Government_Ch10_Homework-1

=**Government Chapter 10 Homework #1**= Answer the following from the reading passages.

1. "In this world, nothing is certain but death and taxes," Benjamin Franklin once said. This quote sums up a universal feeling about taxes. Taxes are payments made by individuals and businesses to support government activities. Individual income tax is one of the biggest taxes Americans pay and is the biggest source of revenue for the federal government. This tax is levied on a person's taxable income, which is an individual's total income minus certain deductions and exemptions. People may elect to take deductions for contributions made to charity, for state and local income taxes, for home mortgage interest, and other expenses. The government also allows personal exemptions or tax credits that reduce the amount of taxable income such as exemptions for the number of dependents. A dependent is someone who depends primarily on another person for basic items such as food, clothing, and shelter. Often dependents are children under the age of 18. The income tax is a progressive tax, which means that it is based on the tax payer's ability to pay. A regressive tax is one that is more of a burden on lower income. The higher a person's income is the higher the person's tax rate. Those with incomes over $250,000 (per year) pay 2/3 of all the income tax. The deadline for filing income tax returns each year is April 15. Nearly everyone with taxable income in the preceding year must file income tax returns by this date. During the year, employers withhold a certain amount of money from the workers' wages. This withholding pays the anticipated taxes ahead of the April 15 filing date. Self-employed people who do not receive regular salaries are expected to file estimates of their income four times per year and make payments based on each estimate. Corporations also pay a corporate income tax. The U.S. has the highest corporate income tax rate in the world. Nonprofit organizations such as churches, labor unions, colleges, and public schools are exempt from this. There are also social insurance taxes. The government collects huge sums of money each year to pay for Social Security, Medicare, and unemployment compensation programs. Employers and employees pay the same percentage of a worker's pay into the social insurance taxes. Excise taxes are taxes on the manufacture, transportation, sale, or consumption of goods and the performance of services - gas and cigarette taxes are examples. Sometimes this type of tax is called a luxury tax since it's often levied on expensive goods such as exotic cars. Customs duties, or import tariffs are on goods that come into the country. The federal government imposes these to raise revenue and also to protect American businesses and agriculture from foreign competition. This was the major source of federal revenue before the 1913 force shift saw the start of the income tax. Estate and gift taxes are also federal taxes. An estate tax is on property and money left after someone has died. A gift tax is on money someone gives while they are living. Governments at all levels can use taxes to influence the economy. Some taxes are aimed to encourage an activity such as deductions for buying a home to encourage buying new homes. Tax exemptions are a privilege granted by government that legally frees certain types of property, sales, or income from taxpaying obligations. One example is churches since government wants to encourage churches since they teach good morals and good citizenship. Some tax exemptions subsidize certain groups such as farmers since the government looks to keep certain food prices low (such as milk). Major tax reform took place in the 1980s. Tax rates in the 1950s and 1960s were as high as 70% on the wealthiest BUT there were so many tax exemptions that no one paid near that rate. In the 1980s, the tax rates were lowered significantly, but the number of exemptions were also decreased. Debt is a major problem today that faces our federal government. The government borrows money by selling securities, or financial instruments that include bonds, notes, and treasury bills. When government spends more than it brings in during one year, this is a deficit. All of the yearly deficits added together make the national debt.
 * What is the biggest source of federal revenue? (A) borrowing (B) income tax (C) corporate tax (D) property tax (E) all (F) none**


 * Workers who have children as dependents get (A) tax credits (B) raises (C) more entitlements (D) social insurance (E) all (F) none**


 * Customs duties are on (A) exports (B) imports (C) property (D) law (E) all (F) none**


 * Some of what you pay for gas goes to the government in an excise tax, which is on (A) consumption (B) transporting (C) sale (D) manufacture (E) all (F) none**


 * When the government spends more than it brings in during a year, that is - spending. (A) fixcal (B) debt (C) securities (D) deficit (E) all (F) none**

