Budgets, Taxes, and Spending in a multi party presidential republic.
It's been a while.
In a presidential republic, the president, or more specifically in the United States, the Federal Treasury and the Secretary of the Treasury spends money on behalf of the United States and borrows any money necessary to do this.
But it is illegal to spend any money in the United States as part of the federal government unless authorized for by law.
That doesn't necessarily mean that all spending comes to a close in any fiscal period provided for by a budget but they do need to be rooted in a statute. There is no way a president can collect without this.
A few important constitutional caveats. Military spending expires at least once every two years, as per Article I Section 8, where the Congress can raise and support armies but appropriations of money to that use last no more than two years. The salaries of the Congresspeople themselves cannot be changed without an intervening election to the House of Representatives, as per the 27th amendment. The salaries of federal judges are also secure and cannot be lowered during their term. Congresspeople cannot be appointed to any office where the salary has been increased during the term the congressperson has been elected to serve (including senators). And the president's salary can neither be increased nor decreased during their term, and the president cannot receive any other domestic emolument.
This also applies to taxation and debt. They also cannot be raised without authorization of law, and while some expire periodically, others don't and stay put until changed. However unless authorization has been provided, money in the treasury can't be withdrawn without authorization, so the president could not in theory have just used the money remaining due to the surplus America had at the end of the Clinton years for whatever they wanted.
Bills imposing a tax also need to be introduced in the House of Representatives, although the Senate could take a House bill and throw out anything they don't like and amend it and pass it such that it could impose a tax, but the House would have to approve of that attempt.
Taxes also need to be apportioned by state population, unless they are a kind of income tax, as per the 16th amendment.
As you hopefully know, laws are passed by congress on its own initiative and the president vetoes or signs the bill, unless they pocket veto them. Ergo, some duality of power does exist, but it depends on the political will of the president to veto a bill and the need for them to have at least 1/3 of the members of either or both houses to help them when it comes to a veto on any laws.
The budget really is just a law that is normally meant to expire about once a year (but not necessarily always once per year, the constitution says nothing on this issue.
Normally there are rules in both houses that change how bills can be introduced and many give a lot of power to the majority leader in the Senate and to the Speaker of the House and make it fairly easy for any filibuster to stall the bill too. But some kinds of laws are basically excepted from this. Three basic ways this works is a budget reconciliation bill, a motion to repeal a state of emergency imposed by the president, and resolutions to nullify federal executive rules. Note, they do not change anything about the power of the president to veto the law, in any case they need a 2/3 vote to do so, but this does take a lot of the power away from the party leadership in the caucuses and from the minority party as a united block in the Senate if it has 41 or more senators, which they almost always have since the beginning of the 80s. This basic procedure is outlined by the Congressional Budget and Impoundment Control Act of 1974.
Also note that sometimes a president has authority to impound funds as well despite the very last sentence I wrote, this was the basis of Donald Trump delaying payments for Ukraine last year and which eventually resulted in an impeachment without conviction. This can be for benign reasons but still remains controversial and the president still must use the authority in law they have to do it, such as if it is in their judgment that a country is for instance giving military aid to terrorists and the American money would just end up funding them.
More important information is that the federal government does not pass all of the spending as ordinary budget, because about 65%-75% of it is based on mandatory spending, things which do not expire year to years. Things like paying off the national debt, salaries of judges, those are included, but the biggest programs are social security, IE what Americans think of when they think of elderly benefits and federal unemployment insurance (and also, you don't pay into a fund which you take out of later, you pay into the benefits, that money is immediately spent to give to today's recipients, and once you become a recipient, you take a portion of any money social security has at that time). They also include medicaid, a program for healthcare for the extremely destitute in some states which have not expanded it as part of the Patient Protection and Affordable Care Act (AKA Obamacare) and more generally for the poorer people in those which have expanded it. And they also include medicare, basically the closest thing America has to a single payer healthcare insurance system where the government pays for the care of seniors but doesn't directly operate the care itself.
