1. The Federal Money Tree Unit V/VI

2. $$$$$ Managing the federal coffers President advises, Congress delegates somewhat harmoniously Who bears the burden of paying? Who receives the benefits? How does one maintain prosperity? Liberal vs. Conservative Ideology Will government continue to fund all those GREAT programs?

3. Budget Government collects $$$ by taxes and spends it via expenditures. If tax allocations are higher, it is a …..surplus. Always debate who was the key… Economic surge really helped / Should we give it all back? If expenses are higher, it is a ……deficit which is then added to the national debt. Interest on the debt

4. National Debt Clock Old Photo?

5. Federal Income Sources Income Tax –16 th Amendment power to tax people via the IRS—50% Direct taxes---one who is taxed pays the tax. Must be equally apportioned. [House] Progressive taxes---higher incomes pay more supposedly. Impact? Flat tax? Loopholes?

6. Federal Tax Sources Regressive Taxes---levied at a flat rate [Sales tax] Excise Taxes---Sale or consumption of a product SIN tax Corporate Tax—10% Social Security- FICA---33% (Regressive) Borrowing Debt load shifts burden to future taxpayers. Balanced budget amendments with certain provisions? Lost Income Loopholes, deductions, tax breaks, off shore, cash money

7. Expenditures Social Security Elderly, needy, poor Social Security Act of 1935, Medicare 1965, Medicaid 1965 1/3 of federal budget Will it be available to you? 2042 How it works? Issue---too much going out, and not enough going in The Fix?

8. Expenditures National Defense Interest on Debt Discretionary Spending Bridge to nowhere, Pell Grants, the Fence Some programs are funded annually while some have sunsets

9. Budget Process Controlled expenditures Increase last years budget by an “increment” to satisfy this years budget. Discretionary allocations Uncontrolled expenditures 2/3 of budget Entitlements You qualify, you get them no matter what the cost to the government even if we have no money Level of benefit X number of recipients

10. The Budget Battle $ 3.2 Trillion + draws a lot of participants. Discretionary decisions SIGS Bureaucratic agencies Office of Management and Budget—President President Congressional Budget Office Subject matter committees—Ag, Science, Energy Appropriations committees Government Accounting Office Partisan politics---Party Issues

11. Budget Reform Fixed Budget Calendar (October 1 to September 31) Budget Committees Congressional Budget Office 1974 Reforms-budget resolution established in April sets the bottom line Spending limits 1993 Gramm-Rudman Act- Balanced Budget

12. Economic Theories Monetarism- Fed monitors interest rates Goal-steady money supply growth with equal growth of economy. Free market principles Keynesianism Inspire demand with expenditures or cut it with higher taxes Goal-government is central figure Price & Wage Government monitors with fiscal and monetary policies Goal-bailouts or subsidies impact market Supple Side Cut taxes, less government Goal-little government, less taxes will inspire private sector to move on its own

13. So…

14. The Federal Money Tree Unit V/VI