Name:
Date:
Period:
Chp. 14: The Federal Bureaucracy
and Budget
Filled In
Notes
Chp. 14: Title
1
In the course of reading this chapter and participating in the classroom activity, students will
a. describe the role and impact of government bureaucracies.
b. examine the historical and modern roles of the president and the executive
branch in the budget process.
c. analyze the responsibilities and budgets of selected departments in the federal
bureaucracy.
d. compare the ways in which the national, state, and local governments raise
revenue and make expenditures.
e. defend a position on how well the federal government budgets and spends tax
dollars.
Typical Monthly Expenses for a Young Adult
 housing (rent and utilities)
 health insurance
Examine the list of typical monthly living expenses for a young adult. Then answer these questions:
 cable television: basic service,
1. Are all of these expenses absolutely necessary? Why or why not?
premium channels
 Internet
 cell phone: basic service, fees for calls
and text messaging
 clothing
2. If your monthly income did not cover all of these expenses, you would have
 groceries
 restaurants and takeout
certain options, such as borrowing money, working more, or eliminating
 transportation
 education
expenses. What are the benefits and consequences of these options?
 entertainment
Preview
3.
If you absolutely had to eliminate expenses, how would you decide which expenses to keep and which to eliminate?
4.
How might these personal budget challenges be similar to and different from those of the federal government?
Notes
Chp. 14: Title
2
The Organization of the Executive Branch
I.
The White House Staff
1.
Made up of about 400 people
2.
Chief of Staff – Dennis McDonough – directs all of the operations of the White House Office and is the most influential of all
presidential aids
3.
II.
Press Secretary – Josh Earnest – relate the president’s views to the public
The Executive Office of the President
1.
Office of Management and Budget (OMB) – largest part of EOP
2.
Council of Economic Advisers (CEA) – council of three economists that provides advice on the economy
3.
National Security Council (NSC) – advises the President in all matters affecting the nation’s security
III. The Executive Departments
1.
There are 15 Cabinet Departments
2.
Dept. of State – (John Kerry) – handles foreign affairs; speaks for the US in the UN
3.
Dept. of Treasury – (Jack Lew) – manages the monetary resources of the US; regulates the IRS; regulates alcohol and
tobacco
4.
Dept. of Defense – (Ashton Carter) – protects the security of the US
5.
Dept. of Justice – (Loretta Lynch) – oversees the nation’s legal affairs
6.
The newest is the Department of Homeland Security, created in 2003
IV. Independent Agencies
1.
Called independent because they are independent of the executive branch, but answer directly to the president
2.
NASA – created in 1958 to help the US compete with the Soviet Union
3.
Environmental Protection Agency (EPA) – created for the purpose of protecting human health and the environment by
writing and enforcing regulations based on laws passed by Congress
Evolution of the Budget Process

The federal budget is an estimate of the money the government will take in and spend on programs over the next
fiscal year

I.
The US government’s fiscal year begins on Oct. 1 and ends on Sept. 31
Congressional Control of Federal Spending: 1789-1921
1.
Legislative branch dominated the federal budget process
2.
All proposals for the spending of federal funds begin in the House of Representatives
a.
3.
Usually revenues and expenditures came out even, creating a balanced budget
a.
Notes
The proposals were combined into a single bill and sent to the Senate
If there was a shortfall, Congress simply raised taxes
Chp. 14: Title
3
II.
Presidential Dominance of Budget Making: 1921-1974
1.
The executive branch gained more control over the federal budget process
2.
Congress enacted the Budget and Accounting Act of 1921, which required the president to submit a proposed budget to
Congress each year
3.
Gave the executive branch more power to decide which agencies and programs received programs
a.
4.
Congress can override, but generally went along with the president’s budget
By 1970, the government was routinely engaged in deficit financing
III. Shared Control of Budget Making: 1974 – Present
1.
Congress enacted Budget and Impoundment Control Act of 1974
a.
Created budget committees in Congress
2.
Hoped to reduce conflict, but exact opposite
3.
Many new costly programs have led to deficit financing, because lawmakers did not want to raise taxes
The Federal Budget Cycle
I.
II.
Phase One: The Executive Branch Prepares a Budget Proposal (~10 months)
1.
The budget process begins about a year and a half before the fiscal year it takes effect
2.
Departments and agencies submit budget requests to the OMB
3.
The OMB review the requests and submits to the President
4.
The president reviews it, makes changes based on proprieties and send it to Congress
Phase Two: Congress Crafts a Budget Resolution (~4 months)
1.
