Glossary: Fiscal Policy Terms

This glossary covers essential fiscal policy terminology. Terms are organized alphabetically for quick reference.

A

Appropriations - Congressional legislation that authorizes federal agencies to spend money. Discretionary spending requires annual appropriations bills.

Automatic Stabilizers - Programs that automatically increase spending or reduce taxes during economic downturns without new legislation. Examples: unemployment insurance, progressive income taxes.

B

Baseline - CBO's projection of spending and revenues under current law. Used to score policy proposals.

Budget Authority - Congressional authorization to enter into obligations that will result in outlays. Differs from actual outlays, which occur when payments are made.

Budget Resolution - A Congressional blueprint that sets overall spending and revenue targets. Not signed by the President; establishes framework for appropriations.

C

Continuing Resolution (CR) - Temporary legislation that extends prior-year funding levels when regular appropriations are not completed.

CBO (Congressional Budget Office) - Nonpartisan agency that provides budget and economic projections to Congress.

Current Services Baseline - Projection of spending assuming current policies continue, adjusted for inflation and population changes.

D

Debt Ceiling - Statutory limit on total federal debt outstanding. Requires Congressional action to raise.

Debt Held by the Public - Federal debt held outside the government (by individuals, institutions, foreign governments, Federal Reserve). Excludes intragovernmental holdings.

Deficit - The annual shortfall when outlays exceed revenues. Adds to total debt.

Discretionary Spending - Programs funded through annual appropriations. Includes defense and non-defense discretionary categories.

E

Entitlement - A program that provides benefits to all who meet eligibility criteria. Spending is mandatory, not subject to annual appropriations. Examples: Social Security, Medicare, Medicaid.

Extraordinary Measures - Actions Treasury takes to continue operations when the debt ceiling is reached. Includes suspending certain investments and reducing cash balances.

F

Fiscal Multiplier - The ratio of change in GDP to change in government spending or taxes. Multipliers above 1.0 indicate spending has amplified economic effect.

Fiscal Year (FY) - The federal budget year running October 1 to September 30. FY2025 runs from October 1, 2024 to September 30, 2025.

G

Gross Federal Debt - Total debt including both debt held by the public and intragovernmental holdings (such as Social Security trust funds).

I

Intragovernmental Holdings - Debt held by federal trust funds (Social Security, Medicare Hospital Insurance). Represents money the government owes itself.

M

Mandatory Spending - Spending on entitlement programs and interest, not subject to annual appropriations. Changing mandatory spending requires new substantive legislation.

Marginal Tax Rate - The tax rate applied to the last dollar of income. Higher marginal rates affect incentives at the margin.

N

Net Interest - Federal interest payments on debt held by the public, minus interest income received by the government.

O

Obligation - A legally binding commitment to make a payment. Precedes outlays in the spending process.

Outlays - Actual payments made by the federal government. The "spending" recorded in budget statistics.

Output Gap - The difference between actual GDP and potential GDP. Negative gaps indicate economic slack.

P

Pay-As-You-Go (PAYGO) - Budget rule requiring that new mandatory spending or tax cuts be offset by other changes to avoid increasing the deficit.

Primary Deficit/Surplus - The deficit excluding net interest payments. Shows whether non-interest spending is covered by revenues.

Projected Baseline - CBO's 10-year forecast of spending and revenues under current law.

Q

Quarterly Refunding Announcement (QRA) - Treasury's announcement of borrowing plans for the upcoming quarter. Includes auction sizes and maturity mix.

R

Reconciliation - A special budget process allowing certain tax and spending bills to pass the Senate with a simple majority (avoiding filibuster).

Revenues - Federal income from taxes, fees, and other sources. Individual income taxes and payroll taxes are the largest sources.

S

Scoring - CBO's estimate of how a legislative proposal would affect spending and revenues relative to baseline.

Sequestration - Automatic spending cuts triggered when spending exceeds caps set by prior legislation.

Structural Deficit - The deficit that would exist at full employment. Excludes cyclical effects from economic conditions.

Surplus - When revenues exceed outlays for a fiscal year. The US last ran surpluses from FY1998-2001.

T

TBAC (Treasury Borrowing Advisory Committee) - Group of market participants that advises Treasury on debt management strategy.

Term Premium - The extra yield investors require to hold longer-duration securities. Can reflect fiscal sustainability concerns.

Transfer Payment - Government payment to individuals (Social Security benefits, unemployment insurance) rather than for goods or services.

Trust Fund - Accounting mechanism for programs with dedicated revenue sources. Social Security and Medicare Hospital Insurance have trust funds.

X

X-Date - The estimated date when Treasury would exhaust cash and extraordinary measures during a debt ceiling standoff.

Related Articles

• Federal Budget Components and Mandatory Spending
• Budget Deficits, Surpluses, and Debt-to-GDP
• Debt Ceiling Mechanics and Contingency Plans

---

References

Congressional Budget Office (2024). Glossary of Budgetary and Economic Terms.

Office of Management and Budget (2024). Budget Concepts and Budget Process.