2. Today, the federal budget is used to predict and control revenue and spending. The budget follows a fiscal year, or the 12 month accounting period from October 1 to September 30 of the next year. The executive and legislative branches are responsible for preparing the budget. The president typically proposes a budget and the Congress uses that proposal to determine its taxing and spending policy for the upcoming fiscal year. When the president prepares a budget, it usually reflects the president's priorities in terms of programs that money needs to be spent on and ideas on taxing. The Budget and Accounting Act of 1921 makes the president responsible for the budget. The Office of Management and Budget is an executive agency that works on the budget for the president under the president's direction. The president also has the Council of Economic Advisors to confer with the president on budget topics. Budget making begins in the spring when each executive bureau and agency draws up a list of their own spending plans and submits it to the OMB. The president typically sends the agencies a guideline for spending under the upcoming budget proposal. For example, the president would indicate to the Defense Department ideas on either expanding or cutting areas of national defense. There are parts of the budget that are called uncontrollable. These are expenditures required by law or resulting from previous budgetary commitments. A major part of uncontrollable spending is the entitlements, which are benefits that include Social Security, pensions for federal workers, Medicare, Medicaid, welfare, unemployment compensation, and benefits for veterans. The other uncontrollable is the interest that must be paid on our national debt. The higher the debt goes, the higher the amount of interest there is to be paid. The highest amount of federal spending is on areas of health (due to Medicare, Medicaid, and the Affordable Care Act). Article 1 Section 9 of the Constitution requires Congress to approve of all federal spending. Thus, the president might propose a budget, but Congress has the authority to pass the budget (although the president can sign or veto what Congress passes). Congress can pass the president's proposal, alter it, change it drastically, or even draw up its own proposal. The Congressional Budget Office (CBO) is a bipartisan group that gives the Congress estimates on costs to different budget proposals. The CBO had been set up in the Congressional Budget Act of 1974.
 * Which agency evaluates spending for Congress? (A) Office of Management and Budget (B) Council of Economic Advisers (C) Congressional Budget Office (D) Treasury Department (E) all (F) none**


 * The largest percentage of federal spending is on (A) defense (B) health (C) national security (D) interest on the debt (E) all (F) none**

3. Federal spending can generally be broken down into four major components: direct benefit payments to individuals, national defense, discretionary spending, and interest on the national debt. Spending on Social Security and federal health programs (Medicare, Medicaid, Affordable Care Act) has become the biggest part of the federal budget. National defense is certainly an important area of the budget and is an area where the states were not competent on their own so definitely a federal concern. It's important for America to have a strong national defense for protection of our own nation as well as helping to protect freedom around the world. Discretionary spending involves spending in areas that the president and Congress view as important such as energy programs, education, the environment, transportation, criminal justice, and various other areas. More recent federal budgets have increased federal aid to states while shifting federal grants away from infrastructure investments (roads, bridges, dams, etc) and toward more public-welfare programs. The term "investment" when used by the government is a support-seeking way to say more spending. The federal government has the ability to impact the economy in two major ways. One way is fiscal policy, which is when the government impacts the economy through taxing and spending. History proves that lower taxes typically encourage business growth and helps the economy in the long run. However, many politicians see short term spending as more prevalent and so often increase taxes. Same logic goes with spending. The other way is monetary policy, which deals with the money supply and interest rates. The Federal Reserve, or the Fed, is the central banking system of the U.S. and is the one that controls monetary policy. There is a 7-member board of governors that controls the Fed headed by the Chairman of the Federal Reserve. They are responsible for implementing the monetary policy. In recent years, the Fed has printed a large amount of money so that the Treasury Department can cover the large yearly deficits. This has led to inflation, which leads to an increase in prices. What happens is since the federal government spends more than it brings in, the U.S. Treasury will go to the Fed for money to borrow. The Fed buys Treasury bonds, which means the U.S. Mint (part of the Treasury Department) has to print more money.
 * Fiscal policy is what the government (A) borrows on its own credit (B) earns from corporations (C) sets interest rates at (D) takes in and spends (E) all (F) none**


 * Monetary policy is controlling the (A) amount of credit in the U.S. (B) spending of money (C) taxes collected (D) the supply of money (E) all (F) none**


 * How does the Federal Reserve impact the economy? (A) sets tax policy (B) says where money is spent (C) orders the Treasury to print more money (D) sets interest rates (E) all (F) none**

