Federal Budget and Debt

Has anyone every done a music parody for an AP class at YHS? • AP Gov: Budget Song

To get us back in the swing of things

• SNL Cold Open

• Next slide we will try to determine the terms- no need to write them down; I will give you a handout

Introduction- Basic Terms

• Budget:

• A policy document allocating burdens (taxes) and benefits (expenditures).

• Deficit:

• An excess of federal expenditures over federal revenues.

• Expenditures:

• What the government spends money on.

• Revenues:

• Sources of money for the government.

Sources of Federal Revenue

• Income Tax • Shares of individual wages and corporate revenues.

• The 16th Amendment permitted Congress to levy an Income tax.

• The individual income tax (not businesses) is the largest single revenue source for the government.

• Our income tax is progressive: • those with more income pay higher rates of tax on their

income.

• is it confusing, unfair, or evil?

• Death and Taxes: Stephen Colbert

Sources of Federal Revenues Cont..

• Borrowing • The Treasury Department sells bonds - this is how the

government “borrows” money.

• The federal debt is the sum of all the borrowed money that is still outstanding.

• The government competes with other lenders.

• Government does not have a capital budget, therefor the Federal Budget is NOT like a household budget

• Debt Limit- the limit of legally allowable debt set by Congress

• How many times has the debt ceiling been raised?

Sources of Federal Revenue Cont…

• Taxes and Public Policy

• Tax Loopholes:

• Tax break or benefit for a few people

• Tax Expenditures:

• Special exemptions, exclusions or deductions - lots of money is lost.

• Tax Reduction:

• The general call to lower taxes.

• Tax Reform:

• Rewriting the taxes to change the rates and who pays them.

• Think back to the Colbert: Death and Taxes video clip

Federal Expenditures

• Big Governments, Big Budgets • A big government requires lots of money.

• As the size of government increases, so does its budget.

• The Rise and Decline of the National Security State • In the 50’s & 60’s, the DOD received more than half the federal

budget.

• Defense now constitutes about one-sixth of all federal expenditures.

Federal Expenditures Cont…

• The Rise of the Social Service State

• The biggest part of federal spending is now for income security programs.

• The biggest of these is Social Security.

• Social Security has been expanded since 1935 to include disability benefits and Medicare.

• These benefit programs face financial problems with more recipients living longer.

HDI: 0.923

IHDI: 0.856

GDP per

Capita: ≈

$42,000

HDI: 0.915

IHDI: 0.76

GDP per

Capita: ≈

$52,000

Human

Development

Reports

Americans typically Want…

• Less overall spending

• More specific spending

• All with

• All with… lower taxes

Federal Budget and Spending

This pie chart represents the total federal revenue from 2015. Having

federal expenditures greater than the federal revenue will create a deficit

for the year.

This pie chart represents the total federal expenditures for 2015,

broken into 3 separate categories.

Federal Budget and Spending This pie chart represents the total federal expenditures for

MANDATORY spending for 2015

This pie chart represents the total federal expenditures for DISCRETIONARY spending for

2015

What’s the Budget Process? • HOMEWORK: VIEW and understand “Creating The Budget”

PowerPoint on www.juarezapgov.weebly.com

PAUSE

• Distribute Budget/Debt Handout

How Do You Balance a Budget?

• You spend less (or same) or tax more

• Spend less = fewer government programs

• Tax More = people have less money to spend

How people generally want to cut the budget

• Some Favorite Targets For Budget Cuts • Science, Space And Technology

• Total savings: $25.6 billion, less than 1 percent of the budget.

• The Arts and Humanities: • Total savings: NEA, $124 .4 million, NEH $141 .1 million, less than .01 percent of the

budget

• Foreign Aid And International Relations • Total savings: $28.5 billion, 1 percent of the budget

• The Program Formerly Known As Welfare • Total savings: Temporary Aid to Needy Families; food and nutrition assistance,

including food stamps: $65.5 billion, 2.39 percent

• And it all adds up to? A grand total of a little over 4 percent of the budget.

• If we have time: TED Talk linked on my website

What is our National Debt anyway?

• National Debt Clock