Chapter 2 Guide: Federalism
Chapter 14 Guide: Congress, the President, and the Budget
In January of 1995, following their takeover of Congress for the first time in four decades, the Republicans tried to cut taxes and control spending. President Clinton responded by twice vetoing the Republican budget, and in the process temporarily shut down the government. With public pressure mounting, it was the Republicans who capitulated as President Clinton’s approval ratings soared during the shutdown.
Public budgets are the supreme example of Harold Lasswell’s definition of politics as “who gets what, when, and how. Budget battles are fought over contending interests, ideologies, programs, and agencies. The central political issue for many years has been how to pay for policies that most people support. A budget is a policy document allocating burdens (taxes) and benefits (expenditures). Over the past 30 years, the national government has run up large annual budget deficits. A budget deficit occurs when expenditures exceed revenues in a fiscal year.
The president and Congress have been caught in a budgetary squeeze: Americans want them to balance the budget, maintain or increase the level of government spending on most policies, and still keep taxes low. Thus, two questions become central to public policy: Who bears the burdens of paying for government? Who receives the benefits?
As you read through the chapter and take notes, you should keep the items below in mind. Remember the importance of being precise in your understanding. For example, know the importance of both the Office of Management and Budget and the Congressional Budget Office. How do they interact with one another, and what kind of influence do they exercise over the executive and legislative branches? Remember, a detailed understanding that includes familiarity with examples from the text is critical to success on the test.
Essential Understandings
• The key players in the budget process include the following:
1. The President
2. The OMB
3. Federal Agencies
4. General Accounting Office
5. Congressional tax committees
6. Congressional budget committees
7. Congressional subject-matter committees
8. Congressional appropriations committees
9. Interest Groups and lobbyists
• The Federal Budget is the starting point of all policy because of the related expenses involved in planning, passing legislation, and implementation.
• The Federal Budget is the number one link between the Executive and Legislative branches. The fact that it takes both to complete the budgetary process means that they have to work together in spite of separation of powers and party politics.
Key Questions
• What are the major sources of federal revenue and who are the major recipients of federal tax expenditures?
• How do tax expenditures benefit middle- and upper-income taxpayers and corporations?
• How are the rise of the national security state and the rise of the social service state associated with government growth in America?
• What is incrementalism and how does it describe the spending and appropriations process?
• What are “uncontrollable” expenditures and entitlements and what impact do they have on the federal budget?
• Who are the key players and decision makers in the budgetary process and what are their roles?
• What are the steps involved in developing the president’s budget?
• How is the OMB of critical importance in establishing the president’s budget?
• What are the steps in developing the congressional budget process?
• Why was the Congressional Budget and Impoundment Control Act of 1974 passed? What changes did it introduce, and to what effect?
• What was the Balanced Budget and Emergency Deficit Control Act (Gramm-Rudman-Hollings Act) of 1987 and why was it passed? What changes did it introduce, and to what effect?
• Why are the budget resolution, reconciliation, authorization, and appropriation stages important to the budget process?
• What are the different ways in which the budget affects the scope of government (be specific)?
Vocabulary:
1. Appropriations Bill
2. Authorization Bill
3. Budget
4. Budget Resolution
5. Congressional Budget and Impoundment Control Act of 1974
6. Congressional Budget Office (CBO)
7. Continuing Resolutions
8. Deficit
9. Entitlements
10. Expenditures
11. Federal Debt
12. House Ways and Means Committee
13. Income Tax
14. Incrementalism
15. Medicare
16. Reconciliation
17. Revenues
18. Senate Finance Committee
19. Sixteenth Amendment
20. Social Security Act
21. Tax Expenditures
22. Uncontrollable Expenditures
* Other Vocab can also be found in your textbook that may be beneficial to your understanding…
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