As seen in Figure 2, the composition of federal tax revenues has changed drastically over the past sixty years. While individual income tax revenue has remained relatively stable as a proportion of total tax revenue, payroll tax revenue has dramatically risen at the expense of corporate income tax revenue. This indicates that the substantial increase in human resource spending has affected the entire composition of the revenue side of the budget.
Section 4.3 - Emphasis of Budget Deficits The transformation of the federal budget over the last sixty years has revealed the evolving view of the government’s role in the U.S. economy. Prior to 1960, budget deficits were a rare occurrence except in times that demanded serious funding, such as periods …show more content…
GDP, whereas federal expenditures have grown substantially from 17% in 1960 to a peak of 24% in 2008-2010 and has started to trend downwards over the last few years as a result of a booming economy [9]. It is important to note that the rise and fall of revenues and expenditures are closely related to the economic and war conditions of the U.S.. As Figure 3 suggests, during times of economic despair as in the recent financial crisis, tax revenues are low because of unemployment and federal spending is high in order to stimulate the economy back to normal levels. Thus, it is important to be aware of the economic conditions when looking at the historical evolution of deficits and surpluses.
This higher emphasis on federal budget deficits contrasts significantly with state and local governments who are usually mandated to produce a balanced annual budget. In 2003, all the states except for Vermont had a legal requirement to balance their budget [12]. But then what makes the federal government any different from state or local government? Is it not viewed as irresponsible to spend more than you …show more content…
economy over the last sixty years despite being known for its capitalistic structure. Consequently, through the analysis of both federal expenditures and revenues, one can determine the role that society views the government should play in the U.S. economy over time. In the early 1960s, the federal government placed a higher importance on the protection of property and individual rights through substantial national defense spending. However, over the last sixty years, defense spending has gradually declined, which has been offset by a sizeable rise in human resource spending. This indicates the federal government’s role shifted more towards improving the welfare of society through human resource and welfare programs, such as Medicare and Social Security. Unfortunately, as seen by numerous historical instances, the federal government does not always do an efficient job of allocating resources and undertaking the correct policies. As a result, we proposed a policy recommendation that would revamp the FDA drug-approval process. This process renovation has the potential to cut drug prices and save a substantial amount of lives if implemented correctly. Our budgetary analysis and new policy discussion leads us to one key point. The U.S. democratic decision-making process deals with an arduous trade-off between equity and efficiency, which is characterized by the policy-making dissent