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.

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

Sources of Government Spending

 

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