4. There are several ways to describe the American economy. The U.S. has a free enterprise or free market system. It is also called capitalism. Our economy is based on the motivation of buyers and sellers or supply and demand. Some call our economy a mixed economy since we have private ownership of business and property, but there is some government involvement. The U.S. plays a leading role in promoting free trade around the world. in recent years, the federal government has emphasized lower tariffs and promoted free trade for many items. The North American Free Trade Agreement (NAFTA) signed by Canada, Mexico, and the U.S. in 1993 was designed to gradually eliminate trade restrictions between the three. Consumers benefit when this increased competition lowers prices. This agreement increased American business that sends goods to Canada and Mexico. However, there was some negative as some businesses have relocated to Mexico or Canada costing some American jobs. The statistics show that more American businesses and citizens were helped by NAFTA than hurt. The government will often try to encourage certain business practices with federal subsidies - government giving money to businesses either in tax breaks, credits, or grants. The U.S. Commerce Department is set up to help the growth of business in the U.S. In recent years (since the 1913 Force Shift) the government has gradually increased its control over business. The government often establishes regulations, or rules that the businesses have to follow. Many are good since they protect unfair business practices and unfair treatment of workers and consumers. However, many government regulations go beyond merely keeping us safe and will increase costs on a business, which could often prevent business growth or hiring. The Commerce Clause is the section of the Constitution that says Congress has the power to regulate commerce. Commerce, or trade is loading the goods, the shipping of those goods (whether by wagon, boat, train, truck, or plane) and then unloading of those goods. If its from a foreign country or from state-to-state (interstate), then Congress can regulate it or set controls over it. However, in 1936 the Supreme Court ruled that the Congress could regulate any action that "directly impacts" commerce. This changes the original intent of the Commerce Clause. Now, the government can make a rule for a business and claim that it impacts commerce so they have the power. Ever since this 1936 Supreme Court ruling, the number of regulations over businesses increased every year. History shows that when the government is friendly to business and encourages growth and hiring then the economy is good. There is a bad economy when government is harsh on business. The U.S. has laws against a monopoly, which is when a single producer controls the entire sale of a product. These laws are often called anti-trust laws. A trust is when several corporations combine their stock and have a board of trustees run the corporation as one giant corporation, or one giant monopoly. There are numerous laws that protect consumers. The Food and Drug Administration (FDA) ensures that food and medicine is not harmful. The Federal Trade Commission (FTC) is to protect consumers by regulating business. The Consumer Product Safety Commission establishes safety standards and ensure that products we buy are not hazardous. The Securities and Exchange Commission (SEC) regulates the stock market and the trading of securities, or stocks and bonds. The government protects workers as well from discrimination and wrongful treatment on the job. The government protect the rights of workers to form unions and the process of collective bargaining, or when the union negotiates a contract with the owners of a company. Unions can benefit workers by protecting all workers and looking for good working conditions. However, unions have become very political and use union dues for political campaigns for candidates that not all union members support. There has been a decline in union involvement in recent decades.
 * The Federal Trade Commission regulates (A) safe food and medicines (B) stock market (C) business (D) environment (E) all (F) none**


 * What does the Food and Drug Administration do?**


 * How is the U.S. a mixed economy?**


 * How did the Supreme Court change the original intent of the Commerce Clause?**

5. Despite being a more urban and industrialized nation, the government supports agriculture because farming is vital to the nation. During the Civil War, the government passed various laws to aid farmers and provide more land. In the early 1900s, however, the farmers faced decling crop prices due to more international competition. Farmers were given aid from the government. More recently, the Department of Agriculture helps farmers market their crops and works to help with prices. The Rural Electrification Administration (REA) helped bring electricity and telephone service to rural areas. Under a government program of price supports, Congress established a support price for a particular crop. If the price goes lower, the farmer is lent money from the Commodity Credit Corporation. When there's a surplus of crops, the CCC holds the surplus crops in government storage facilities until the market price goes up and the crop can be sold. It also uses surplus crops in welfare programs for school lunches and for famine relief overseas. To avoid large surpluses each year, the government adopted the idea of acreage restriction, or acreage allotment. This means the government only pays support prices for the crops grown in the assigned number of acres. Conserving the nation's land has become a major role of the Forest Service in the Agriculture Department. Also, the Environmental Protection Agency (EPA) has grown in its power to regulate businesses in terms of environmental regulations. Various Clean Air Acts were passed through recent decades which aimed at cutting carbon emissions from factories. Various new laws also would target water pollution. Environmental issues came up after Rachel Carson wrote //Silent Spring// about the dangers of pesticides and insecticides on the environment. Environmentalism often conflicts with energy today. The United States has a vast reserve of oil in Alaska (ANWR - Arctic National Wildlife Refuge), but the land is a wildlife refuge. Environmentalists don't want to see any drilling for oil even though doing so would keep America from needing Middle Eastern oil and the U.S. has the safest drilling methods in the world. Even closer to home is the Marcellus Shale region, which can get natural gas from the shale in the ground. Environmentalists are against this. There have been attempts to use solar and wind energy, but it is not nearly efficient enough to provide the amount of electricity that Americans require.
 * ANWR is in the state of A- and is known for being rich in o-- and is a topic of controversy today in terms of d--- for o-- on that land.**


