds and that is directly related to employing a worker. These can consist of fixed charges or be proportionally linked to an employee's pay. The charges paid by the employer usually cover the employer's funding of the social security system, and other insurance programs.

http://www.youtube-nocookie.com/embed/EW5IdwltaAc?rel=0