Chapter 14: THE CONGRESS, THE PRESIDENT, AND THE BUDGET; THE POLITICS OF TAXING AND SPENDING

LEARNING OBJECTIVES

After studying Chapter 14, you should be able to:

1. Describe the major sources of federal revenues.

2. Understand the nature of the tax system in America.

3 . Explain the nature of federal expenditures and why so much of the budget is uncontrollable.

4. Discuss how the budgetary process works, who is involved, and the politics of budgetary reform.

5. Understand how budgeting affects democracy and the scope of government in America.

The following exercises will help you meet these objectives:

Objective 1: Describe the major sources of federal revenues.

1. List four sources of federal revenues.

1.

2.

3.

4.

2. How does the federal government borrow money?

 

 

3. List two criticisms of a balanced budget amendment.

1.

2.

Objective 2: Understand the nature of the tax system in America.

1. Define tax expenditures and give three examples.

Definition:

Examples:

1.

2.

3.

2. What were the three major reforms of the Tax Reform Act of 1986?

1.

2.

3.

Objective 3: Explain the nature of federal expenditures and why so much of the budget is uncontrollable.

1. Name the two conditions associated with government growth in America.

1.

2.

2. What is meant by the phrase "military industrial complex"?

 

3. Explain how Social Security is a kind of intergenerational contract.

 

 

4. List four features of incremental budgeting.

1.

2.

3.

4.

5. Explain how entitlements are "uncontrollable expenditures."

Objective 4: Discuss how the budgetary process works, who is involved, and the politics of budgetary reform.

1. Beginning with the largest category, rank order the revenues and expenditures of the federal budget.

Revenues

Expenditures

1.

1.

2.

2.

3.

3.

4.

4.

5.

5.

6.

6.

2. List the ten main actors in the budgetary process.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

3. Explain the three main provisions of the Congressional Budget and Impoundment Control Act of 1974.

1.

2.

3.

 

4. What is meant by a budget resolution?

 

 

5. Explain the two ways in which laws are changed to meet the budget resolution.

1.

2.

6. What was the Gramm-Rudman-Hollings Act and why did it fail?

 

 

Objective 5: Understand how budgeting affects democracy and the scope of government in America.

1. List three possible explanations as to why democracies have seen a substantial growth in government in the twentieth century.

1.

2.

3.

2. How could the budgetary process limit government?

 

 

KEY TERMS

Identify and describe:

Budget deficit expenditures

Revenues income tax Sixteenth Amendment

Federal debt tax expenditures Social Security Act

Medicare incrementalism uncontrollable expenditures

Entitlements House Ways and Means Committee Senate Finance Committee

Congressional Budget and Impoundment Control Act of 1974

Congressional Budget Office (CBO)

Budget resolution reconciliation authorization bill

Appropriations bill continuing resolutions