Glossary
23 terms in federal economic and legislative policy, each on its own page, each written to be understood without the others.
Looking for a straight answer to a question? Every term phrased as the question it answers →
A
Appropriations
The annual laws that give federal agencies legal authority to spend money.
B
Basis point
One hundredth of one percentage point. A 25 basis point cut is a quarter of one percent.
Budget resolution
A congressional blueprint setting spending and revenue totals. It is not a law and the president does not sign it.
Byrd rule
A Senate rule that strikes provisions from a reconciliation bill when they are not primarily budgetary.
C
CBO baseline
The Congressional Budget Office's projection of spending, revenue and debt under current law.
Consumer Price Index
A monthly measure of the average change in prices paid by urban consumers for a basket of goods and services — the household reading of the inflation tax.
Continuing resolution
A temporary funding measure that keeps agencies open at existing levels when the appropriations bills are not finished.
Cost-of-living adjustment
The annual Social Security increase indexed to consumer prices — a partial catch-up after the inflation tax, not protection from it.
D
Debt ceiling
A statutory cap on total federal borrowing. It limits paying for spending already authorised — the bill coming due, not a vote to spend more.
Deficit
The amount by which federal spending exceeds revenue in a year — a flow that adds to the debt, and is inflationary if monetized.
Discretionary spending
The portion of federal spending set each year through the appropriations process.
Dot plot
A chart in the Fed's quarterly projections showing where each FOMC participant expects rates to be at future dates.
Dual mandate
The two goals Congress set for the Federal Reserve: maximum employment and stable prices. Stable prices still require that money not outrun output.
F
Federal funds rate
The interest rate banks charge each other for overnight loans of reserves — the price the FOMC chooses in order to invite or restrain credit.
I
Inflation
A general rise in the price level, produced in the sustained case by money growing faster than output — which lowers what a unit of currency will buy.
M
Mandatory spending
Federal spending that flows from permanent law rather than annual appropriations.
N
National debt
The accumulated total the federal government owes from every past deficit — a stock whose interest is paid by taxpayers or inflation.
O
Open market operations
The tools the New York Fed uses to hold the funds rate in range — and, in size, to change the stock of reserves.
Outlays
Money the federal government actually pays out in a period, as distinct from what it is authorised to spend.
Q
Quantitative easing
Large-scale purchases of Treasury and mortgage-backed securities, paid for with newly created reserves. That is money creation.
Quantitative tightening
Shrinking the central bank's balance sheet by letting securities mature without replacing them — a withdrawal of base money, usually without sales.
R
Reconciliation
An expedited budget procedure that lets certain fiscal legislation pass the Senate by simple majority, without being subject to a filibuster.
Y
Yield
The return on a bond as an annual percentage of its price — set by expected short rates, inflation, and Treasury supply.