The discretionary spending is what happens annually or at least in general, regularly. This is what America's budget, to the extent it has a single budget, genuinely is majority dedicated to defense and military spending (and it is about 3% of GDP, were other democratic countries tend to have it around 1-2.5% of GDP). The remainder is all of the rest of the normal federal spending like the federal aid to highways. The federal government, aside from defense contracts, generally gives this money to others to spend to achieve the objectives of the congress and president at any given time, and a lot is dispersed to states either as a bloc grant where the states decide mostly on how to spend it and categorical grants, where they have little say other than they hold the money.
Also, remember that anything not based in the constitution here is irrelevant if Congress passes a law or amends an existing one to do something, although they would not usually be privileged motions that can change the relative power of the party leadership and the filibuster. This is the basis of the COVID-19 spending which is happening in the US this year. TARP (Troubled Asset Relief Program) grants were another example.
Other vernacular worth knowing is that a deficit (or sometimes surplus) is the difference of the revenue of the US vs it's spending, which is made up for by the treasury getting bonds and debt securities. The debt is the total amount of this deficit from all of American government history since there was such a thing as American national credit with which to get loans. The US has a very low interest rate on those bonds it does get, sometimes making it cheaper than free to actually spend money in some ways if the present day spending manages to increase the GDP which the US can tax, but you must always make sure that you pay it back and look like you will long term if you want to keep those low rates. It only has to get worse once before the trust can evapourate. Greece learned this the hard way.
A couple tax words that also are important. A value added tax is literally what it sounds like, a tax on the value someone or something adds to a thing. IE when a store sells an item, it pays taxes on their sales but they subtract non wage costs they had to create it such as the cost of buying the things they sell. It happens all the way down the chain and often taxes actual economic activity pretty well, a part of why the European Union member states tend to rely on VAT a lot. Ted Cruz actually proposed such a tax (although the specific rates he had in mind would have led to a bigger deficit) as a possible replacement to many types of revenue sources, when he was running for president in 2016.
Income tax is exactly a tax on your actual income, but the tax codes normally provide some options such as where the income was earned (why many places register their legal locations in places where they can benefit, in America that normally means Delaware). Deductions subtract a given amount from your total income. An income of 60,000 dollars with a 16.67% deduction, a 10% tax rate, and 20% tax credit would be a 10,000 dollar deduction, for 50,000 dollars which can be taxed, 5,000 dollars which is the amount of tax owed, and the tax credit relieves you from 20% of the 5000 dollars, so your total tax is 4000 dollars, and 4000/60000 is 6.67% effective tax. When people say that say Amazon or a rich person might pay 0% taxes, this is what ends up happening, not paying an effective tax.
Corporate tax is basically the same on corporations which are not tax exempt (a corporate entity is legally anything with a legal identity, but things like a union or charity, while having a legal identity, is not producing directly economic activity, so they are excepted) and the same kinds of ideas about deductions, credits, rates, and effective rates apply.
Payroll taxes are paid by you and your employer, and in America, this mostly means the fund used to pay for social security. When people are talking about the idea that social security is capped, what they are probably meaning is that relation to the part of the payroll tax used to pay for it, if you happen to, have at least as of April 2016 according to Hank Green, be earning over 118 thousand dollars, you stop paying for social security.
Capital Gains Taxes also are basically a tax on capital, things, real estate, bonds, and importantly, stock shares, and if you say made 50 thousand dollars on the stock market and the tax is 5%, you pay 2500 dollars in tax in relation to that.
Wealth taxes are about everything about you. A property tax actually does this in relation to the valuation of only real estate property, but a wealth tax considers everything you have access to that is valuable. If you owe more than you have in cash, you need to liquidate the asset (or maybe the government will liquidate it and you give the thing to be liquidated over). Normally there is a limit to how far this can go, but it does importantly give you a reason to spend money now or invest in things that will be used to generally create an economy.
Excise taxes are about certain types of products, like cigarettes, but are otherwise a sales tax. Estate taxes are imposed on what is left of an estate if the person dies or goes permanently missing to the point that people agree they're probably dead, and it only takes into consideration what the person in question had and has nothing to do with the person inheriting the things, and the executor of a will would usually be responsible for this.
