Presentation on theme: "Deficits and Debt. The Budget Process Taxes, especially personal income taxes, provide most of the federal government’s revenue. The federal budget."— Presentation transcript:
The Budget Process Taxes, especially personal income taxes, provide most of the federal government’s revenue. The federal budget each year is an estimate of anticipated income and expenses for a certain period of time. Our federal budget is based on a fiscal year that begins on Oct. 1 and is created by the Office of Management and Budget, which is part of the Executive Branch. If more money was spent than collected a deficit exists. If less money was spent than collected surplus exists.
Deficit Spending Causes of deficit spending: War Recessions Policy Decisions
National Debt This is the total amount the government owes. The govern borrows each year to cover the amount of the deficit. To help with the deficit the government sells securities to individuals, corporations and financial institutions. A person that buys a savings bond is loaning money to the government for a certain period of time. There are also regular bonds, and Treasury bills. Each year the government has a budget deficit, it borrows an additional amount, adding to what it owes. (National Debt)
What’s the Impact The interest on the National Debt eats up a significant portion, about 10-20% of the federal budget each year. Interest paid on the National Debt is now 10 times what the government spends on education in year.