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16th amendment

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Income Tax; congress has the power to collect taxes on people's income

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AFDC/TANF

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Federal funds for children in families that fall below state standards of need. In 1996, Congress abolished AFDC, the largest federal cash transfer program, and replaced it with the Temporary Assistance for Needy Families (TANF) block grant

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antitrust policy

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A policy designed to ensure competition and prevent monopoly, which is the control of a market by one company.

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appropriations bill

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An act of Congress that actually funds programs within limits established by authorization bills. Appropriations usually cover one year

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authorization bill

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a bill that sets up a federal program and specifies how much money may be appropriated for the program

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balanced budget

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Budget in which revenues are equal to spending

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benefit

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A satisfaction that people believe they will enjoy if a policy is adopted.

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budget resolutions

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a bill setting limits on expenditures based on revenue projections, agreed to by both houses of Congress in April each year.

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budget surplus

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amount gov. budget receipts exceed budget outlays for the year. (more money coming in than out)

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capitalism

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an economic system in which individuals and corporations, not the government, own the principal means of production and seek profits. Pure capitalism means the strict noninterference of the government in business affairs

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client politics

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A policy in which one small group benefits and almost everybody pays

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command economy

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Industries are owned by the government, and competition and profit are prohibited.

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The Congressional Budget and Impoundment Control Act of 1974

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an act designed to reform the budgeting process by making Congress less dependent on the president's budget; established a fixed budget calendar and a budget committee in each house.

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Consumer Price Index (CPI)

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The key measure of inflation that relates the rise in prices over time.

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continuing resolution

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when Congress cannot reach agreement and pass appropriations bills, these resolutions allow agencies to spend at the level of the previous year.

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Cost

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A burden that people believe they must bear if a policy is enacted.

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cost argument

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political tactic of pointing out what people will lose

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deficit budget

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A budget that has expenditures exceeding tax revenue.

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deficit spending

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the federal government's practice of spending more money than it takes in as revenues.

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Deflation

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a contraction of economic activity resulting in a decline of prices

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Deregulation

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the lifting of restrictions on business, industry, and professional activities for which government rules had been established and that bureaucracies had been created to administer

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direct regulation/command and control

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According to Charles Schultze, the existing system of regulation whereby government tells business how to reach certain goals, checks that these commands are followed, and punishes offenders.

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discretionary spending

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Spending set by the govt through appropriations bills, including operation expenses &salaries of govt employees (defense, environment, education, space exploration)

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entitlements

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policies for which congress has obligated itself to pay X levels of benefits to Y number of recipients. Social Security benefits are an example

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entrepreneurial politics

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A policy in which almost everybody benefits and a small group pays the cost.

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Expenditures

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money that the govt. receives.

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Federal Reserve System/Federal Reserve Board/the Fed

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consisting of twelve Federal Reserve districts, the Fed facilitates exchanges of cash, checks and credit; it regulates member banks; and it uses monetary policies to fight inflation and deflation

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fiscal policy

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The policies of taxation &spending that comprise the nation's economic policy

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free enterprise

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Economic belief that individuals and businesses are allowed to compete for profit with a minimum of government interference

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free market

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an economic system in which prices and wages are determined by unrestricted competition between businesses, without government regulation or fear of monopolies.

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here-and-now argument

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What happens now or in the near future is more important to most people than what happens in the distant future

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incentive

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Something of value one cannot get without joining an organization

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incrementalism

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A description of the budget process where the best predictor of this year's budget is last year's budget, plus a little bit more (an increment). According to Aaron Wildavsk, "Most of the budget is a product of previous decisions.

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Inflation

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is a rise in the general level of prices of goods and services in an economy over a period of time

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Internal Revenue Service (IRS)

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collects income tax and enforces tax code

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income distribution

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shares of the national income earned by various groups

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Keynesian economics

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the theory that the health of an economy depends on what fraction of their incomes people save or spend

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laissez faire approach

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An economic theory that government should not regulate or interfere with commerce

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line-item veto

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Proposed by Ulysses S. Grant, gives presidents the power to disapprove of individual items within a spending bill.

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majoritarian politics

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A policy in which almost everybody benefits and almost everybody pays

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market economy

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an economy that relies chiefly on market forces to allocate goods and resources and to determine prices

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mandatory spending

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expidentures required by previous commitments

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means test

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An income qualification program that determines whether one is eligible for benefits under government programs reserved for lower-income groups

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military-industrial complex

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a network of a nation's military force together with all of the industries that support it.

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Mixed economy

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An economic system in which the government is deeply involved in the economic decisions through its role as regulator, consumer, subsidizer, taxer, employer, and borrower.

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monetary policy

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Manipulation of the supply of money in private hands by which the government can control the economy.

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National Labor Relations Act, 1935

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created a National Labor Relations Board that could compel (force) employers to recognize and bargain with unions; this law helped promote the growth of organized labor in the 1930s and for decades thereafter.

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Office of Management and Budget (OMB)

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The organization responsible for preparing the federal budget and for central clearance of legislative proposals from federal agencies

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omnibus bill

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vote for a series of laws as a single package

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policy entrepreneurs

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Activists in or out of government who pull together a political majority on behalf of unorganized interests

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opportunity cost

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what you give up when you make an economic decision

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progressive tax

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A tax by which the government takes a greater share of the income of the rich than of the poor.

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proportional tax/flat tax

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tax imposing the same percentage of taxation on everyone

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protectionism

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Economic policy of shielding an economy from imports.

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Reaganomics/supply side economics

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belief that a combination of monetarism, lower federal spending, and supply-side economics will stimulate the economy

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regressive tax

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a tax whereby people with lower incomes pay a higher fraction of their income than people with higher incomes

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revenue

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money the govt spends

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scarcity

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when needs are greater than resources

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Simpson-Mazzoli Act

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said must prove employees are legal, failed, should deny government benefits if can't prove legal

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Immigration Reform and Control Act, 1986

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The 1986 US immigration legislation that toughened American immigration laws while granting amnesty (an act of forgiveness for past offenses) to many longtime undocumented workers.

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social insurance taxes social safety net

answer

the many programs that the federal government provides to protect americans against economic and social misfortune

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social welfare policy

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Government programs designed to improve quality of life

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Social Security Trust Fund

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The "bank account" into which social security contributions are "deposited" and used to pay out eligible recipients.

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Socialism

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A political ideology based on strong support for economic and social equality.

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Subsidy

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Government grants of cash or other valuable commodities such as land to individuals or organizations. Subsidies can be used to promote activities desired by the government, reward political support, or buy off political opposition.

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supply side economics

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economic theory advocated by President Reagan holding that too much income goes to taxes so too little money is available for purchasing, with the solution being to cut taxes and return purchasing power to consumers.

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tax loopholes

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exceptions or oversights in the tax law that allow some people and businesses to avoid paying taxes. these are opposed on the grounds of equity

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Tax Reform Act of 1986

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simplify the income tax code, broaden the tax base and eliminate many tax shelters and other preferences

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three economic questions

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What to produce? How to produce? For whom to produce?

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trade-offs

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Alternative that is available whenever a choice is to be made

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traditional economy

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based on customs and beliefs

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transfer payments

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Benefits given by the government directly to individuals- either cash transfers, such as Social Security payments, or inkind transfers, such as food stamps and low-interest college loans

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uncontrollable expenditures

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Expenditures that are determined not by a fixed amount of money appropriated by Congress but by how many eligible beneficiaries there are for a program or by previous obligations of the government.

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voucher

answer

Money provided by the government to parents for payment of their children's tuition in a public or private school of their choice

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