 * What is a way the government attempts to help farmers?**

6. The 1913 Force Shift led America into a century of government growth. The Great Depression was a time that saw massive growth in government as well as more government-reliance by American citizens. During the depression, the federal government initiated two types of programs. One type would be social insurance programs. Social insurance was started by Social Security, or OASID insurance (old age, survivors, and disability). Medicare (health care for the elderly) would be a social insurance program that started in the 1960s. A third part of social insurance is unemployment compensation. The other type of programs the government developed would be public assistance programs. Such programs include Supplemental Security Income (SSI) that provides income for those with low income (welfare), old age, blind, or disabled. This is run by the Social Security Administration. Another type of public assistance is food stamps to assist those with low income with money to purchase food. Medicaid is health care for those with low income. Supporters of public assistance say these programs provide assistance for those with low income. Opponents show that such programs lock people into a life of poverty since there is less incentive to work out of poverty when assistance of given for nothing. In the 1790s, the Congress set up the United States Public Health Service. Today, the government is deeply involved in promoting public health. The largest amount of federal spending is on health (Medicare, Medicaid, and other federal programs dealing with health care). The Food and Drug Administration (FDA) tests all food and drugs (medicine) to make sure they are safe for the public.
 * Which is NOT a public assistance program? (A) Medicare (B) Medicaid (C) Food Stamps (D) SSI (E) all are public assistance programs (F) none are public assistance programs**


 * is health care for the elderly while is health care for those with low income.**


 * S- S--- is retirement pensions for the elderly and f--- s- enables low income families to purchase groceries.**


 * What does the Food and Drug Administration do?**

7. Education was intended to be a state-by-state issue as the states are competent in the area of education on their own. However, the federal government spends a lot of money on education and has various controls over education with mandates over the states. The federal government is also involved in spending on higher education. During the Civil War, the government passed a law to set up agricultural schools (today's state universities). The G.I. Bill during World War II helps pay for higher education for those in the military. Debates continue over the role of the federal government in education since, based on the Constitution, education is a state issue. The debate over school choice goes on even at the federal level. Those who favor school choice feel that tax dollars should help low income students attent a charter or private school if the parents do not want to use the public school. The federal government provides money for housing for those with low income. "Section 8" housing or public housing is such housing - for those with low income. Fannie Mae and Freddie Mac are two companies that get federal money to loan money to people who are having a hard time securing a house loan from a regular bank. Giving mortgages to those who can't afford to pay the mortgage are called subprime mortgages and are a reason for the 2008 housing market collapse. The Securities and Exchange Commission (SEC) should have been the agency to recognize the problems in this area in 2007, but did not. To help the decline of the inner cities, the federal government would support urban renewal programs. Such programs can get federal money and involve rebuilding deteriorating areas or removing run-down properties. The goal is to restore slum areas and make cities more attractive. The Department of Housing and Urban Development runs this program as well as public housing altogether. The federal government is also involved in transportation with the interstate highway system. The federal government helps to fund mass transit programs in cities such as busses, subways, and commuter trains.
 * The largest percentage of federal spending is on (A) defense (B) health (C) national security (D) education (E) all (F) none**


 * Which agency failed to stop the 2008 financial crisis since it is the one to regulate Wall Street and banking? (A) FTC (B) SEC (C) IRS (D) Federal Housing Authority (E) all (F) none**


 * Which department runs the urban renewal programs and public housing? H-- and U D--**

8. Foreign policy consists of strategies and goals that guide a nation's relations with other countries and groups in the world. The principle goal of American foreign policy is to preserve national security. This means the protection of a nation's borders and territories against invasion or control by foreign powers. Another goal of foreign policy is free and open trade to preserve access to natural resources and maintain overseas markets for American businesses. World peace is a third goal of foreign policy. A fourth goal is to support democratic governments in the world. The United States is a clear example of liberty and justice. A fifth goal is to provide humanitarian aid in the way of food, medical supplies, and technical assistance to underdeveloped nations or nations that suffered a disaster. America's foreign policy went from isolationism (avoiding involvement in world affairs) to internationalism (being involved in world affairs). In George Washington's farewell address, he warned against getting too involved in foreign entanglements and urged a policy of isolationism. The U.S. maintained more of an isolation status until the world wars led America into being a world leader. The Cold War saw America lead the free world against communism. More recent foreign policy issues have dealt with Islamic terrorism in the world. Two geo-political opponents of the U.S. today in terms of influence in the world are Russia and China.
 * Recent foreign policy has been impacted by the (A) Cold War over communism (B) War on Terror from Islamic terrorists (C) World War I and World War II (D) illegal immigration (E) all (F) none**


