AP US Government

1. You’ll Need: Pen/Pencil, half-sheet of paper, andNotes.. Last Night’s Homework: None AP US Government Tuesday, January 22, 2013

2. Quick Write Pair Share / Write • What is a budget? • A deficit? • A debt? *Think of these terms in relation to your family’s spending.

3. The Congress, the President, and the Budget:The Politics of Taxing and Spending Chapter 14

4. Introduction • Budget: • A policy document allocating revenue (taxes) and expenditures. • Deficit: • An excess of federal expenditures over federal revenues. • Expenditures: • What the government spends money on. • Revenues: • Sources of money for the government.

5. Sources of Federal Revenue • Income Tax • Shares of individual wages and corporate revenues. • The 16th Amendment permitted Congress to levy an Income tax. • The individual part is the largest single revenue source for the government. • Income tax is progressive: Those with more income pay higher rates of tax on their income.

6. Sources of Federal Revenue • Borrowing • The federal government borrows from foreign investors, foreign governments and the American people (the Treasury Department sells bonds as one source). • The federal debt is the sum of all the borrowed money that is still outstanding (over $15 trillion as of Feb, 2012)

7. Sources of Federal Revenue Total National Debt

8. Sources of Federal Revenue: Taxes and Public Policy -Tax Loopholes: Any tax break that allows a person to benefit from NOT paying some part of his/her taxes • Deductions for specific items • Not everyone has the same access to loopholes • Tax Expenditures: The losses in federal revenues that result from tax breaks, deductions and exemptions • Examples: mortgage interest, child credits, exclusion of pension payments

9. Sources of Federal Revenue

10. Taxes and Public Policy • Tax Reduction: The general call to lower taxes. • Tax Reform: Rewriting the taxes to change the rates and who pays them. • How much to tax is almost always a point of contention among Congress and the public • Tax Reform Act of 1986: under Reagan, cut taxes for everyone • Clinton raised tax rates for the wealthy

11. 10 Giant Loopholes

12. Inauguration Speech • Create t-chart of likes and dislikes. • What are some policy issues he mentions? • Give the president a grade of 1-10 on his speech.

13. You’ll Need: Pen/Pencil, andNotes.. Last Night’s Homework: Read to page 446 AP US Government Wednesday, January 23, 2013

14. The Congress, the President, and the Budget:The Politics of Taxing and Spending Chapter 14

15. Federal Expenditures • The federal gov’t must pay its own operational costs—a significant % of its budget • National Security/Defense • Was the biggest expenditure through Reagan • Defense now constitutes about one-fourth of all federal expenditures—down from ½ of budget.

16. Federal Expenditures • Trends in National Defense Spending (Figure 14.4)

17. Federal Expenditures The biggest part of federal spending is now for social service programs (benefits to poor and elderly). • The biggest of these is Social Security. • Social Security has been expanded since 1935 to include disability benefits and Medicare. • These benefit programs face financial problems with more recipients living longer.

18. Federal Expenditures The Rise of the Social Service State • Social Security • Medicare • Medicaid • Unemployment Insurance

19. Federal Expenditures • Trends in Social Service Spending (Figure 14.5)

20. “Uncontrollable” Expenditures - Are a form of mandatory spending • Pensions and payments toward the national debt are fixed and thus not subject to cuts or changes • Mainly entitlements like Social Security—benefits the government must pay to all who are eligible according to federal rules. • The only way to control the expenditures is to change the rules/laws.

21. Federal Expenditures • Incrementalism • Is the basis on which the budget is adjusted each year • A budget is calculated by assuming that the expenditures included in the budget of the previous year will rise for the next year. • Agencies can safely assume they will get at least what they got last year. • The budgets tend to go up a little each year.

22. Federal Budget Webquest • Click on “Federal Budget” under the AP Government section of http://www.noahg.com • Step One: Investigate the six links. • Step Two: Answer questions 1-6 • Activity: Create a plan to reduce federal spending by 10%

23. You’ll Need: Pen/Pencil, Laptop. Last Night’s Homework: Read up to page 453 AP US Government Thursday, January 24, 2013

24. Steps in the Budget Process

25. Federal Budget Presentations • Required Slides: • Introduction: • What is the federal Budget? • Budget Process: • What are the important steps in the budget process? • The President’s Message: • Summarize the President’s message found at the beginning of the federal budget. • Department Budgets (one per person) • Describe the budget of the department you’ve researched. • What policy areas does this department cover, and how much money was allocated to the department? • Budget Critique: • How would your group change the budget? • What are its strengths and weaknesses?

26. Resources • Steps in the Budget Process Reading • Textbook: Pages 453-458 • Government Printing Office: • http://www.gpo.gov/fdsys/ • Click on “Budget of the U.S. Government” on the right. Find your fiscal year.