Budget committees in the House and Senate review the proposal and recommend changes
2.
Based on hearings form the OMB, each chamber passes its own budget resolution
a.
this is not a detailed spending plan, but an overall plan that states how much each area of national concern will
receive
3.
The resolution goes to a conference committee to be reconciled, then the House and Senate approve the final version
III. Phase Three: Congress Enacts Appropriations Bills (~4 months)
1.
House and Senate Appropriations committees work on appropriations bills
a.
2.
13 of these bills detailing how the money will be handed out and spent
Sent to president for approval or veto
IV. Phase Four: The Budget Goes Into Effect
1.
Budget should go into effect on Oct. 1
2.
If the president and congress cannot reach an agreement, we have a budget crisis
a.
Notes
The last one was Oct. 2013 – led to a shutdown of “nonessential” government activities; lasted 15 days
Chp. 14: Title
4
Where the Money Comes From and Where it Goes
I.
Revenue Sources
1.
Largest source of revenue for the government is the individual income tax
a.
Authorized by the 16th Amendment
b.
it is flexible and progressive – the higher one’s income, the higher the tax
c.
in 2008, it provided over $1Trillion to the government
d.
must file a tax return by April 15 – a declaration of your taxable income and of the exemptions and deductions you
claim
e.
2.
3.
most people pay taxes through withholding – a pay as you go plan
Social Insurance Taxes (Payroll taxes) – 2nd major source of funding
a.
These are in the form of Social Security and Medicare deductions from a paycheck
b.
Provide welfare and unemployment benefits also
Excise Taxes (3rd largest source)
a.
laid on the manufacture, sale or consumption of goods and services (like alcohol or telephone service)
4.
progressive taxes – the more you earn, the higher your taxes
5.
regressive taxes – the tax burden falls more heavily (as a percentage of income) on poorer taxpayers
How your Taxes Are Calculated
Single Taxpayers:
and Surviving Spouses:
Married Filing
If you are single and earned $50,000 you fall into the 25% tax bracket. Subtract $36,900 from $50,000 (you get $13,100) and
multiply that by 25% (equals $3,275). Add that to $5081.25 (equals $8,356.25).
If you are married and you and your spouse earned $150,000 together, you fall into the 28% tax bracket. Subtract $148,850 from
$150,000 (you get $1,150) and multiply that by 28% ($322). Add that to $28,925 (equals $29,247)
1.
How much would a single person pay in taxes if they earned $25,000 in one year?
2.
How much would a single person pay in taxes if they earned $200,000 in one year?
Notes
Chp. 14: Title
5
3.
How much would a married couple pay in taxes if they earned $400,000 in one year?
4.
Who pays more taxes per person – a single person who makes $200,000, or a married couple who makes $400,000?
5.
So, is there a tax break for married couples?
II.
Mandatory Spending: Entitlements and Interest
1.
2.
covers about 2/3 of the national budget
a.
NOT argued over by the President and Congress
b.
the law dictates that these must be covered and can only be altered by special legislation
entitlements – benefits that must be provided to all eligible people who seek them; EX-Social Security, Medicare, and
Medicaid
III. Discretionary Spending: Defense, Government Services, and Pork
1.
the part of the budget that is debated
2.
biggest part goes to the Department of Defense
3.
earmarks – money set aside for specific projects; where a lot of the debating occurs
Glossary Chp. 14
Directions: Fill in the definition for the term listed. Then, in the box on the right, you have to draw a picture OR
write the definition in your own words OR write a sentence using the word that demonstrates its meeting.
Chief of Staff
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Press Secretary
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Balanced Budget
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Notes
Chp. 14: Title
6
Glossary Chp. 14
Directions: Fill in the definition for the term listed. Then, in the box on the right, you have to draw a picture OR
write the definition in your own words OR write a sentence using the word that demonstrates its meeting.
Budget Surplus
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Federal Deficit
Processing (Illustration, Summarization, or Sentence)
.
.
.
..
National Debt
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Progressive Tax
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Regressive Tax
Processing (Illustration, Summarization, or Sentence)
.
.
.
..
Entitlement
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Earmark
.
Processing (Illustration, Summarization, or Sentence)
.
.
..
Notes
Chp. 14: Title
7
Summary
DIRECTIONS: Choose only one of the following:
a) write a summary (25-75 words) of what you believe was the most important aspect of the notes/lecture
b) write what you believe to be the most interesting or memorable part of the notes/lecture (25-75 words)
c) draw something that symbolizes the notes/lecture to you (has to be different than your title page)
Notes
Chp. 14: Title
8