10 trillion and counting https://www.youtube.com/watch?v=pfZyffw7U6E
www.whitehouse.gov/omb
Solve the deficit
http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?_r=0
THE FEDERAL BUDGETUnit 7.2
I. BUDGET AND SPENDING
A. Executive Branch -President submits a new budget every year1.Office of
Management and Budget (OMB)
2. Huge political statement about priorities of gov’t
B. LEGISLATIVE BRANCH
1. Congress receives a proposed budget from the executive branch
a. B/w March – October b. Each branch of Congress must pass bills for
discretionary spendingc. Appropriations –bills that assign spending money
on a specific program, project or government department
d. 12 subject areasi. EX: Defense, Agriculture, Transportation & Housing
and Urban Development
C. FISCAL POLICY
1. Fiscal Policy –use of gov’t revenue collection and expenditures to influence the economy
2. Discretionary -spending optional spending that is approved thru an appropriations bill
a. 12 departments/committees are subject to this funding
3. Mandatory spending -spending required by existing law
4. Currently 60% of US budget Social Security Medicare/Medicaid Other entitlements
D. Budget breakdown
1.entitlement programs (social security, Medicare, welfare): ~50% of budget
2. defense- 21%, interest on debt 9%
3.deficit (spending more than the revenue collected)
4. total debt: $10.8 trillion, >$200 billion in interest
II. GOV’T INTERVENTIONS
Entitlement programs Medicaid, Food Stamps, WIC, FDC
payments, federal jobs programs & training
Gov’t subsidized loans for college education
Federal Reserve lowering interest rates so that
companies can expand businesses & hire more workers
Taxation Progressive tax rate & Income tax credit
UNEMPLOYMENT AND POVERTY
A. Cyclical Employment- unemployment rises during economic downturns and falls when economy improves
B. Full Employment- unemployment rate 4-5%
C. Underemployment- people working at a job in which they are overqualified or part-time
CLOSE
Give a situation in which someone is underemployed.
What is fiscal policy? Why do you think both the executive and legislative branches participate in shaping it?
TAXES; FEDERAL , STATE AND LOCAL
Federal Taxes Personal Income Tax: Paid by individuals –progressive Payroll Tax: employers deduct tax from employees paychecks for Entitlements
Capital Gains tax: tax on profits made from sell of assets Excise Tax: tax on goods ( sin tax) cigarettes, gas, alcohol: regressive
Tariff: Tax on imported goods Corporate Income Tax: Income tax on profits Estate Tax: Tax on inheritance
STATE AND LOCAL TAXES
State: State individual income tax: progressive- largest source of revenue for the
state Corporate income tax: Estate Tax Sales Tax: Tax on goods and services – regressive Excise Tax: Licenses/ Permits: Fees/ fines:
Local : Property Tax: Largest source of revenue for a local cities Sales tax: Licenses, fees, permits, fines
WHAT ARE AUTOMATIC STABILIZERS?
Automatics stabilizers are expenditures by the Federal Budget to offset the negative affects of a slowdown in the economy.
Examples are Unemployment benefits, foods stamps and other public assistance programs.
These programs help people supplement their incomes.