US Government Chapter Review Outlines: Chapter 19: Taxing, Spending, and Economic Policies

Chapter number and title: Chapter 19: Taxing, Spending, and Economic Policies

Outline: Section 1: The Government Raises Money Through Taxing and Borrowing.

The Federal government raises revenue by taxing and borrowing.
Individual income taxes are the largest single source of Federal revenue.
Many deductions made the income tax less progressive and led to a major tax reform in 1986.
Most people pay their taxes through withholding from their pay checks.
Other taxes include social insurance taxes, excise, taxes, estate and gift taxes, and custom duties.
The government raises additional revenues from borrowing, by selling securities to individuals and businesses.

Section 2: How is Federal Spending Decided

The Federal budget details the governments' income and expenditures.

The largest government expenditures go for entitlements, which are direct payments of benefits to individuals.

Defense spending and interest on the national debt are the next largest categories of spending.

The budget for each fiscal year is prepared by the Office of Management and Budget, with the Presidents approval.

Congress must then approve the budget in a series of appropriations bills.

Agency budgets are based on the previous years' budget plus or minus small changes.

Uncontrollable expenditures force Congress and the president to make choices between Civilian programs or Military spending.

Section 3: The Federal Government Influences the Nation's Economy

The United State's economy is capitalism, or a free enterprise system.
Manipulating levels of taxing and spending, called fiscal policy, is one way of exerting an influence on the economy.
The Federal Reserve System regulates the economy through the use of monetary policy, which affects the amount of money in circulation.

Term 1: Fiscal policy - A way of influencing the economy by deliberately changing levels of taxing and spending.

Term 2: Monetary policy - A governmental tool for influencing the economy by varying the amount of money in circulation.

Term 3: Loose money - This lowers the discount rate, and lowers requirements for reserves and margin.

Short answer essay question (which can be answered in a 2-3 sentence paragraph).

Essay: Do you believe that government should attempt to regulate the nation's economy?

The government should attempt to regulate the economy so that there can remain a sense of order and security. Our economy is fragile and should be regulated for the good of the citizens. The government should definitely be involved in the economy but should not overpower it. This is why we have a mixed economy: the government must preserve competition within a capitalist framework while providing a social safety net for those who do not receive the benefits of the free enterprise system.