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What Is the Government Deficit?

A deficit is the difference between a reference amount and the actual sum of money. In the government, the deficit is difference during a fiscal year between receipts received and the outlays. Receipts can include money received from revenue such as taxes while outlays are things that the government spends money on, which can be on-budget or off budget.
When looking at a government’s deficit, there are two important elements: the structural element and the cyclical element. Together these two elements make up the total observed budget deficit.
Structural deficit: Any debt that is left over during a business cycle when the tax levels are much lower than the general spending level of the government. 
Cyclical deficit: The additional required borrowing during a point in a business cycle where levels of unemployment are high, meaning high expenditures and low revenue.
The government’s deficit can be discussed with or without interest. The total deficit or just the deficit often includes both the debt’s interest as well as the spending itself. Meanwhile, the primary deficient is just the difference between government spending and the total revenue of different taxes.

Solutions for the Deficit
There are different ways to modify the government’s deficit. The most common suggested solution is to either reduce any excess spending by the government or to raise taxes. Structural deficits occur when either the spending is too high or revenue from taxes is too low. Modifying either or both of these things can help reduce the deficit.
When tax raises are considered a possible solution, they can be raised evenly across the board, or with consideration of what groups can better handle a tax increase. For example, those with higher income, longer life expectancies, or those who have previously received larger tax cuts in the past may be targeted. Businesses or government agencies can also be targeted in a specific fashion as well.
Another solution is to make changes to the tax code. Changing the code can result in less tax cuts or increases in tax revenue. For example, allowing for fewer deductions of closing various tax loopholes are possible ways to effectively produce the same result as increasing taxes.
The government may also choose to refinance some of their debt. The government makes annual debt service payments based on their overall public debt, which can include both principle and interest. By refinancing, it allows the government to set us debt service payments that are lower than the original amount, which reduces expenditures by the federal government without actually cutting spending.

The “Fiscal Cliff” will Certainly Affect States’ Budgets

The “Fiscal Cliff” will Certainly Affect States’ Budgets

The fiscal cliff is the expiration of federal tax provisions and implementation of spending cuts scheduled for January 2013.  If the fiscal cliff occurs, states—especially those connected to the federal tax code and federal spending—will see fewer federal deductions.  A recent report by Pew Center on the States, titled The Impact of the Fiscal Cliff on the States, shows how scheduled federal tax changes will affect states.  

The scheduled tax changes include about $393 billion (or 80 percent) of the fiscal cliff’s total amount.  If federal taxes increase, states tied to the federal tax code will see increases in state revenue as well.

Here’s how the fiscal cliff affects states:

•    25 states and D.C. would see higher state tax revenues from lower federal deductions
•    30 states and D.C. would see increases in revenue from tax credits after federal tax credits are reduced
•    23 states would see deductible businesses expenses expire and result in higher taxable corporate income in the coming term
•    33 states can collect more estate tax revenue by 2013
•    6 states allow citizens to deduct federal income taxes from state taxes, which would reduce state tax revenue in the coming term

The scheduled spending cuts equal $98 billion of the fiscal cliff.  $49 billion of the spending cuts are required by the Budget Control Act of 2011.

If the fiscal cliff occurs, the federal deficit is reduced by $491 billion.  Yet, the Congressional Budget Office reports the fiscal cliff would cause significant economic digression in 2013.  

Anne Stauffer, the Pew project director, stated: “Given the uncertainty about whether any or all of the policies in the fiscal cliff will be addressed temporarily or permanently, it is important to understand that the effects of the different components will vary across states.”

Source: Pew Center on the States

Virgin Islands Senator Indicted for Multiple Types of Fraud

Virgin Islands Senator Indicted for Multiple Types of Fraud

On November 8, 2012, the US Attorney’s Office for the District of the Virgin Islands announced that Senator Alvin Williams, Jr. was indicted for working with others to engage in bribery, mail fraud, and wire fraud.  Two legislative members, Garry Sprauve and Kim Blackett, were indicted as well.  

The indictment claims the following:

Williams gave the commissioner of the Virgin Islands Department of Public Works a bribe of $10,000 on September 5, 2009 to grant work by Ace Development Inc in the future.  Williams had interest in the company.  

Williams gave bribes to developers for the Raphune Vista housing project in St. Thomas from February 21, 2007 to November 8, 2011.  He also promoted legislation for the developers so Ace Development Inc could provide rented equipment to the developers.  

Williams received a bribe of $10,000 for supporting legislation for the Tutu Park wind turbine project from September 1, 2008 to September 31, 2008.  He is suspected of receiving $25,000 on September 22, 2008 as well.  

