The Budget

Discretionary Fiscal Policy: involves deliberate decisions by the president and Congress to run budget surpluses or deficits; can be done by changing the amount of taxing and government spending 

Mandatory Spending: funding required to fund programs such as unemployment insurance, food stamps, and Medicaid; spending increases when economy declines 

Budget and Accounting Act of 1921: gave the president authority to prepare an annual budget and submit it to Congress for approval

Office of Management and Budget (s): assists the president and handles the details of the budget preparation; puts together a budget that reflects the president's preferences and priorities, as wells as modifies and revises agency budget request downward; president usually agrees with OMB decisions

Fiscal Year: begins on October 1 of one calendar year and runs through September 30 of the following calendar year

Appropriations Committees: provide funding need to carry out programs; often deny some or all of the funding authorized by the legislative committees

Budget and Impoundment Control Act of 1974: establishes a budget process that includes setting overall levels of revenues and expenditures, the size of the budget surplus or deficit, and priorities among different “functional” areas (ie, national defense, transportation, agriculture, etc) 

Congressional Budget Office: professional staff of technical experts that assist the budget committees and provide members of Congress with their own source of budgetary information so they would be more independent of the OMB

Continuing Resolution: authorizes agencies to continue operating on the bases of the previous year's appropriation until approval of their new budget

Economic Growth and Tax Relief Reconciliation Act of 2001 (p): lowered income tax rates across the board, expanded deductions and provided taxpayers with rebates in the summer and early fall of 2001: up to $300 for single tax filers, $500 for heads of households, and $600 for married couples

National Debt: sum of the annual budget deficits

Budget Deficit: occurs when the government spends more money than it takes in

Gramm-Rudman-Hollings Act of 1985: created a procedure for automatic deficit reduction: 
1. Budget deficit goals of $171.9 billion and $144 billion were set for 1986 and 1987 . After that, the deficit goal would be lowered annually by $36 million decrements until it reached zero in 1991
2. Several programs were exempted from automatic budget cuts, including Social Security, Medicaid, veteran's benefits, food stamps, Aid to Families with Dependent Children child nutrition, and interest on the national debt. 
3. If at the beginning of a fiscal year the deficit target was not met, then, by a process called sequestration, automatic, across-the-board budget cuts, divided equally between nonexempt domestic and military programs, would be levied, sufficient to meet the deficit target

Budget Enforcement Act of 1990: set limits on discretionary spending and created a “pay as you go” procedure, requiring that increases in spending be offset by decreases in other appropriations so there would be no increase in the deficit

Omnibus Budget Reconciliation Act of 1993 (p): incorporated a mix of tax increases and entitlement reductions; the top income tax rate was increase and those with very high incomes were assessed a surcharge, also included corporate tax increases, and increases in the tax that high-income Social Security recipients would pay; placed limits on the Medicare program

Budget Surplus: occurs when the government takes in more than it spends

Entitlement Program: income security program to which all those meeting eligibility criteria are enrolled  

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