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Ch04 Handout Budgets

Ch04 Handout Budgets

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Published by Katherine Sauer

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Published by: Katherine Sauer on Jan 04, 2012
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 Public Economics ± Dr. Sauer 
Chapter 4: US BudgetI. US Budget DataTextbook Figure 4-1: Federal Taxes, Spending, and the Deficit ________________________________________________________________________________ Textbook Figure 4-2: Actual, Standardized, and Cyclically Adjusted US Budget Deficits ________________________________________________________________________________ 
 
2Textbook Figure 4-3: CBO¶s Projected vs Actual Surplus/Deficit _________________________________________________________________________________ II. A little history«1921: Budget and Accounting Act- President has overall responsibility for budget planning- created Bureau of the Budget which expanded the President¶s control over budgetaryinformation- renamed Office of Management and Budget in 1971Congress lacked authority to- establish and enforce budgetary priorities- coordinate actions on spending and revenue legislation- develop budgetary and economic information independently of the executive branch1974: conflict between the legislative and executive branches reaches a high point- fundamental disagreement between the President and the Congress over control of budgetaryand spending prioritiesPresident Richard Nixon used ³impoundments´ to stop Congress from funding programs that Nixon didn¶t like.Many in Congress also didn¶t like the executive branch¶s control of budgetary information.- questioned the objectivityThe dispute led to enactment of the Congressional Budget and Impoundment Control Act of 1974.D
uring the past half century, the Congress has witnessed 
 
a steady erosion of its control over thebudget. In contrast, we have seen a consistent escalation of executive influence over budget and  fiscal policies. The Congressional Budget and Impoundment Control Act of 1974 will give us themeans to reverse that erosion.... [It] calls for the establishment 
 
of a Congressional Budget Office²CBO²as an agency of the Congress. The CBO... will provide Congress with the kind of 
 
3
information and analysis it needs to work on an equal footing with the executive branch.
  ²Senator Edmund Muskie, June 21, 1974The law established- procedures for controlling presidential impoundments of funds- formal process through which the Congress could develop, coordinate, and enforce its own budgetary priorities- the House and Senate Budget Committees to oversee execution of the budget process- the Congressional Budget Office to provide the budget committees and the Congress with anindependent, nonpartisan source of informationIII. The Role of the Congressional Budget OfficeCBO¶s chief responsibility is to help the budget committees with the Congressional budget resolutionand its enforcement.The budget resolution sets- total levels of spending- total levels of revenues- broad spending prioritiesThe budget resolution is a concurrent resolution- approved by the House and Senate- not signed by the President- does not have the force of law- provides no taxing or spending authorityIt is more like a ³blueprint´ to guide Congressional action on spending and revenue legislationwithin the jurisdiction of other committees.
Other duties of the CBO are
:1. It provides budgetary information for Congress.- the Appropriations, Ways and Means, and Finance Committees- other Congressional committees- individual members of Congress2. It must issue annual reports.- helps Congress identify authorizing legislation that should be in place before it considers the 12regular appropriation bills3. It must identify federal mandates contained in legislation and to estimate the cost that they wouldimpose.4. It must produce reports at Congressional request that analyze specific policy and program issues thatare significant for the budget.

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