Chapter 16                  Section 1                   Notes

Where the Money Comes From:  Taxes

Section Objective:  To understand how the Federal Government raises money.

A.     The Power to Tax

1. Congress exercises the taxing power to finance the costs of operating the Federal Government as well as nonrevenue purposes.
2. Constitutional Limitations

*Taxes may be levied only for public purposes.

*Export taxes are prohibited.

*Direct taxes must be equally apportioned among the States according to their populations (except for income taxes, which according to the 16^th Amendment, may be levied without regard to population).

*Indirect taxes must be levied at the same rate throughout the country.

3.      The Implied Limitation

*The Federal Government may not tax State or local government in the exercise of their formal governmental functions.

*Nongovernmental activities of State and local governments may be taxed.

B.     Current Federal Taxes

1.  The income Tax – The income tax is flexible and progressive and is levied   on both individuals and corporations.

2.      The Individual Income Tax

*A tax is levied on each person’s taxable income.

*Tax rates vary depending on the amount of income a person receives.

3.      The Corporation Income Tax

*Corporations also pay income tax on their profits.

*Nonprofit organizations are not subject to this tax.

4.      Social Insurance Taxes

*Social insurance taxes paid by employees and employees finance social security, Medicare, and unemployment compensation.

*These taxes are regressive, or laid at a flat rate without regard to a taxpayer’s income.

5.      Exise Taxes

*Excise tax on the manufacture, sale, or consumption of goods and services.

*These taxes are passed on to consumers by the producers.

6.      Estate and Gift Taxes

*The estate tax is the tax on the estate on one who dies.

property away before they die.

7.      Custom Duties

*These taxes are goods brought into the country from abroad.

*Once the major source of federal income, custom duties now make up only two percent of government revenues.

C.     Taxes for Nonrevenue Purposes

1.      Taxes are also used to regulate discourage activities that Congress considers harmful to the public.

2.      There are constitutional limits to Congress’s power to tax for such purposes.

Chapter 16                                          Section 2                           Outline

Nontax Revenues and Borrowing

Section Objective:  To understand borrowing as a source of federal revenue.

A.     Nontax Revenues

1. The Federal Government earns more than $20 billion a year from nontax revenues.
2. Nontax revenues come from many sources, including earnings of the Federal Reserve System, interest on loans, fees charged by federal agencies, monies from the sale of public lands, seigniorage, and fines imposed by federal courts.

B.     Borrowing

1. Traditionally, the power to borrow was used only to meet crises and to    finance large-scale projects that could not be paid for out of current income.
2. In recent decades, the government has borrowed regularly in order to make up the difference between what it spends and what income it takes in-the deficit.
3. The Federal Government can borrow at lower interest rates than private borrowers because interest on federal securities cannot be taxed by State or local governments.
2. The Public Debt
   1. The public debt is all of the money borrowed by the government and not yet repaid plus the interest on that money.
   2. The public debt has increases rapidly in recent years, causing great controversy because of the burden it places on tomorrow’s taxpayers.

Chapter 16                  Section 3                   Notes

Spending and the Budget

Section Objective:  To understand how the Federal Government sends money and the complex process of preparing the federal budget

A.     Federal Spending

1. The Federal Government spends the largest amount of money on social security.
2. Interest on the public debt is the second largest object of current federal spending.
3. Controllable and Uncontrollable Spending

*About 20 percent of spending by the Federal Government in controllable, that is, the President and Congress decide how much will be spent each year on these expenditures.

*About 80 percent of spending-such items as interest on the national debt, social security benefits, food stamps, and other entitlements-is not controllable, that is the government cannot control the amount of these payments.

2. Budget The Federal
3. 1.      The Budget Process

*The budget process is the joint responsibility of the President and Congress.

*The President proposes a budget and Congress decides whether and in what amounts to appropriate the funds the President asks for in that budget.

2.      The President and the Budget

*Each federal agency is required to submit detailed estimates of its spending needs for the coming year.

*The Office of Management and Budget reviews the requests, holds hearings in which agencies are required to justify their estimates, and fits all the requests into the federal budget that is sent to Congress.

3.      Congress and the Budget

*The President’s budget is referred to the Budget Committee in each house.

*The Congressional Budget Office helps these committees study and make decisions about the President’s budget.

*The President’s budget is also sent to the House and Senate Appropriations committees, which are responsible for fashioning the bills that actually appropriate the money.

*Congress tries to pass all of its appropriations measures before the beginning of the fiscal year (October 1), but seldom succeeds in doing so and must then pass emergency spending legislation to allow the government to continue operating until the budget is passed.

Chapter 17/1

Foreign and Defense Policy:  An Overview

Section objective:  To understand the historic and continuing goals of America’s foreign and defense policies.

