Review of Revenue Estimates in Federal

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Review of Revenue Estimates in Federal, State and Local Budgets |

Public Budgeting |

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1/28/2012 |

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The federal, state, and local budget is known as the infamous monetary tank from which money is distributed to various programs. Why are these budget plans causing such an uproar of approval or disapproval when it is proposed by the President or other authoritative authorities every February? The money utilized every fiscal year, which runs from October 1st of each year until the end of September of the following year, belongs to the people. The money is raised through income taxes, excise taxes (taxes on goods) and social insurance payroll taxes. Presently, the public is worried about how they will receive a fair share of money appropriations in such a slow economy. The deficits at each level have returned, which means that the government’s spending exceeds its raised revenues. The budgets are an exercise in making choices, and these choices will inevitably make a dramatic impact on individuals living in the United States of America.

Historical View

The present federal budget can be characterized by one word: deficit spending. It has been a way of life for the federal government since World War II and since the origin of the state and local levels, respectively. The last times that federal budget expenses were brought into balance with revenues were in 2000, 1998, 1969, and 1960. Prior to 1940, the federal budget was balanced, except in years of war and economic recession.

There are many theories to the causes of persistent federal budget deficits during the last forty years. Many experts believe the cause of the current deficit originates in policy mistakes of the 1980s, such as the reduction in taxes and increase in defense spending. Others believe that the American public is demanding more in government benefits than it is willing to pay for in taxes. However, the complex budget process may explain the persistent budget...