More Budget Issues

1. More Budget Issues

2. 10% of taxpayers pay 2/3 of income tax • Progressive vs Flat Taxes http://www.optimist123.com/optimist/images/flat_tax_curves.gif

3. Gov’t Borrowing gov’t doesn’t have a capital budget and these purchases do count in current operating budget http://blogs.cfr.org/setser/files/2009/06/private-v-public-borrowing-thru-08-11.png

4. Gov’t Borrowing http://rlv.zcache.com/democrats_spending_borrowing_us_out_of_debt_bumper_sticker-p128026995264263873trl0_400.jpg text claims Republicans are now more about cutting taxes rather than reducing gov’t spending but that is likely wrong in view of current issues.

5. Gov’t Borrowing

6. tax expenditures - special exemptions. Charities, deduction of interest on mortgage interest, deduction on capitol equipment • Taxes and Public Policy who do these exemptions benefit? they amount to 1/3 of gov’t’s total receipts

7. Taxes and Public Policy tax indexing - 1985- indexed to the cost of living - those families with high incomes saw savings - lower income families saw none because taxes on social insurance and excise taxes rose and those fall disproportionately on lower class citizens

8. A.K.A. Deductions! Tax payers love them! • interest on mortgages • employer contributions to health care • IRA contributions • children • State and local taxes • etc. • Tax Expenditures

9. Hope Credit - 1st two years postsecondary, $1500 per year. Doesn’t apply to postgraduate or professional programs. Enrolled 1/2 time Lifetime Learning Credit - undergrad, professional, graduate. If qualify then 20% of first $10,000 cost -max $2000 per year can’t do both. dependent can’t claim. can claim more than one Hope credit if more than one kid/taxpayer qualifies but only claim one lifetime learning per family • Lifetime Learning Credit

10. Is big too big? compared to other nations? Eisenhower’s Military Industrial Complex Dept of Defense 1/5 of budget Biggest slice is income security expenditures - intergenerational contract • Rise of national security costs • Rise of social service state

11. best predictor is last year’s budget never address base of budget agencies assume they will get equivalent to last year’s budget debate is on the increment budget always grows a little every year • Incrementalism exceptions: NASA

12. What? Why is it difficult to change? • Uncontrollable expenditures

13. Let’s look at gov’t benefits over time • What factors cause it to change?

14. rising elderly population - rising elderly pop means increasing number of elderly receiving benefits who exert pressure on interest groups • shrinking birth rates • increased life expectancy • voting numbers and rates • more effective elderly interest groups (AARP) • public awareness of issues for the elderly • children can’t vote/organize • Gov’t benefits over time • What factors cause it to change?

15. create timeline of budget process p 455 • create a t chart illustrating how the budget process works through Congress and how it works through the Executive branch • use pp. 453-457