From 2006 to December 2011, Williams and other staff members were suspected of taking campaign contributions and using the funds for personal expenditures.  He accepted bribes from September 2010 to July 28, 2011 for increasing the salaries of staff members as well.  

Lastly, Williams and other staff members are suspected of engaging in wire fraud so Williams could pursue online degrees from the University of Phoenix.  The defendants reportedly defrauded the Virgin Islands government to use public funding for the non-legislative education.  

Williams faces up to 20 years in prison and fines up to $250,000.  The indictment is asking for $1,129,365.76 in restitution.  

U.S. Attorney Ronald W. Sharpe stated, “It is a breach of the public trust for public officials to use their office for personal gain.  I encourage anyone with direct knowledge of illegal acts or who has any information concerning corruption in the Virgin Island to call the Public Corruption Task Force at (340) 715-6516.”

Source: Federal Bureau of Investigation

Baylor University Medical Center to Pay over $900,000

Baylor University Medical Center to Pay over $900,000

On November 27, 2012, the Department of Justice announced that Baylor University Medical Center, Baylor Health Care System, and HealthTexas Provider Network agreed to pay the federal government $907,355 for submitting false claims to Medicare.

False claims were also submitted to the Federal Employees Health Benefit Program (FEHBP) and Civilian Health and Medical Program of the Uniformed Services (TRICARE) for radiation oncology services.  The radiation is highly sophisticated and uses tools for extreme precision to protect surrounding organs.  

The United States claimed that Baylor University filed the improper claims from 2006 to May 2010. During this time, they doubled their claims to Medicare for radiation treatment plans, billed more expensive services when a less expensive service was needed, billed services without providing documentation of the services or medical records, and more.  

Stuart F. Delery with the Justice Department’s Civil Division stated: “Physicians who participate in Medicare must bill for their services accurately and honestly.  The Department of Justice is committed to ensuring that federal health care funds are spent appropriately.”  

Sarah R. Saldaña, the U.S. Attorney for the Northern District of Texas, stated: “This civil recovery is a testament to the efforts of the Department of Justice to hold all parties, regardless of position, accountable for the submission of improper claims to federal health care programs.”

The Civil Division for the Justice Department, the U.S. Attorney’s Office for the Northern District of Texas, the Department of Health and Human Services’ Office of Inspector General, the FBI, and the Defense Criminal Investigative Services helped during the settlement with Baylor.  

The settlement was possible because of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) that was created by the Justice Department and Department of Health and Human Services in May of 2009.  

Source: Department of Justice

China’s Government Looking to Fight Inequality

China’s Government Looking to Fight Inequality


Last month, a report issued by the China National Bureau of Statistics revealed that inequality in the nation is slowly narrowing. Although good news, public outrage concerning unearned privilege is still growing as China’s online public is growing furious over the parade of corrupt public officials partaking in the illegal procurement of properties. Gong Aiai, one of the latest officials in a long-line of corruption was a former bank official who was arrested this week on suspicion of procuring 41 homes in Beijing with improper identity papers. Ms. Aiai; however, appears to be an amateur when compared to Zhao Haibin, a former police chief, accused of owning 192 properties throughout the Guangdong province.

Given the obscene amount of corruption taking place in the nation as of late, this week marked an opportune time for China’s cabinet to pass a plan to fight inequality. The plan however, is broad in scope and thin in details.

Supported by the National Development and Reform Commission, the nation’s planning body, the plan points to 35 goals, including some direct remedies to combat inequality, such as increasing taxes on the rich and transferring said funds to the poor. The goals also encompass subtle measures, such as liberalizing the nation’s artificially low interest rates, which diverts income from savings to investment.

A number of governments throughout the world redistribute income after it is earned; however, China’s plan aims to intervene far earlier in the process. China wants a higher proportion of income to be a pain on wages as oppose to profits. To this end, the minimum wage will increase by at least 40% by 2015. Moreover, the plan demands more respect for fairer compensation when land owners sell their properties.

Many of these initiatives keep with existing trends as the nation has increased spending on social security, education, health care and public housing from 30% to 36%. These percentages should continue to rise over the next three years according to the initiative.

The plan shows the government is aware of the nation’s disturbing divisions; however, execution and respect for the imposed regulations remain a question.

Officials close to the government expressed doubts concerning the practicalities of expanding pilot property taxes on luxury homes and other measures that would distribute income. Corrupt officials in the nation’s government holding scores of potentially taxable properties will invariably hope that such delay and doubt continues.

