The document provides an overview of the federal budgeting process in the United States. It discusses how federal agencies submit budget proposals to the President, who then sends a budget request to Congress. Congress then reviews the request with help from the Congressional Budget Office. The House and Senate Budget Committees each draft a budget resolution, which is merged and voted on by Congress. The budget determines how money will be allocated to various spending priorities, including entitlement programs, defense, and debt payments. It also distinguishes between controllable and uncontrollable spending categories.
Political Cartoon Question Answer: The worker in the cartoon is faced with so many different government taxes that he not only receives no money, he owes the government more than he has earned.
Checkpoint Answer: Direct taxes are applied directly to and paid by specific individuals, while indirect taxes may be shifted to other people for payment.
NOTE TO TEACHERS: The first four examples are the expressly stated limits on the federal power to tax. The last limitation is an IMPLIED limitation under the Constitution.
Checkpoint answer: Congress can tax only for public purposes, cannot tax exports, and must distribute direct taxes (except the individual income tax) evenly among the states, all indirect taxes must be set at the same rates in all parts of the country.
NOTE TO TEACHERS: A direct individual income tax would have to be levied so that each state would pay a portion of the tax equal to its percentage of the nationās population, which is both unfair and impossible to enforce given the wide differences in personal wealth and population between states.
Insert the third column graphic showing differing tax rates from the Progressive Taxes feature on page 461 here in the right column, without the caption. Add Click to Enlarge feature.
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NOTE TO TEACHERS: The US Mint earns a profit on the creation of coins, while the US Postal Service sells millions of dollars of mint-condition stamps to collectors each year.
Checkpoint Answer: The government receives interest on loans, charges fees for passports, copyrights, patents, and trademarks, and sells or leases public lands.
Graph Question Answer: In 1951 the combination of a booming economy and the Korean War led to a slight surplus, in the 1980s, the arms race combined with lower taxes to produce large deficits, in 2000 a balanced budget, higher taxes, and lower military spending produced a surplus, and in 2008, the cost of Social Security and two wars combined with a failing economy to produce a large deficit.
Checkpoint Answer: Congress must authorize borrowing, which is done by the Treasury Department through selling securities such as treasury notes and bonds to investors
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Graph Question Answer: According to the graph, the government owes the most to itself, followed by foreign investors.
Chart question answer: Expenditures on Health and Human Services and Social Security have grown dramatically as a percentage of total federal expenditures, as have interest payments on the public debt. The Other category has shrunk significantly.
Checkpoint Answer: Financially, the budget is a lengthy, detailed estimate of federal income and expenses for the coming fiscal year. Politically, it represents the Presidentās proposed public policies as accepted, modified, or rejected by Congress, and so is a source of political guidance and a topic of serious political debate.
Question Answer: Student answers will vary, but they should note that Congress is interested in gauging the opinion of private citizens and industries about the spending plans for the coming year, as federal spending will affect public policies that in turn affect these citizens and industries.
NOTE TO TEACHERS: In above image, singer and songwriter John Legend testifies before a House Appropriations hearing on funding for the arts.
Checkpoint Answer: Inflation lowers purchasing power, hurting consumers. Deflation lowers earning power, hurting producers, as well as making it harder to borrow money.
NOTE TO TEACHERS: The above image shows President George W. Bush signing the 2008 Economic Stimulus Act.
NOTE TO TEACHERS: The above image shows Federal Reserve Chairman Ben Bernake.
Political Cartoon Question Answer: The cartoon implies that trying to find the proper balance between economic growth and interest rates is very difficult, because lowering one tends to raise the other.