PPO- Federal Budget Lesson

Federal Budget

The federal budget is a huge part of determining the direction the government is taking regarding public policy. The Constitution provides a few guidelines about the budget.

Guidelines about the Budget

CONSTITUTIONALITY

DESCRIPTION

Article 1, Section 8, Clause 1

  • Congress is given the power to lay and collect taxes
  • Pay debts
  • Provide for the common defense and general welfare

Article 1

  • Gives the House of Representatives the power to initiate the process of passing all appropriations
  • Establishes power of Congress to impose excise taxes in the form of tariffs
  • Congress has the power to borrow money on the credit of the U.S.
  • Congress can appropriate only money that is budgeted

Article 1, Section 9

  • Prohibits excise tariffs

16th Amendment

  • Income tax is the only direct tax levied

McCulloch v. Maryland

  • States cannot tax the federal government

Even though Congress has the authority to use federal money, other parts of the government are also part of the process.

President: Must submit a budget proposal to Congress the first Monday after January 3rd.

Office of Management and Budget (OMB): The president's spending plan is sent to this office and it puts the budget requests together, reviews, revises, and prepares the budget for the president to submit to Congress.

Congressional Budget Office (CBO): By mid-February, it evaluates the president's budget and submits a report to the House and Senate Budget Committees.

Congress: By April 15th, a common budget direction must be passed. The fiscal year begins October 1st and both houses must pass the budget legislation by that date to avoid a government shutdown.

Most revenue that the federal government uses mainly comes from taxes. If the revenues are lower than government spending, the government borrows money to finance the difference. The difference between revenues and spending is the deficit.

Sources of Government Revenue

Explore each section in the tabs below to learn more.

Individual Income Tax

 

Individual Income Taxes are imposed on an individual's income or profits

 

 

 

Sources of Government Spending

  • Social Security is the largest federal program and provides monthly benefits to retired and disabled workers, their dependents, and survivors.
  • Medicare provides health care coverage for elderly Americans and people with disabilities.
  • Medicaid provides for the poor, people with disabilities, and senior citizens in nursing homes.
  • Major Means-Tested Entitlements provide benefits to people with incomes below minimum levels. Examples include:
    • Food Stamps
    • Supplemental Security Income
    • Child Nutrition
    • Earned Income Tax Credit
    • Veteran's pensions
  • Other entitlements include:
    • Federal retirement and insurance programs
    • Payments to farmers

 

 

IMAGES CREATED BY GAVS