文档介绍：Chapter 4 Budget
Introduction
Just as households deal with budget issues, so does the government.
Federal government has hundreds of revenue-raising tools and thousands of programs on which to spend this revenue.
Budget process plicated by the dynamic nature of budgeting. Many federal programs have implications for many years e.
This lesson:
Describes the federal budgeting process and efforts to limit the deficit.
Discusses measurement issues.
Explains why we should care about reducing the budget deficit.
FEDERAL BUDGETING: The Budget Deficit in Recent Years
Government debt is the amount that a government owes to others who have loaned it money.
It is a stock variable; the debt is an amount owed at any point in time.
Government deficit is the amount by which spending exceeds revenues in a given year.
It is a flow variable; the deficit flow is added to the previous year’s debt stock to produce a new stock of debt owed.
Figure 1 shows trends in revenue, spending, and the surplus/deficit.
Figure 1
Source: CBO, The Budget and Economic Outlook: FY 2005-2014, Appendix F
And the deficit turned into a surplus.
Thus, large deficits appeared.
Many of these positive trends reversed themselves in recent years.
Expenditure grew steadily to 1992.
Tax revenue did not keep pace.
Revenues increased due to tax increases and rising asset values.
The fiscal picture changed in the 1990s – spending fell.
The Budget Process
Budget process begins with President submitting budget to Congress on or near the first Monday in February.
House and Senate then work out that year’s Congressional Budget Resolution, a blueprint for budget activities.
Entitlement spending refers to funds for programs for which funding levels are automatically set by the number of eligible recipients.
Social Security and Medicare are two prominent examples.
Discretionary spending refers to spending set by annual appropriation levels. Funding is optional.
The House and Senate mittees each take the tot