Deck 15: Congress,the President,and the Budget: the Politics of Taxing and Spending

Question 1

Corporate taxes yield more revenues than do individual taxes.

Answer 1

False

Question 2

A policy document allocating taxes and expenditures,or a series of goals with price tags attached,is a(n)

A)balance sheet.
B)procurement.
C)fiscal register.
D)appropriation.
E)budget.

Answer 2

E

Question 3

Currently,the most expensive part of the federal budget is

A)spending on income security.
B)spending on education.
C)spending on national health care.
D)spending on roads and bridges.
E)military spending.

Answer 3

A

Question 4

The budget of the Department of Defense now constitutes about one-fifth of all federal expenditures.

Question 5

The total federal debt is about $15 million.

Question 6

Tax expenditures are

A)sales taxes paid when goods and services are purchased.
B)money spent by the IRS collecting taxes.
C)rebates provided to individuals who have overpaid federal taxes.
D)revenue losses that result from special exemptions,exclusions,or deductions on federal tax law.
E)income that is taxable by the federal government.

Question 7

An excess of federal expenditures over federal revenues is called a

A)budget.
B)deficit.
C)tax.
D)debt.
E)tax expenditure.

Question 8

The income tax is generally progressive,meaning that

A)it increases incrementally on an annual basis.
B)those with more income pay higher rates of tax on their income.
C)those with more income pay more taxes than those with less income.
D)it is a newer form of taxation than sales taxes.
E)it is better than a flat tax.

Question 9

Medicare is

A)given only to those who do not have private insurance.
B)administered separately from the Social Security system.
C)provided only for hospital care of poor people.
D)the most expensive of all welfare programs,providing basic medical care for the poor.
E)designed to provide both hospital and physician coverage to the elderly.

Question 10

Social Security and agricultural subsidies are examples of entitlements.

Question 11

Policies for which Congress has obligated itself to pay a certain level of benefits based on a certain number of recipients are known as

A)earmarks.
B)pork.
C)entitlements.
D)incremental expenditures.
E)welfare.

Question 12

Homeowners' mortgage interest tax deduction is an example of a tax expenditure.

Question 13

The federal income tax is an example of a progressive tax.

Question 14

The Sixteenth Amendment,ratified in 1913,

A)explicitly permitted Congress to levy an income tax.
B)limited the total income tax Congress could levy on an individual.
C)set up the Social Security system.
D)forbade Congress from levying an income tax.
E)required the federal government to balance its budget each year.

Question 15

Which of the following is NOT a feature of incrementalism?

A)Policymakers focus all of their attention on the policy base-that is,the amounts agencies have had over previous years.
B)Policymakers focus little attention on the policy base-that is,the amounts agencies have had over previous years.
C)Agencies can often safely assume that they will get at least the budget they had last year.
D)Most attention is given to proposed increments in the budget.
E)The budget for any given agency tends to grow a little bit every year.

Question 16

The federal debt

A)consists of all the money borrowed over the years by the national government that is still outstanding.
B)is money owed to foreign nations by the United States government.
C)is all money borrowed over the years by the federal government and owed to state governments.
D)is the difference between the amount of annual tax receipts and government expenditures.
E)is money owed by taxpayers to the United States government but never paid.

Question 17

The statement,"The largest determining factor of the size and content of this year's budget is last year's" is an expression of

A)earmarks.
B)welfare.
C)incrementalism.
D)entitlement.
E)regulation.

Question 18

Medicare was added in 1965 to the Social Security system that provides health insurance for the elderly.

Question 19

What is the largest social policy of the federal government?

A)Early childhood education
B)Children's health insurance
C)College loans
D)Social Security
E)Job training programs

Question 20

Expenditures that are determined by how many eligible beneficiaries there are for a program,making them hard for Congress to control,are called

A)political pork.
B)incremental policies.
C)uncontrollable expenditures.
D)progressive taxes.
E)regressive taxes.

Question 21

Approximately what percentage of the annual federal budget pays interest on the national debt?

A)2 percent
B)7 percent
C)9 percent
D)15 percent
E)25 percent

Question 22

A budget deficit occurs when expenditures exceed

A)revenues.
B)borrowing.
C)appropriations.
D)inflation.
E)authorizations.

Question 23

The fastest growing source of federal revenue has been

A)fees for services.
B)social insurance taxes.
C)personal income taxes.
D)borrowing.
E)corporate income taxes.

Question 24

The picture of the federal budget is one of constant growth.

Question 25

Corporations today pay

A)income taxes,which account for most federal revenue.
B)income taxes,which account for more federal revenue than individual income taxes.
C)income taxes,which account for less federal revenue than individual income taxes.
D)no income taxes.
E)capital gains taxes and property taxes instead of income taxes.

