Do You Know The Federal Budget?

1.

United States Citizens contribute what percent of the government’s total tax revenues each year (not including borrowing) through individual income taxes and payroll deductions?

A.

25%
B.

60%
C.

75%
D.

43%

Correct Answer
B. 60%

Explanation
Answer: The federal budget consists of two main pots of money: trust funds and federal funds.

Payroll deductions are the taxes we pay that become trust funds to finance Social Security and Medicare, among other programs. There are over 200 trust funds.

Federal Funds constitute all other government funds. At roughly two-thirds of federal revenues, the Federal Fund aggregates revenues from a number of sources. The largest share of Federal Fund revenues comes from individual income taxes.

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2.

p { margin-bottom: 0.08in; } There are basically five steps in the federal budget process. Below we list six. Which is not a step in the budget process? Step 1: President Submits a Budget Proposal Step 2: House and Senate Pass a Budget Resolution Step 3: President negotiates with House, Senate and the ghost of Ronald Reagan Step 4: House and Senate Subcommittees “Markup” Appropriation Bills Step 5: House and Senate Vote on Appropriation Bills and Reconcile Differences Step 6: President Signs each Appropriation Bill and the Budget is Enacted

A.

Step 2
B.

Step 1
C.

Step 6
D.

Step 3

Correct Answer
D. Step 3

Explanation
Answer: The president sends his budget request to Congress each February for the coming fiscal year, which starts on October, 1st. But the budget request is only a proposal. Only after Congress enacts, and the president signs, spending bills do we have an actual budget.

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3.

The most significant historic increase (pre-2000) to federal spending occurred when?

A.

Great Depression (1933)
B.

American Recession (1973)
C.

World War II (1944)
D.

Reagan Military Build-Up (1983)

Correct Answer
C. World War II (1944)

Explanation
Answer: Federal spending increased significantly around 1933 in response to the Great Depression during President Franklin D. Roosevelt's "New Deal." But the most significant increases came during World War II. In 1944, outlays reached an all time high of 44 percent of the GDP. Other than during World War II, and prior to the Great Recession the peak of federal spending was in 1983 during the Reagan military build-up.

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4.

In 1920 federal spending totaled around 10% of U.S. Gross Domestic Product (GDP). GDP makes up what percentage of federal spending today? Gross Domestic Product (GDP) is one way of talking about the size of an economy and can be measured by adding up all of the spending by individuals, businesses, and government along with the value of products exported to foreign countries, while subtracting all of the products imported from other countries.

A.

24%
B.

12%
C.

60%
D.

43%

Correct Answer
A. 24%

Explanation
As part of the fiscal year 2013 budget request, the Obama Administration proposed roughly $3.7 trillion in total federal spending. Federal government spending now accounts for 24 percent of the total U.S. Gross Domestic Product (GDP). Federal spending comes back into our communities in many ways, much of it in the form of cash assistance, often funneled through state and local agencies or programs. Programs like the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) provide assistance to individuals and families, while others like the Community Development Block Grant (CDBG) program allow communities to fund public and private infrastructure projects.

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5.

More than 70 percent of Americans oppose cuts to:

A.

The Justice Department
B.

Military spending
C.

Social Security & Medicare
D.

Housing & Urban Development

Correct Answer
C. Social Security & Medicare

Explanation
Over half of President Obama’s proposed 2013 budget - 62 percent - funds mandatory spending, which includes earned-benefit programs like Social Security and Medicare. Those two programs are overwhelmingly popular among the American public. A September 2011 Reuters poll found that more than 70 percent of Americans oppose cuts to those programs, with fully 77 percent of Americans opposing cuts to Social Security.

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6.

Discretionary programs - like education, the military, and environmental protection - account for what percent of President Obama’s fiscal 2013 budget?

A.

45%
B.

31%
C.

12%
D.

68%

Correct Answer
B. 31%

Explanation
Answer: President Obama released his fiscal year 2013 budget proposal, in which Discretionary programs account for 31 percent of the new budget. Discretionary spending refers to spending set on a yearly basis by decision of Congress. Such spending is usually authorized by Congress in another act.

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7.

President Obama favors tax reform in accordance with what rule?

A.

Buffet Rule
B.

Gates Rule
C.

Margaritaville Rule
D.

Equality Rule

Correct Answer
A. Buffet Rule

Explanation
Answer: A February 2012 poll found that 85 percent of Americans favored raising taxes on the wealthy to help reduce budget deficits. President Obama favors tax reform in accordance with the “Buffet Rule”, which suggests that no millionaire should pay a lower tax rate than middle-class Americans.

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8.

Education spending accounts for 2 percent of the new budget; roughly the share that has gone to education for decades. What percentage of Americans, in a February 2011 poll, favored increasing education spending?

A.

78%
B.

45%
C.

62%
D.

12%

Correct Answer
C. 62%

Explanation
Answer: A February 2011 poll that asked Americans what kinds of spending should be cut to reduce deficits found that 62 percent favored increasing education spending, despite their worry about deficits.

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9.

Of the following, which takes up the smallest percentage of proposed 2013 total budget funding?

A.

Interest on Debt
B.

Veteran’s Benefits
C.

Social Security, Unemployment & Labor
D.

Energy & Environment

Correct Answer
D. Energy & Environment

Explanation
In President Obama’s proposed fiscal year 2013 total budget (combined discretionary and mandatory), Interest on Debt accounts for 7% of spending, Veteran’s Benefits for 4%, Social Security, Unemployment & Labor for 34% and Energy & Environment for 1%.

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10.

Military spending, including funding for wars in Iraq and Afghanistan, declined by what percent in President Obama’s proposed 2013 budget?

A.

2%
B.

21%
C.

14%
D.

6%

Correct Answer
D. 6%

Explanation
Answer: Military spending, including funding for wars in Iraq and Afghanistan, declined by 6 percent, though the Department of Defense base budget - which excludes war operations - declines by only 2.6 percent.

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