The Federal government collects money (revenue) and spends money (expenditures) The government is important in our economy.
Post on 27-Dec-2015
216 Views
Preview:
Transcript
Chapter 10:Economics of
Government Spending
The Federal government collects money (revenue) and spends money (expenditures)
The government is important in our economy.
Main Idea
Section 1
The circle graph shows that ALL LEVELS of government combined =1/3 GDP GROSS DOMESTIC PRODUCT
Money collected in taxes is called ____________________ Money used to pay for goods and services is called _______________
If revenue = 2416 billion Expenditures = 2700 billion Which? Budget deficit Budget surplus
circle
If revenue = 2700 billion Expenditures = 2750 billion Which? Budget deficit Budget surplus
circle
Budget
Budget building process president congress
Federal government not required to have a balanced budget
revenue = expenditures
Due: October 1
Back to the president
Two Types of Expenditures: Fed Govt
1. Goods and Services
2. Transfer Payments
• Planes, tanks, ships space shuttles
• office buildings
• land for parks
• capital goods for schools and libraries.
• Social Security
• welfare
• Unemployment compensation
• Medicare
Grant in Aid:Payment from one level of
government to another (ex. federal govt to state govt)
Example: interstate highways: Fed govt pays most and state pays rest
The government expenditures have grown since the 1940s◦ WWII◦ Change in public opinion that government should
have a large role in everyday economic affairs.◦ TVA, low cost electricity to people in the south in
the 1930s
Government Growth
Fiscal year: 12-month financial planning period October 1-September 30
2 TYPES OF GOVERNMENT SPENDING
1. Mandatory Spending
2. Discretionary Spending
Spending by law.Congress does not need to approve
Spending that needs to be approved each
year.
Social SecurityIncome Security
MedicareMedicaid
Net interest on debt
National Defense
The House discusses Spending on National Defense
is not part of the annual budget process, although Congress can deal with its separately.
Discretionary SpendingNATIONAL DEFENSE
Various committees in the House decide how to spend the money and propose appropriation bills. House votes on bill.
The budget is reassemble and voted on by the House and Senate.
Mandatory Spending
Mandatory Spending-voteand discussion not needed
Social Security-Money paid to retired workers
Medicare-Health care for senior citizens
Medicaid-Medical insurance
for low income people
Net interest on debt-
interest paid on $ government has
borrowed
Income Security-Food stamps
SSIHUD housing
State Budget process: must have a balanced budget: expenditures include:
Intergovernment expenditures:Ex. Sales tax $ given to local government
Insurance trust and retirement-
Retirement $ for police, teachers, highway workers
Higher education:colleges
Public welfare;Cash assistance to
the poor
Other:PrisonsParks Roads
Snow removal
Local Budget process: must have a balanced budget: expenditures include:
Elementary/Secondary Education
Public Health and SafetyPolice
fire
OtherRoads
Snow removalSalt for icy roads
Utilities:Traffic lightsStreet lights
WaterGas
electricity
Approving spending ◦ Some states have enacted a Balanced budget
Amendment, Which is a constitutional amendment that requires that annual spending not exceed revenue
◦ When revenue drops….NO MORE SPENDING◦ A reduction in revenues may occur if sales tax or
state income tax fall because of a decline in general level of economic activity
Section 3
https://www.youtube.com/watch?v=gkJnmWhin90
http://www.forbes.com/sites/realspin/2014/04/15/passage-of-the-data-act-is-a-major-advance-in-government-transparency/
Video & Article
top related