1. From Isolationism to internationalism

1. For most of American history, the country has minimized its involvement with other nations.
2. During the past 50 years, the United States has found it necessary to involve itself in foreign affairs because the nation’s security and well-being are ever more closely related to international security and well-being.

2. Foreign Policy:  What it Is

1. Foreign policy is all of the Federal Government’s statements and actions with regard to foreign countries, including matters of treaties and alliances, international trade defense and foreign aid.
2. Some policies of the Federal Government with regard to foreign affairs have remained stable over time while others have changed with changing world conditions.
3. American foreign policy may be either aggressive – launching new policies and initiatives-or defensive- as it was during the cold war.

3. The President’s Responsibilities

1. The President dominants the field of foreign policy because of his or her position as commander and chief and chief diplomat.
2. A number of officials and agencies, such as the Sate Defense departments exist to help the President carry out the responsibilities of guiding American foreign policy.

17/2                 Notes

Section Objective:  To understand the process of setting a foreign and defense policy.

1. The State Department

1. The State Department is headed by the secretary of state and is the President’s right arm in foreign affairs,
2. The secretary of state is appointed by the President and confirmed by the Senate.
3. The secretary of state ranks first among cabinet members.

2. Organization and Key Components

1. The department is organized both geographically and functionally.
2. The Foreign Service – Under international law, every nation has the right to send and receive diplomatic representatives.
3. Ambassadors

·        Ambassadors are appointed by the President with Senate approval.

·        Ambassadors keep the president informed of the latest events in the host country, negotiate diplomatic agreements, and protect the interests of American citizens abroad.

4. Special Diplomats – Some ambassadors represent the United States at the

      United Nations, at other international organizations, and at international

       conferences.

5. Passports

·        The State Department issues passports.

·        Passports entitle their holders to certain privileges in other countries

3. Diplomatic Immunity

1. Under international law, ambassadors are not subject to the laws of the   state to which they are accredited
2. Diplomatic Immunity is essential to the conduct of international relations, and breaches of the privileged status of ambassadors are rare.

4. The Defense Department

1. Civil Control of the Military – the Framers knew that a strong military was a potential threat to liberty, so they were careful to subject the military to the civilian authority of the President and Congress.
2. The Secretary of Defense

*The secretary of defense is appointed by the President with Senate approval.

*The two main responsibilities of the position are to advise the president  on military matters and to run the Defense Department.

3.  Chief Civilian Aides – The secretary of defense has a number of civilian   aides, who are appointed by the President with Senate approval.

4.  Chief Military Aides – the five Joint Chiefs of Staff the highest ranking officers in the armed services; they serve advisers to the President, the secretary of defense, and the national Security.

5. The Military Departments

1. The Department of the Army

*The army is the largest and oldest of the armed services.

*It is responsible for military operations on land.

2. The Department of the Navy

*The navy is responsible for sea warfare and defense.

*the Marine Corps is a combat-ready land force that supports the navy, operating within the navy Department.

3.  The Department of the Air force

      *The air force is the youngest of the military services.

*Today the air force is the nation’s first line of defense; it has primary     responsibility for military air and aerospace operation.

 Chapter 17/3  Notes

Other Foreign/Defense Policy Agencies

Section Objective:  To understand the role of other federal agencies in making and carrying out foreign and defense policies.

1. The Central Intelligence Agency
   1. The head of the CIA is appointed by the President and confirmed by the Senate.
   2. The CIA is charged with gathering and analyzing intelligence related to foreign and defense policy and reporting it to the President and the national Security Council.
   3. The CIA is forbidden to operate within the United States.

2. The united States Information Agency
   1. The USIA is a propaganda unit that promotes a positive image of the  United States and its way of life abroad.
   2. Voice of America radio, cultural and academic exchange programs, and media distribution centers operate all over the world.

3. The National Aeronautics and Space Administration
   1. NASA is an independent agency that handles the nation’s space programs.
   2. Its efforts are toward both military and peaceful ends.

4. The United States Arms Control and Disarmament Agency
   1. The USACDA is responsible for American participation in arms limitations and disarmament negotiations with other nuclear powers. 
   2. The director of the USACDA is the President’s chief advisor on arms limitation and disarmament.
   3. Much of the agency’s work has centered around talks and agreements on disarmaments with the former Soviet Union; this work has assumed even greater importance with the breakup of the Soviet Union and the potential fir turmoil in that region.

5. The Selective Service System
   1. Through most of American history, the armed forces were filled by  voluntary enlistment.
   2. In 1940 the selective service system was set up to draft young men into the military.
   3. Since 1973, when American involvement in the Vietnam War ended, the draft has been suspended, but the law remains on the books, and today all men must register for service at age 18.

17/4  Notes

American Foreign Policy:  Past and present

Section Objective:  To understand major features of American foreign policy, past and present.