Deeply Divided: Supreme Court Hears Both Sides on Landmark Same-Sex Marriage Case

Deeply Divided: Supreme Court Hears Both Sides on Landmark Same-Sex Marriage Case


As supporters and protestors alike fervently debated the issue of same-sex marriage outside the United States Supreme Court building, justices inside were hesitant to extend a sweeping constitutional right for lesbians and gays to wed in all 50 states. 
IN the first of two days of hearings on the landmark cases, Justice Anthony Kennedy, who is considered the decided vote on the split court, questioned whether the court should even be hearing the matter. 
“This was a deeply divided Court, and a court that appeared to be grabbing for an answer here,” reported CNN’s Senior Legal Analyst Jeffrey Toobin, who attended the arguments over California’s Proposition 8, which prohibits same-sex marriage. Voters approved the Proposition 8 proposal by a margin of 52 to 48 percent in November of 2008, less than six months after the state’s Supreme Court ruled that marriage is a right that must be extended to gay couples. 
The fundamental legal question in the California case is whether the 14th Amendment guarantee of equal protection prevents individual state from defining marriage and instituting their marital laws. 
That said, it is also the question of whether the advocacy group appointed to defend the matter even possesses the legal standing to argue the case in court. 
Justice Anthony Kennedy raised concerns regarding whether the possibility of gay marriage was enough to establish a harmful effect on the gay community. Established the community as suffering harm is a key jurisdictional hurdle that allowed the gay community to appeal the matter in the first place. 
If the United States Supreme Court dismisses the appeal on the grounds that the activists do not have the standing to defend the matter in court it might uphold the lower federal court rulings, which declared the proposition as unconstitutional. 
Tuesday’s hearing was the first of back-to-back hearings on gay marriage laws. The Supreme Court will listen to arguments Wednesday on a separate challenge to the Defense of Marriage Act, which similar to the California law, defines marriage as between one man and one woman. 
The Supreme Court is expected to announce its final ruling on the matter sometime in June. 
Attorneys representing the couples seeking to overturn Prop 8 said they could not tell how the court would rule. “We are confident where the nation is going with this, but we do not know for sure what the United States Supreme Court is going to do. That said, we are very grateful that they heard the case, they asked the hard question and there is no denying where the right is.”
Source: whitehouse.gov

U.S. Senate

U.S. Senate

A Look at the U.S. Senate

The U.S. government consists of three branches of government, the judicial branch, executive branch, and the legislative branch. The legislative branch is then further broken down into the Senate and the House of Representative, together being referred to as the Congress.
The Senate is made up of two Senators from each state, for a total of 100 Senators. The Vice President of the U.S. also serves as the President of the Senate and as the power to vote on a decision that is tied.
Each member must be at least 30 years old and a citizen of the U.S. for at least nine years, as well as a current resident of the state they wish to represent. A senator serves a six year term that can be renewed without limit if the state if voted for through a popular election as defined by the 17th Amendment.
These terms are staggered and thus elections for Senators occur every two years for approximately a third of the Senate. One major purpose of this is to prevent having elections for both seats of a state at once.
The powers of the Senate are very clearly defined in the U.S. Constitution. They are the only body that has the power to confirm any appointments made by the President that needs consent. The Senate also has the exclusive power to ratify treaties.
The only exception to the Senate’s powers is that any treaty involving foreign trade or appointments to the Vice President must be approved by the House of Representative as well. The Senate also has the exclusive power of declaring war
Any legislation that has reached the President for his signature has already been passed by majority vote in both the House of Representatives and the Senate. If a President chooses to veto a bill, it can still be passed as long as the Senate and House both pass it again with a two-thirds majority.
There are currently 17 different committees and 70 subcommittees within the Senate. These amounts are not definite and are subject to change with every new Congress. In order to pass a bill through the Senate, it is first introduced within a subcommittee and can then be accepted, rejected, or amended. After the subcommittee decides to move the bill forward, then then goes to the full committee and if approved again, moved to the Senate floor.
Once on the Senate floor, there is a debate process where members speak about the bill or introduce amendments. These methods are often used to filibuster or delay a bill. In order to break a filibuster, 60 members, or a supermajority is needed. After debate ends, a simple majority can pass a bill.