27. Why do Budgets Grow? Quick Write • Why is it difficult to cut or balance the federal budget? Use these terms in your answer: • Uncontrollable expenditures • Loopholes • Mandatory spending • Incrementalism

28. You’ll Need: Pen/Pencil and Notes Last Night’s Homework: Read up to page 460. AP US Government Monday, January 28, 2013

29. 1/28 to 2/1 • Monday 1/28 • Federal Budget Presentations • Chapter 14 Notes • Tuesday 1/29 • Chapter 14 Notes • Study for Quiz • Wednesday 1/30 (Substitute) • Chapter 14 Quiz • Chapter 14 HW Due • Begin film: IOUSA • Thursday 1/31 (Substitute) • Finish watching: IOUSA • Prepare for DeFazio’s visit • Friday 2/1 • Congressmen DeFazio Visit

30. Federal Budget Presentations

31. The Congress, the President, and the Budget:The Politics of Taxing and Spending Chapter 14

32. The Budgetary Process • Budgetary Politics • The budget affects and involves agencies and departments in the federal, state and local governments. • The Players • The President proposes/submits the budget, Congress must approve it. • Almost all committees are involved in the budget.

33. The Budgetary Process Step #1: The President’s Budget -Budget requests from each executive department are submitted to the Office of Management and Budget (OMB) in the executive branch. • Interest groups and agencies often team up when making budget requests.

34. The Budgetary Process Step #2: Proposal • Based on all of the agency requests, the President formally proposes a budget plan to Congress in February.

35. The Budgetary Process Step #3: In Congress • The House and Senate Budget Committees and the Congressional Budget Office review the proposed budget for its feasibility. • House Ways and Means Committee and the Senate Finance Committees MAY rewrite tax codes now to increase or decrease revenue.

36. The Budgetary Process Step #4: Budget Resolution • Congress must agree on a budget resolution, the final amount of expenditures NOT to be exceeded for the year.

37. The Budgetary Process Step #5: Congress (Appropriations Committees) might make changes to existing laws in order to meet the budget resolution. • Reconciliation: Program authorizations are revised • Authorization Bill: Expenditures allowed for discretionary programs or the requirements for entitlement programs are changed.

38. The Budgetary Process Step #6: Congress passes the budget bill • Congress must pass the final budget bill and the President must sign it for it to become law.

39. FRQ Assessment

41. You’ll Need: Pen/Pencil and notes. Last Night’s Homework: Chapter 14 Reading AP US Government Tuesday, January 29, 2013

42. The Congress, the President, and the Budget:The Politics of Taxing and Spending Chapter 14

43. The Budget Process (Review) • Budget requests are submitted to the Office of Management and Budget (OMB). • Based on requests (from interest groups and agencies), the President formally proposes a budget plan to Congress in February. • The House Ways and Means Committee and the Senate Finance Committee predict revenues for the upcoming year. • Congress passes a budget resolution—the final amount of expenditures for the year. • The Appropriations Committees in both houses determine how federal funds will be allotted among agencies. • Congress must pass the final budget bill and the President must sign it into law.

44. Budget Reform • Congressional Budget and Impoundment Control Act of 1974 reformed the process. • Established a fixed budget calendar, congressional budget committees, and the CBO. • Budget was to be considered as a whole. • A budget resolution sets the bottom line for the budget. • The current budget is then reconciled. • The new budget is authorized and appropriated.

45. The Budgetary Process • Congress and the Budget • The Success of the 1974 Reforms. • Between 1974 and 1998, every budget was a deficit budget. • Congress misses most of its own deadlines. • Congress passes continuing resolutions to keep the government going until it passes a budget.

46. The Budgetary Process Annual Federal Deficits (Figure 14.6)

47. The Budgetary Process • Congress and the Budget • More Reforms. • Congress passed bills to try and control the deficits. • By 1990, Congress focused on the increases in spending. • Both parties claimed victory for the budget surpluses that began in 1997. • Economic downturn, income tax cuts, and increased military expenditures brought a return to deficits by 2001.

48. Understanding Budgeting • Democracy and Budgeting • Many politicians “spend” money to buy votes. • With many groups and people asking for government assistance, the budgets get bigger. • Some politicians compete by trying not to spend money. • People like government programs, but they really don’t want to pay for them, thus there are deficits & the public debt.

50. (10pts) Budget Reform Proposals • Your group is responsible for proposing a new Federal Budget Process in order to fix our somewhat broken system. • The goal of this new process is to reduce our debt and increase citizen participation in our budget process. • On google docs (share w/Noah): • Create a 6-10 step process for your new budget proposal. Describe each step in 1-3 sentences. • Include important deadlines in the budget process. • Your new process must include: • The President • The American People • House and Senate (w/ important committees) • Penalties for increasing the debt and not meeting deadlines • You may use parts of the current budget process, or you can create an entirely new process. • Be ready to describe your new process to the class.