 * What are the 5 goals of foreign policy (n s, f and o t, w p, aid help or support for d g, and h aid)?**


 * What did George Washington say about foreign policy?**

9. The president has the bulk of the power in terms of foreign policy. The president is commander-in-chief of the military and can therefore maneuver soldiers and equipment around the world without the approval of Congress. The president also appoints officials to represent the U.S. is foreign nations, which are called ambassadors. The conducting of negotiations between nations is called diplomacy. The president also receives ambassadors (foreign ministers) of other nations. The president is also able to recognize the legitimacy of a foreign government. Presidents have the power to make a treaty (wth approval of the Senate). A treaty is a formal agreement between the governments of two or more nations. As head of state or chief of state the president is the symbol of the nation and represents the U.S. in the world. Presidents have various advisers when it comes to foreign policy. The Secretary of State is the president's chief foreign policy advisor. The State Department is in charge of all foreign embassies (where our ambassadors stay). The Secretary of Defense is the president's chief advisor on national security and the military. The Joint Chiefs of Staff are the chiefs of the military branches and are part of the Defense Department who adivse specifically on military operations. This is especially necessary in times of military operations. The National Security Advisor is another key position that is the director of the National Security Council. The Central Intelligence Agency (CIA) gathers and analyzes intelligence on others in the world. The National Security Agency (NSA) is responsible for code-breaking and electronic spying. The powers the Congress has over foreign policy is mostly in the power to declare war. In addition, Congress must approve of all funding, which includes funding for foreign policy purposes. The Senate has the power to ratify (approve) treaties. There is a way for the president to get around this and that is by forming executive agreements, which are like treaties but do not need Senate approval and are not binding once a president leaves office.
 * Which assists the president in making foreign policy? (A) State Department (B) Defense Department (C) CIA (D) National Security Council (E) all (F) none**


 * Which group is part of the Defense Department that gives military advice? (A) CIA (B) National Security Council (C) Joint Chiefs of Staff (D) National Security Agency (E) all (F) none**


 * Who advises the president on foreign policy (chief advisor)? Who on national security?**


 * A-- represent the U.S. in foreign nations and are appointed by the president.**


 * D is conducting negotiations between nations.**

10. The State Department deals specifically with foreign policy. The Secretary of State is the president's chief foreign policy advisor. The Foreign Service is an agency in the State Department and mostly works in our embassies abroad. An embassy includes the official residence and officers of the ambassador and his or her staff. The primary function of an embassy is to make diplomatic communication between governments easier. Embassies are usually in the capital cities of a country. The U.S. also maintains consulates in major cities of foreign nations. A consulate is not normally involved in diplomatic negotiations serve mostly as a safeguard for Americans traveling abroad and to promote American business interests in foreign nations. The State Department has the power to issue passports, or documentation allowing a citizen to travel to another country. A visa is also issued by the State Department, which is documentation allowing a person from another nation to come into America. Nations often meet to deal with economics in the world. The G20 Summit is held yearly by the top economic nations in the world to discuss economics in the world. Foreign policy in action often includes treaties and international agreements. In mutual defense alliances, nations agree to support one another in case of an attack. One such treaty was the formation of NATO (North Atlantic Treaty Organization), which was originally formed by free nations in the Cold War for mutual defense against the Communist Bloc. With the collapse of Communism in Europe, NATO still exists as a defensive alliance among the members. The U.S. has similar agreements with nations in North and South America with the OAS (Organization of American States) and with ANZUS (Australia, New Zealand, United States). Foreign policy can also develop foreign aid agreements and programs. Foreign policy also involves dealing with unfriendly nations. One way is applying sanctions, which are measures such as withholding loans, arms, or economic aid to force a foreign government to cease certain activities. Use of military force is another way to deal with unfriendly nations.
 * Nations meeting at the G20 Summit are discussing (A) world peace (B) sanctions (C) economics (D) humanitarian aid (E) all (F) none**


 * What do you purchase from the State Department to travel to another nation?**


 * What do NATO, the OAS, and ANZUS have in common? (A) issue economic sanctions (B) trade agreements (C) defensive alliances (D) fight terror (E) all (F) none**

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