And tariffs are an amount an importer pays, although because very few people purchase their things directly and are thus not the importer, they normally buy the thing to sell domestically and the price is increased to account for the tariff. Many tariffs these days have been massively reduced from what they once were, especially between countries with good relations like Canada and the European Union and Canada, Mexico, and America also having reduced a huge amount of their tariffs, but note that for any political discussion before the New Deal in America, federal revenue depended heavily on tariffs, and often were basically the only source of income for the federal government. They remain important though as people who make and sell things must take into account these tariffs and must consider them macroscopically as opposed to the probably nickels a tariff on a particular product is likely to cost you (aside from maybe cars where it might be worth a few hundred in terms of how much higher the consumer cost will be).
Tax brackets are also very important. They define the rates at which you pay a tax. they are filled from the lowest bracket up progressively, although not all taxation is progressive in America (where in general, the curve of all taxes combined hits the poor the least and the richest the most, and flat taxes make this curve essentially flat and regressive taxes do the opposite). If you earn say 50 thousand dollars, under the current (July 21 2020) tax brackets in America, and are single, the first 9,875 dollars are taxed at 10%, so $987.50, the remaining funds up to 40,125 are taxed at 12%, so $3,630 dollars, and a total tax of 4617.50 dollars, and the last bit of money is taxed at 22%, so that's 50 thousand minus $40,125, or $2172.50 dollars in tax, added together with the rest, 6,790 dollars, or an effective rate of 13.58%. This is disregarding any other factors like credits or deductions, but know that they would reduce this amount to pay.
If you were to apply them, then you would normally apply the standard deduction of $12,500 dollars from $50,000, for $37,500, and that would affect the latter two brackets I used in the last paragraph, so start with the $987.50 from the lowest bracket, then an extra $3,315 with the 12% rate on the next amount, you never enter the third bracket, for a total of $4,302.50. From here you would add an earned income tax credit, and the amount for a single person filing it's 538 dollars, bringing the total tax to $3764.50 or an effective rate of 7.529% tax rate, only about 55% of what you would otherwise owe, just using the standard things that don't take into account anything like if you have a tax credit for healthcare (which most people at this level of income would be eligible for).
I would also advise that when making comparisons with other countries, it's normally a good idea to make comparisons per capita or as a percentage of GDP or similar types of comparisons and not take the literal number of dollars. The US's federal debt is a large number, currently about 106.7% of GDP, according to this website: https://worldpopulationreview.com/countries/countries-by-national-debt. That's certainly a lot of money but if you happen to also be looking for countries with kinds of ideas like you want, you should think about how big the US is as a population, a tax base, and with a long reputation of paying money when it is supposed to and never having an inflation spiral as devastating as it was in say Hungary or the Weimar Republic, as much as people had a problem with inflation back when Gerald Ford proposed the only notable program he had, Whip Inflation Now.
Budget transparency also tends to be high in the US even though there isn't as much the Congress can do to directly direct the president, Congress's biggest influence that can be exercised in the short term is often by threatening to not reauthorize federal programs and spending, and it's also one of the things that the majority leader of the Senate, the Speaker of the House, often the minority party in the Senate if it can avoid the majority's use of a reconciliation provision (as it can if the spending is not allowed under that process or they have a House majority that can block attempts), and often the committees and their chairs related to appropriations can have a lot of power over. The Congress very often requires the executive to report to Congress, and as Congress normally doesn't have much power to make it's own reports secretive, it normally indirectly gets into the hands of the public. Congress also often holds hearings that deliberately challenges or embarrasses the administration, and that works best if they are publicly embarrassed not in camera embarrassed.
But the budgets do tend to be quite technical in nature, same with tax codes, and it can be hard to understand them, and there are few good processes to have the public involved with creating this budget, especially if the goal is to do so outside of trying to do so state by state or district by district and to consider the aggregate of America, so this is the basis of the grade America gets on Budget Transparency, this website: https://www.internationalbudget.org/open-budget-survey/country-results/2019/united-states
Another thing to remember is that, combined with the state power over the biggest federal programs to actually implement the law and social objectives, state governments do far more to an individual living their lives, and their choices make radical differences to people. Federal authority is over the biggest picture things, although they can have some minutia on individual decisions and individual capacity and fiscal health.
