More Budget Issues
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Transcript of More Budget Issues
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More Budget Issues
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Progressive vs Flat Taxes
http://www.optimist123.com/optimist/images/flat_tax_curves.gif
10% of taxpayers pay 2/3 of income tax
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Gov’t Borrowing
http://blogs.cfr.org/setser/files/2009/06/private-v-public-borrowing-thru-08-11.pnggov’t doesn’t have a capital budget and these purchases do count in current operating budget
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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.
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Gov’t Borrowing
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Taxes and Public Policy
tax expenditures - special exemptions. Charities, deduction of interest on mortgage interest, deduction on capitol equipment
who do these
exemptions
benefit?
they amount to 1/3 of gov’t’s total receipts
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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
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Tax ExpendituresA.K.A. Deductions! Tax payers love them!
•interest on mortgages•employer contributions to health care•IRA contributions•children•State and local taxes•etc.
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Lifetime Learning CreditHope 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
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Rise of national security costs
Rise of social service stateIs 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
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Incrementalismbest 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
exceptions:NASA
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Uncontrollable expenditures
What? Why is it difficult to change?
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Let’s look at gov’t benefits over time
What factors cause it to change?
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Gov’t benefits over time
What factors cause it to change?• 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
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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