Question 26

A tax system where those with more taxable income not only pay more taxes but also higher rates of taxes is known as

A)communism.
B)socialism.
C)progressive.
D)regressive.
E)unfair.

Question 27

Which of the following is not one of the major sources of federal revenues?

A)Personal income taxes
B)Corporate income taxes
C)Social insurance taxes
D)Sales taxes
E)Borrowing

Question 28

A policy document allocating burdens and benefits is known as

A)a budget.
B)tax regulations.
C)a revenue statement.
D)an expenditure list.
E)a rate of interest.

Question 29

Congress was officially given the power to levy an income tax through the

A)Sixteenth Amendment.
B)Supreme Court case of Pollock v. Farmer's Loan and Trust Co.
C)Internal Revenue Act.
D)Balanced Budget Amendment.
E)revenue clause of the Constitution.

Question 30

The total national debt is projected to be approximately _______ by 2011.

A)$1 trillion
B)$2 trillion
C)$3 trillion
D)$10 trillion
E)$15 trillion

Question 31

Large budget deficits can constrain government,for example,as fear of increasing national debt limited President Obama's proposal for health care reform.

Question 32

The first income tax in America was adopted

A)in 1913 with the adoption of the Sixteenth Amendment.
B)to pay for the Civil War.
C)to pay for the American Revolution.
D)to create Social Security for elderly Americans.
E)to build the White House.

Question 33

Because wealthier Americans pay higher rates of income taxes than others,the federal income tax is an example of a

A)progressive tax.
B)regressive tax.
C)liberal tax.
D)user-based tax.
E)flat tax.

Question 34

Who pays Social Security taxes?

A)Employers and employees
B)Employees only
C)Employers only
D)Employees and Social Security recipients
E)Employers and Social Security recipients

Question 35

In the early years of the nation,the federal government raised most of its revenue through

A)income taxes.
B)sales taxes.
C)fees collected on imported goods.
D)sales of natural resources.
E)property taxes.

Question 36

A budget is

A)a blueprint for what the government should do.
B)a policy determination of how much to spend.
C)a policy document allocating burdens (taxes)and benefits (expenditures).
D)passed by the president's cabinet.
E)None of the above is true.

Question 37

What was the result of the Supreme Court's ruling in Pollock v.Farmer's Loan and Trust Co.?

A)A federal income tax was ruled unconstitutional.
B)Poll taxes were abolished.
C)The federal government was prohibited from spending tax revenue on farm subsidies.
D)The IRS was established.
E)Taxes on home loans were ruled unconstitutional.

Question 38

Which federal agency was created in order to collect the federal income tax?

A)The Congressional Budget Office
B)The Treasury Department
C)The General Accounting Office
D)The Auditors General
E)The Internal Revenue Service

Question 39

As a general rule,the bigger the budget,the bigger the government.

Question 40

Which amendment to the U.S.Constitution permitted the federal income tax?

A)Tenth
B)Fourteenth
C)Fifteenth
D)Sixteenth
E)Eighteenth

Question 41

All of the following are examples of entitlements that contribute to uncontrollable expenses EXCEPT

A)Social Security.
B)Medicare.
C)veterans' aid.
D)funding for new roads and bridges.
E)agricultural subsidies.

Question 42

By 1990,the Social Security system was financed by a payroll tax of

A)2 percent.
B)5 percent.
C)7.5 percent.
D)15 percent.
E)10 percent.

Question 43

How many workers supported the Social Security benefits for one retiree in 1945?

A)1
B)5
C)20
D)25
E)50

Question 44

The federal program designed to provide health care coverage for older Americans is known as

A)Social Security.
B)Medicare.
C)Medicaid.
D)Medical Security.
E)retirement insurance.

Question 45

The government borrows money principally by

A)selling bonds.
B)maintaining numerous credit card accounts.
C)printing more currency.
D)obtaining loans from foreign governments.
E)obtaining loans from the Federal Reserve.

Question 46

The "military-industrial complex" refers to the

A)global network of bases that the Department of Defense maintains.
B)close relationship between defense officials and the corporations that supply their hardware needs.
C)competition between the military and civilian industries for government dollars.
D)government-owned industries that manufacture military weapons and equipment.
E)Pentagon and the buildings that surround it.

Question 47

Spending on the defense currently makes up approximately what proportion of all federal expenditures?

A)One-tenth
B)One-fifth
C)One-quarter
D)One-third
E)One-half

Question 48

Revenue losses attributable to provisions of the federal tax laws,which allow a special exemption,exclusion,or deduction are known as

A)tax dividends.
B)fiscal seepages.
C)treasury bills.
D)tax reductions.
E)tax expenditures.