What does all this have to do with a multi party system? I'll use another post to explain shortly.
In a presidential republic, the president, or more specifically in the United States, the Federal Treasury and the Secretary of the Treasury spends money on behalf of the United States and borrows any money necessary to do this.
But it is illegal to spend any money in the United States as part of the federal government unless authorized for by law.
That doesn't necessarily mean that all spending comes to a close in any fiscal period provided for by a budget but they do need to be rooted in a statute. There is no way a president can collect without this.
A few important constitutional caveats. Military spending expires at least once every two years, as per Article I Section 8, where the Congress can raise and support armies but appropriations of money to that use last no more than two years. The salaries of the Congresspeople themselves cannot be changed without an intervening election to the House of Representatives, as per the 27th amendment. The salaries of federal judges are also secure and cannot be lowered during their term. Congresspeople cannot be appointed to any office where the salary has been increased during the term the congressperson has been elected to serve (including senators). And the president's salary can neither be increased nor decreased during their term, and the president cannot receive any other domestic emolument.
This also applies to taxation and debt. They also cannot be raised without authorization of law, and while some expire periodically, others don't and stay put until changed. However unless authorization has been provided, money in the treasury can't be withdrawn without authorization, so the president could not in theory have just used the money remaining due to the surplus America had at the end of the Clinton years for whatever they wanted.
Bills imposing a tax also need to be introduced in the House of Representatives, although the Senate could take a House bill and throw out anything they don't like and amend it and pass it such that it could impose a tax, but the House would have to approve of that attempt.
Taxes also need to be apportioned by state population, unless they are a kind of income tax, as per the 16th amendment.
As you hopefully know, laws are passed by congress on its own initiative and the president vetoes or signs the bill, unless they pocket veto them. Ergo, some duality of power does exist, but it depends on the political will of the president to veto a bill and the need for them to have at least 1/3 of the members of either or both houses to help them when it comes to a veto on any laws.
The budget really is just a law that is normally meant to expire about once a year (but not necessarily always once per year, the constitution says nothing on this issue.
Normally there are rules in both houses that change how bills can be introduced and many give a lot of power to the majority leader in the Senate and to the Speaker of the House and make it fairly easy for any filibuster to stall the bill too. But some kinds of laws are basically excepted from this. Three basic ways this works is a budget reconciliation bill, a motion to repeal a state of emergency imposed by the president, and resolutions to nullify federal executive rules. Note, they do not change anything about the power of the president to veto the law, in any case they need a 2/3 vote to do so, but this does take a lot of the power away from the party leadership in the caucuses and from the minority party as a united block in the Senate if it has 41 or more senators, which they almost always have since the beginning of the 80s. This basic procedure is outlined by the Congressional Budget and Impoundment Control Act of 1974.
Also note that sometimes a president has authority to impound funds as well despite the very last sentence I wrote, this was the basis of Donald Trump delaying payments for Ukraine last year and which eventually resulted in an impeachment without conviction. This can be for benign reasons but still remains controversial and the president still must use the authority in law they have to do it, such as if it is in their judgment that a country is for instance giving military aid to terrorists and the American money would just end up funding them.
More important information is that the federal government does not pass all of the spending as ordinary budget, because about 65%-75% of it is based on mandatory spending, things which do not expire year to years. Things like paying off the national debt, salaries of judges, those are included, but the biggest programs are social security, IE what Americans think of when they think of elderly benefits and federal unemployment insurance (and also, you don't pay into a fund which you take out of later, you pay into the benefits, that money is immediately spent to give to today's recipients, and once you become a recipient, you take a portion of any money social security has at that time). They also include medicaid, a program for healthcare for the extremely destitute in some states which have not expanded it as part of the Patient Protection and Affordable Care Act (AKA Obamacare) and more generally for the poorer people in those which have expanded it. And they also include medicare, basically the closest thing America has to a single payer healthcare insurance system where the government pays for the care of seniors but doesn't directly operate the care itself.
