balanced budget

Examples of balanced budget in the following topics:

• Arguments for and Against Balancing the Budget

  • Balanced budgets, and the associated topic of budget deficits, are a contentious point within both academic economics and politics.
  • A balanced budget, particularly a government budget, is a budget with revenues equal to expenditures.
  • A cyclically balanced budget is a budget that is not necessarily balanced year-to-year, but is balanced over the economic cycle, running a surplus in boom years and running a deficit in lean years, with these offsetting over time .
  • John Maynard Keynes founded the Keynesian school, which promotes balanced governmental budgets over the course of the business cycle as opposed to annual balanced budgets.
  • Describe arguments against maintaining a balanced budget in the United States

• Components of the Cash Budget

  • The cash budget includes the beginning balance, detail on payments and receipts, and an ending balance.
  • A cash budget is a prediction of future cash receipts and expenditures for a particular time period, usually in the near future.
  • The cash flow budget helps the business determine when its income will be sufficient to cover its expenses and when the company will need to seek outside financing.
  • Accounts receivable, also known as Debtors, is money owed to a business by its clients (customers) and shown on the business's balance sheet as an asset.
  • One of the assets listed is cash, which factors into the overall budget.

• Gridlock in Government

  • Reagan’s policies of cutting taxes and increasing defense spending in relation to the Cold War had exploded the federal budget deficit, making it three times larger in 1989 than when Reagan took office in 1980.
  • He began an effort to persuade the Democratic controlled Congress to act on the budget.
  • Bush was further constrained by the emphatic pledge he had made at the 1988 Republican Convention—“read my lips: no new taxes”—and found himself in the difficult position of trying to balance the budget and reduce the deficit without breaking his promise.
  • In October of 1990, there was a brief government shutdown when Bush vetoed the budget Congress delivered.
  • Near the end of the 101st Congress, the president and congressional members reached a compromise on a budget package with the Omnibus Budget Reconciliation Act of 1990.

• The Balance of Trade

  • The twin deficits hypothesis is a concept from macroeconomics that contends that there is a strong link between a national economy's current account balance and its government budget balance.
  • If (T-G) is negative, we have a budget deficit.
  • Thus, budget deficits and trade deficits go hand-in-hand .
  • The twin deficits hypothesis implies that as the budget deficit grows, net capital outflow from a country falls.
  • The red line represents net imports, which is equivalent to the negative balance of trade, and the black line represents net borrowing, which is equivalent to the government budget deficit.

• Effect of a Government Budget Deficit on Investment and Equilibrium

  • A budget deficit will typically increase the equilibrium output and prices, but this may be offset by crowding out.
  • A government's budget balance is determined by the difference in revenues (primarily taxes) and spending.
  • A positive balance is a surplus, and a negative balance is a deficit.
  • The consequences of a budget deficit depend on the type of deficit .
  • As the economy grows more quickly, the budget deficit falls and the fiscal stimulus is slowly removed.

• Budgets, forecasts, and alternative scenarios

  • An extension of the cash flow forecast concept is the operating budget.
  • "A budget is a financial document used to project future income and expenses.
  • Then, as the year unfolds, actual income and expenses are posted to the accounting records, and compared to what was budgeted, and a variance from budget for each item budgeted (e.g. sales, selling expenses, advertising costs, etc) is calculated.
  • Most organizations take budget variance to date into consideration each month, and then prepare a revised budget (or forecast) for the balance of the year.
  • This step is particularly important if variances to date vary from the original budget in a major way.

• Life History Patterns and Energy Budgets

  • Energy budgets and life history strategies determine the type of reproductive capacity displayed by a population.
  • Thus, all species have an energy budget in which they must balance energy intake with their use of energy for metabolism, reproduction, parental care, and energy storage, as when bears build up body fat for winter hibernation.
  • Most of their energy budget is used to produce many tiny offspring.
  • Chinook salmon are an example of a population that uses its energy budget in one major reproductive event, dying shortly thereafter.
  • Describe the energy budgets of, and the life history strategies used in, reproduction

• The Forecast Budget

  • In order to determine the optical cash balance for a company, cash flows are estimated and a forecast is prepared.
  • The optimal cash balance is determined by looking at the four reasons for holding cash:
  • One of the best ways to determine the optimal cash balance is to fully understand cash flow patterns.
  • The pro-forma balance sheet method looks straight at the projected book cash account; if all the other balance sheet accounts have been correctly forecast, cash will be correct, too.
  • Both need to be adjusted for the difference between book cash and bank balances, which are often significantly different.

• Budget Resolutions

  • Congress must create an annual budget resolution in response to the President's budget request according to the Congressional Budget and Impoundment Control Act of 1974 (also known as the Congressional Budget Act) .
  • The budget resolution establishes budget totals, allocations, entitlements, and sometimes includes reconciliation instructions to certain House or Senate committees.
  • April 15th is the target date for congressional adoption of the budget resolution set by the Congressional Budget Act.
  • In some instances, Congress has not adopted a budget resolution.
  • The Congressional Budget and Impoundment Control Act of 1974 (Congressional Budget Act), created during the Nixon administration, established the current budget resolution process.

• Preparing the Budget

  • The Office of Management and Budget (OMB) performs key tasks in preparing the presidential budget request that is submitted to Congress.
  • A great deal of preparation goes into the president's budget request submission, which is entitled, Budget of the U.S.
  • The structure of the OMB facilitates the preparation of the budget and the later submission of that budget to Congress.
  • The Office of Management and Budget plays a key role in preparing the president's budget request to Congress.
  • Summarize the key role played by the Office of Management and Budget in shaping the President's budget request