And the Wait Begins: Arguments end in Second Same-Sex Marriage Case

And the Wait Begins: Arguments end in Second Same-Sex Marriage Case


A majority of Supreme Court justices posed questions in oral arguments today regarding the Federal Defense of Marriage Act, indicating the court may strike down a key part of the legislation that denies legally married gay couples the same benefits provided to straight couples. 
The court is expected to offer a ruling with three months on the constitutionality of the 1996 federal law that defines marriage for federal tax and benefit purposes as only between a man and a woman. 
Today’s arguments ended two days of presentations before the Supreme Court on one of the most landmark social issues of this generation—the right  married esbian and gay couples to receive the benefits of law provided to straight couples. 
Following the arguments, Edith Windsor, aged 83 stood on the steps of the courthouse and proclaimed something she kept secret for decades prior to her challenge against the Defense of Marriage Act. 
“I am a lesbian, okay, who just filed a lawsuit against the United States of America, which is overwhelming for me,” she proclaimed. She had just listened to two hours of arguments before the Supreme Court on whether or not she was required to pay higher estate taxes than someone in a heterosexual marriage. 
Windsor attempted to explain to the media why she and her deceased spouse, Thea Spyer married in the State of New York when the law was established decades after they first met. 
Marriage, Windsor said, is a “magic word, for anyone who does not understand why we want it and why we need it.”
Under the Federal Defense of Marriage act, pension, Social Security and bankruptcy benefits, along with other federal provisions, are not granted to lesbian and gay couples who are legally married in states that allow such unions. 
As a result of this federal law, Windsor was required to assume an estate tax bill that was much larger than what straight couples were required to pay. Moreover, because Windsor’s decades-long partner was a woman, the United States government did not recognize their same-sex marriage, even though their home state of New York did.  
The United States Supreme Court was divided among ideological lines during the arguments regarding the constitutionality of the Defense of Marriage Act. If legally married, lesbian and gay couples were denied more than 1,100 federal benefits. 
The potential swing judge, Justice Anthony Kennedy questioned the reach of the legislation, saying it represents a “grave risk of running into traditional state police powers to regulate marriage.”
This statement caused observers to speculate Kennedy joining the four liberal-leaning justices to create a majority against the Defense of Marriage Act. 
Source: Associated Press



A Look at Federalism in the United States

In the United States, government is recognized on both the state and national level. This relationship between the levels is known as federalism. While federalism in the United States responds to the political atmosphere, there still a balance between state and national government. 
The first American governments after the revolutionary war did not use federalism. Prior to the U.S. Constitution, America was made up of colonies that were under the rule of England. While these colonies did cooperate with each other, particularly during the Revolutionary war, they were essentially self-sustained bodies of government.
The idea of combining these smaller divisions to centralize government as is found in federalism was heavily criticized. These colonies had fought against the oppression of England, which had a central government, similar to the national government suggested in the U.S. Constitution. However, soon after declaring independence, it was clear that individual states would not be able to sustain themselves without creating some form of a central government 
Federalism helped unify the states without destroying all of their governing powers. For example, a centralized government allows the states to use the same currency. However, states would still be able to set their own laws as well, for example, whether a death penalty would be used in the state.
The U.S. Constitution was drafted, which carefully defined just how federalism would be and the relationship between the state and national government. It also worked to limit the national government’s power while protecting the rights of citizens.
While the type of federalism in the United States has varied throughout American history, there are still certain powers that will always remain so by the authority of the U.S. Constitution.
Reserved Powers: These are specifically for just the state, such as police powers, licensing, education, conducting elections, regulating intrastate commerce, and health regulations.
Granted Powers: These powers, sometimes called the enumerated or express powers are listed in Article 1, Section 8 of the Constitution. These consist of the powers that the federal government have. Some examples include regulating commerce, coining money, declaring war, establishing post offices, collecting taxes and making legislation that enforces the Constitution.
Concurrent Powers: Powers that are held by both the state and federal government, for example taxation, setting up courts, creating and enforcing laws, constructing and maintaining roads, and certain spending.
While the powers of both the state and national governments are defined in the U.S. Constitution, there can be shifts to the balance in federalism.
For example, in the late 18th century, Americans were more concerned on strongly limiting the Federal government, but doing so made the Federal government effectively useless. It was necessary move away from the Federalist papers and to create a new government through the U.S. Constitution since states could not be expect to have objective and educated views on a national level.
The Federal government was given more power in the 19th century by Justice John Marshall who felt that the U.S. Constitution did not create defined layers of the government and portrayed this view in many of his rulings, such as how the Commerce Clause could be used by the Federal government as seen in Gibbons v. Ogden.
Justice Marshall’s attempt and strengthening the national government in federalism was slightly undone by Justice Taney, his successor who would felt that the national government was limited exclusively to the enumerated powers while the states would receive everything else.
Since the Regan administration up until the beginning of the 21st century, there was a push to return powers to the states from the Federal government, particularly through court decisions that evaluated the Federal government’s powers through gun possession, police powers, the Commerce clause, and agriculture.