The discretionary spending is what happens annually or at least in general, regularly. This is what America's budget, to the extent it has a single budget, genuinely is majority dedicated to defense and military spending (and it is about 3% of GDP, were other democratic countries tend to have it around 1-2.5% of GDP). The remainder is all of the rest of the normal federal spending like the federal aid to highways. The federal government, aside from defense contracts, generally gives this money to others to spend to achieve the objectives of the congress and president at any given time, and a lot is dispersed to states either as a bloc grant where the states decide mostly on how to spend it and categorical grants, where they have little say other than they hold the money.
Also, remember that anything not based in the constitution here is irrelevant if Congress passes a law or amends an existing one to do something, although they would not usually be privileged motions that can change the relative power of the party leadership and the filibuster. This is the basis of the COVID-19 spending which is happening in the US this year. TARP (Troubled Asset Relief Program) grants were another example.
Other vernacular worth knowing is that a deficit (or sometimes surplus) is the difference of the revenue of the US vs it's spending, which is made up for by the treasury getting bonds and debt securities. The debt is the total amount of this deficit from all of American government history since there was such a thing as American national credit with which to get loans. The US has a very low interest rate on those bonds it does get, sometimes making it cheaper than free to actually spend money in some ways if the present day spending manages to increase the GDP which the US can tax, but you must always make sure that you pay it back and look like you will long term if you want to keep those low rates. It only has to get worse once before the trust can evapourate. Greece learned this the hard way.
A couple tax words that also are important. A value added tax is literally what it sounds like, a tax on the value someone or something adds to a thing. IE when a store sells an item, it pays taxes on their sales but they subtract non wage costs they had to create it such as the cost of buying the things they sell. It happens all the way down the chain and often taxes actual economic activity pretty well, a part of why the European Union member states tend to rely on VAT a lot. Ted Cruz actually proposed such a tax (although the specific rates he had in mind would have led to a bigger deficit) as a possible replacement to many types of revenue sources, when he was running for president in 2016.
Income tax is exactly a tax on your actual income, but the tax codes normally provide some options such as where the income was earned (why many places register their legal locations in places where they can benefit, in America that normally means Delaware). Deductions subtract a given amount from your total income. An income of 60,000 dollars with a 16.67% deduction, a 10% tax rate, and 20% tax credit would be a 10,000 dollar deduction, for 50,000 dollars which can be taxed, 5,000 dollars which is the amount of tax owed, and the tax credit relieves you from 20% of the 5000 dollars, so your total tax is 4000 dollars, and 4000/60000 is 6.67% effective tax. When people say that say Amazon or a rich person might pay 0% taxes, this is what ends up happening, not paying an effective tax.
Corporate tax is basically the same on corporations which are not tax exempt (a corporate entity is legally anything with a legal identity, but things like a union or charity, while having a legal identity, is not producing directly economic activity, so they are excepted) and the same kinds of ideas about deductions, credits, rates, and effective rates apply.
Payroll taxes are paid by you and your employer, and in America, this mostly means the fund used to pay for social security. When people are talking about the idea that social security is capped, what they are probably meaning is that relation to the part of the payroll tax used to pay for it, if you happen to, have at least as of April 2016 according to Hank Green, be earning over 118 thousand dollars, you stop paying for social security.
Capital Gains Taxes also are basically a tax on capital, things, real estate, bonds, and importantly, stock shares, and if you say made 50 thousand dollars on the stock market and the tax is 5%, you pay 2500 dollars in tax in relation to that.
Wealth taxes are about everything about you. A property tax actually does this in relation to the valuation of only real estate property, but a wealth tax considers everything you have access to that is valuable. If you owe more than you have in cash, you need to liquidate the asset (or maybe the government will liquidate it and you give the thing to be liquidated over). Normally there is a limit to how far this can go, but it does importantly give you a reason to spend money now or invest in things that will be used to generally create an economy.
Excise taxes are about certain types of products, like cigarettes, but are otherwise a sales tax. Estate taxes are imposed on what is left of an estate if the person dies or goes permanently missing to the point that people agree they're probably dead, and it only takes into consideration what the person in question had and has nothing to do with the person inheriting the things, and the executor of a will would usually be responsible for this.