Question 49

Tax expenditures tend most to benefit

A)lower-income people and the poor.
B)lower-middle-class people and small businesses.
C)the government.
D)middle- and upper-income people and corporations.
E)state and local governments.

Question 50

How many workers support the Social Security benefits for one retiree as of 2005?

A)3
B)5
C)10
D)20
E)50

Question 51

A major feature of incremental budgeting is that it

A)provides small increases in the current budget over the previous year's budget.
B)greatly inflates government spending each year.
C)fragments the budget into many small items,making it hard to plan for a unified budget.
D)reduces current budgets by small amounts over successive years.
E)reevaluates the budgetary base on which past budgets were built.

Question 52

A majority of the U.S.national debt is currently held by

A)Fortune 500 companies.
B)the American public.
C)foreign investors.
D)the World Bank.
E)Bank of America.

Question 53

As a federal program,Social Security began under which president?

A)John F. Kennedy
B)Lyndon Johnson
C)Theodore Roosevelt
D)Franklin Roosevelt
E)Herbert Hoover

Question 54

The "military-industrial complex," a term referring to the link between the military and the defense industry,was coined by which president?

A)Harry Truman
B)Dwight Eisenhower
C)John F. Kennedy
D)Lyndon Johnson
E)Richard Nixon

Question 55

An example of a tax expenditure is

A)a lower tax rate for lower-income families.
B)direct government support of charities.
C)the Social Security system.
D)a tax deduction for the mortgage interest paid by homeowners.
E)the purchase of a Stealth Bomber by the Pentagon.

Question 56

The biggest uncontrollable expenditure in the federal budget is

A)national defense spending.
B)pay for military personnel.
C)veterans' aid.
D)the Social Security system.
E)interest on the national debt.

Question 57

All of the money borrowed by the federal government over the years that still needs to be paid back is known as

A)the federal deficit.
B)government bonds.
C)the Social Security Trust Fund.
D)the federal debt.
E)the revenue gap.

Question 58

Which of the following is NOT true about federal expenditures?

A)Spending on payments to individuals now makes up the largest chunk of federal expenditures.
B)Spending on national defense is greater today than it was during the Vietnam War.
C)Spending on national defense and on payments for individuals has continually risen since 1967.
D)All of the above are true.
E)None of the above is true.

Question 59

In 1965,_______ was added to the Social Security program to provide health care coverage to the elderly.

A)Medplan
B)Medicare
C)Medicaid
D)disability
E)unemployment insurance

Question 60

An example of incremental budgeting is

A)reviewing an agency's budget to establish a lower base.
B)Carter's zero-based budgeting.
C)reducing an agency's budget a little each year.
D)giving an agency a little more than it had last year.
E)breaking a budget into its component parts and reviewing each part individually.

Question 61

When the federal government wants to borrow money,the Treasury Department sells bonds.

Question 62

The top 10 percent of taxpayers pay more than 70 percent of all federal income taxes.

Question 63

The federal income tax is a flat tax.

Question 64

If the president and Congress fail to appropriate funds every year,the government will come to a standstill.

Question 65

The Supreme Court ruled the federal sales tax unconstitutional in the case of Pollock v.Farmer's Loan and Trust Co.

Question 66

The Constitution allocates the task of budgeting to the executive branch alone.

Question 67

Over the past 30 years,the size of the annual budget deficit of the national government has shrunk.

Question 68

The Sixteenth Amendment permits Congress to levy an income tax.

Question 69

More of the government's revenue now comes from borrowing than from taxes.

Question 70

The Internal Revenue Service was established to collect federal sales taxes.

Question 71

Social Security taxes are paid by both employees and by employers.

Question 72

About 70 percent of all federal income taxes are paid by the wealthiest 10 percent of Americans.

Question 73

The three major sources of federal revenue are personal income taxes,corporate income taxes,and social insurance taxes.

Question 74

Entitlements are

A)increases in funding for specific individuals or groups like farmers or small business owners.
B)policies for which Congress has obligated itself to pay X level of benefits to Y number of recipients.
C)special rights granted to elderly Americans.
D)government efforts to redistribute and equalize wealth.
E)budget items,the funding of which fluctuates greatly from year to year.

Question 75

Debt that the Treasury owed Social Security is called intergovernmental debt.

Question 76

Social Security taxes have grown faster than any other source of federal revenue.

Question 77

Tax exemptions are revenue losses that result from special exclusions or deductions on federal taxes.

Question 78

A capital budget is a budget for expenditures on items that will serve for the long term,such as equipment,roads,and building.

Question 79

Most of the government's budget is paid for by borrowing,rather than through taxes.

Question 80

Taxpayers' ability to deduct contributions to charities from their taxable income is an example of a tax expenditure.