1. Foreign Policy from Independence Through World War I
   1. Monroe Doctrine- The Monroe Doctrine stated that the United States expected Europe to stay out of North and South America.
   2. Continued Expansion – the nation expanded, through war and through purchase, to include all of the present day United States.
   3. The United States- a World Power- By 1900 the United States had become a colonial power as a result of the Spanish American War.
   4. The Good Neighbor policy- After several decades of tense relations between the United States and Latin America, FDR tried to improve relations with that region.
   5. The Open Door in China

The Open Door policy of 1899 promoted equal trade access to China   for all nations.

Ties between the U.S. and China were cut when communists took control of China in 1949.  It was not until 1979 that diplomatic ties were reestablished between the two countries.

2. The Two World Wars
   1. German submarine attacks on American shipping led to American involvement in World War I, but isolationism was strong after the war.
   2. The Japanese attack on pearl Harbor (1941) forced America into World War II and ended this country’s isolationist tendencies.
3. Foreign Policy from 1945 to Today

1.  Peace through Collective Security – the United nations was established to       forge a world in which future wars would be prevented.

2.  Deterrence – Deterrence, or peace through strength, was a central tenet of  American foreign policy after World War II.

     D.  Resisting Soviet Aggression

1.  The Truman Doctrine and Containment-  the policy of containment,  expressed in the Truman Doctrine, was that the nation would check further Soviet expansion and wait for it to collapse.

2.  The Berlin Blockade – on 1948 the Soviet Union tried to overtake West Berlin, but the United States mounted an airlift that saved the city.

3.  The Cuban Missile Crisis – In 1962 war was narrowly averted when the United States demanded that Soviet missiles in Cuba be withdrawn.

4.  The Korean War- In 1950 communist North Korean forces invaded South Korea.  UN forces entered on the side of South Korea, and eventually the invasion was turned back.

5.  The war in Vietnam – Between 1954 and 1968 the United States became increasingly involved in the war in Vietnam; American involvement ended in 1973 after taking over 58,000 American lives.

E.  Détente and the Return to Containment

1.  American withdrawal from Vietnam marked the beginning of a new  American policy of detent-a relaxation of cold war tensions.

2.  Détente with the Soviet Union ended in 1979, when the Soviets invaded Afghanistan.

6. The End of the Cold War
   1. Mikhail Gorbachev worked to forge disarmament agreements and made  radical changes in his country’s foreign policy.
   2. The end of the cold war was the realization of the goal of containment.

Chapter 17/5    notes

Foreign Aid, Defense Alliances, and the United Nations

Section Objective:  To understand the purposes of American foreign aid and defense alliances and the role of the United Nations.

A.     Foreign Aid

1.      In general, foreign aid foes to those countries that are considered most critical to the achievement of America’s foreign policy goals.

2.      Most foreign aid money must be used to buy American goods and services.

B.     Security Through Alliances

1.      American defense strategy is based on a network of regional security alliances.

2.      The North Atlantic Treaty organization (NATO) is the cornerstone of American defense, protecting Western Europe, Canada, and the United States.

3.      Other Alliances – The United States also has mutual defense pacts with most of the nations in the Western hemisphere and with Pacific nations, including Japan, the Philippines, Australia, New Zealand, and South Korea.

4.      The United States and the Middle East

*The United States does not have defense pacts in the Middle East

*In 1991 the Persian Gulf War was fought, with the United States supporting Kuwait against the Iraqi invasion of that country.

*Arab-Israeli peace negotiations were sponsored by the United States in 1991.

C.  The United Nations

1.  American participants in the United Nations, formed in 1945, marks a    fundamental shift toward internationalism in American foreign policy.

2.  The United Nations was formed by the victorious allies of World War II.

D.  The UN Charter

            1.  Membership-Today the UN has 179 members

2.  Basic organization – There are six principal organs of the UN:  the General  Assembly. The Security Council, the Economic and Social Council, the trusteeship Council, the international Court of justice, and the Secretariat.

E.  The General Assembly

      1.  Each member of the UN has a seat and a voice in the General Assembly.

2.  The General Assembly elects the 10 nonpermanent members of the Security        Council and other UN officials, debates international issues, and makes      recommendations to the Security Council.

F.  The Security Council

1.  The five permanent members of the UN’s major peacekeeping body, the  Security Council, are the united States, France, the united kingdom, Russia, and China.

2.  Each country has veto power over the actions of the Security Council.

G.  Other Important UN Bodies

1.  The Economic and Social Council – This 54 member council is responsible for   carrying out the UN’s economic, cultural, educational, and health-realted activities.

2.  The Trusteeship Council – This council sets guidelines for the government of  all “non-self-governing territories.”

3.  The International Court of Justice – This court, which meets at The Hague, is  made up of 15 elected judges who serve for nine-year terms.  The court handles cases brought to it voluntarily by members and nonmembers alike.

4.  The Secretariat – The Secretariat is the civl branch of the UN, headed by the influential secretary-general.