And tariffs are an amount an importer pays, although because very few people purchase their things directly and are thus not the importer, they normally buy the thing to sell domestically and the price is increased to account for the tariff. Many tariffs these days have been massively reduced from what they once were, especially between countries with good relations like Canada and the European Union and Canada, Mexico, and America also having reduced a huge amount of their tariffs, but note that for any political discussion before the New Deal in America, federal revenue depended heavily on tariffs, and often were basically the only source of income for the federal government. They remain important though as people who make and sell things must take into account these tariffs and must consider them macroscopically as opposed to the probably nickels a tariff on a particular product is likely to cost you (aside from maybe cars where it might be worth a few hundred in terms of how much higher the consumer cost will be).
Tax brackets are also very important. They define the rates at which you pay a tax. they are filled from the lowest bracket up progressively, although not all taxation is progressive in America (where in general, the curve of all taxes combined hits the poor the least and the richest the most, and flat taxes make this curve essentially flat and regressive taxes do the opposite). If you earn say 50 thousand dollars, under the current (July 21 2020) tax brackets in America, and are single, the first 9,875 dollars are taxed at 10%, so $987.50, the remaining funds up to 40,125 are taxed at 12%, so $3,630 dollars, and a total tax of 4617.50 dollars, and the last bit of money is taxed at 22%, so that's 50 thousand minus $40,125, or $2172.50 dollars in tax, added together with the rest, 6,790 dollars, or an effective rate of 13.58%. This is disregarding any other factors like credits or deductions, but know that they would reduce this amount to pay.
If you were to apply them, then you would normally apply the standard deduction of $12,500 dollars from $50,000, for $37,500, and that would affect the latter two brackets I used in the last paragraph, so start with the $987.50 from the lowest bracket, then an extra $3,315 with the 12% rate on the next amount, you never enter the third bracket, for a total of $4,302.50. From here you would add an earned income tax credit, and the amount for a single person filing it's 538 dollars, bringing the total tax to $3764.50 or an effective rate of 7.529% tax rate, only about 55% of what you would otherwise owe, just using the standard things that don't take into account anything like if you have a tax credit for healthcare (which most people at this level of income would be eligible for).
I would also advise that when making comparisons with other countries, it's normally a good idea to make comparisons per capita or as a percentage of GDP or similar types of comparisons and not take the literal number of dollars. The US's federal debt is a large number, currently about 106.7% of GDP, according to this website: https://worldpopulationreview.com/countries/countries-by-national-debt. That's certainly a lot of money but if you happen to also be looking for countries with kinds of ideas like you want, you should think about how big the US is as a population, a tax base, and with a long reputation of paying money when it is supposed to and never having an inflation spiral as devastating as it was in say Hungary or the Weimar Republic, as much as people had a problem with inflation back when Gerald Ford proposed the only notable program he had, Whip Inflation Now.
Budget transparency also tends to be high in the US even though there isn't as much the Congress can do to directly direct the president, Congress's biggest influence that can be exercised in the short term is often by threatening to not reauthorize federal programs and spending, and it's also one of the things that the majority leader of the Senate, the Speaker of the House, often the minority party in the Senate if it can avoid the majority's use of a reconciliation provision (as it can if the spending is not allowed under that process or they have a House majority that can block attempts), and often the committees and their chairs related to appropriations can have a lot of power over. The Congress very often requires the executive to report to Congress, and as Congress normally doesn't have much power to make it's own reports secretive, it normally indirectly gets into the hands of the public. Congress also often holds hearings that deliberately challenges or embarrasses the administration, and that works best if they are publicly embarrassed not in camera embarrassed.
But the budgets do tend to be quite technical in nature, same with tax codes, and it can be hard to understand them, and there are few good processes to have the public involved with creating this budget, especially if the goal is to do so outside of trying to do so state by state or district by district and to consider the aggregate of America, so this is the basis of the grade America gets on Budget Transparency, this website: https://www.internationalbudget.org/open-budget-survey/country-results/2019/united-states
Another thing to remember is that, combined with the state power over the biggest federal programs to actually implement the law and social objectives, state governments do far more to an individual living their lives, and their choices make radical differences to people. Federal authority is over the biggest picture things, although they can have some minutia on individual decisions and individual capacity and fiscal health.
What does all this have to do with a multi party system? I'll use another post to explain shortly.
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