Lesson 50 of 1524
Domestic Policy
Name the type of policy before you argue about it. A rule, a transfer, and a widely shared project are not the same fight.
Practice this chapterSocial Security and Medicare are largely funded by payroll taxes and are entitlements. Medicaid is a joint federal-state program aimed at people with low incomes.
A means test limits a benefit to people below an income or asset line. Social Security retirement benefits are not means-tested in that way. Supplemental programs often are.
Deficit and debt
Deficit is one year. Debt is the running total.
A surplus year shrinks the debt. It does not make the debt the same thing as the deficit.
Worked example
In year 1 the federal budget spends 100 billion more than it collects. In year 2 it spends 50 billion more than it collects. Someone says the debt that year is 50 billion. What is confused?
- 1The year-1 gap of 100 billion is that year’s deficit. The year-2 gap of 50 billion is a second deficit.
- 2The debt is the accumulated unpaid total, not the latest single-year gap.
- 3If these two years were the whole story and nothing was repaid, the debt would be about 150 billion, not 50.
- 4The speaker treated this year’s deficit as if it replaced the debt. It adds to the debt.
Result: The 50 billion figure is the new deficit, not the debt. The debt includes the earlier 100 billion as well.
Why. A deficit is a flow, one year’s shortfall. The debt is a stock, the sum of shortfalls still unpaid. Calling the flow by the stock’s name understates what is owed.
Top-down implementation assumes the statute’s details were clear and the agency only carries them out. Bottom-up implementation notices how much is decided by the people who apply the rule.
Practice margin
This chapter
A fresh set from this chapter only. Choose 10 or 20. Multiple choice and fill-in, with no repeat inside the set.