GOVERNMENTCHAPTER 16 FINANCING

GOVERNMENT - THE BUDGET

REVENUE – Raising $

Taxes Progressive Taxes – get bigger the more

money you make Income Tax

Regressive Taxes – the same for everyone Sales Tax

Selective Sales Tax – on specific items Excise Tax (luxury tax)

Taxes

Borrowing $

Deficit spending – the government spends more $ than it brings in.

Surplus – the government brought in more $ than is spent (doesn’t usually happen)

Public Debt – All of the money the government has borrowed and not yet repaid, including the interest due.

Public Debt

Spending

Uncontrollables – money that Congress is committed to spend. Entitlements – benefits that are guaranteed to

those people who qualify Largest – Social Security

Controllable – money that may or may not be spent, it is up to Congress to decide AKA – Discretionary Spending

Ex. – Shelter houses at National Parks

Spending

Budgeting

GDP – total value of all goods & services sold by the United States

Inflation – increase in prices Deflation – decrease in prices Fiscal Policy – the governments power to

tax & spend. How much of each?

Raising v. Spending $

Should we spend more $, then… Raise taxes OR Go further into debt?

Should we cut spending, but… Not have to raise taxes Not be able to fund as many programs