The Federal Budget Process

The Federal Budget Process

The Role of Politics in the Budget Process Political ideology of President & Congress > Liberal Ideology? > Conservative Ideology? Federal agencies & departments attempt to influence White House with their own budget priorities Iron Triangle – interest groups (ex: Boeing), executive agencies (ex: DOD), lobby Congressional Committee (Armed Services)

The Role of Politics in the Budget Process Individual Congressmen want earmarks or pork barrell projects funded in the budget The President’s campaign promises Separation of Powers conflict between POTUS AND Congress with regard to budget priorities (Gov shutdowns in 1995, 2013)

Federal Spending for Mandatory and Discretionary Programs Over Time 5

Mandatory Spending = 2/3 Federal Budget!!! 6

Presidents Proposed $4.1 Trillion Budget FY 2016 7

Social Security So, What’s the Problem?

What’s in Your Paycheck? SAMPLE

What is Social Security? FDR signs the Social Security Act (1935) Social Security consists of several social welfare and social insurance programs administered by the federal government & guaranteed by federal law Social Security includes the federal old age, survivors and disability program

Facts About Social Security The minimum age to receive full retirement Social Security benefits is 65 Partial benefits may be paid at 62 There is no means test Social Security outlays constitute about 20.8% of the federal budget each fiscal year

Who Pays for Social Security? Social Security is a completely self-funded program through payroll deductions paid by employers and employees called the FICA tax. The current FICA tax rate is 6.20% of the gross wage amount Employers contribute pay the same 6.20% tax for each worker

Who Pays for Social Security? The current working generation pays for the benefits of the retired generation. Right now, there is a Social Security surplus because the Baby Boom generation (1946-1964) is much larger than the World War II generation.

So, What’s the Problem with Social Security? The Baby Boom generation is also much larger than the succeeding Generation X and Millenials If Social Security remains as it is today, the Social Security Trust Fund will go bankrupt in the next 20 years or so when the bulk of the Baby Boomer generation retires

Interpreting a Political Cartoon Source: http://www.8asians

Interpreting a Political Cartoon Source: http://www.usnews.com

Saving Social Security TASK: To prevent the program from going bankrupt by 2030, brainstorm FIVE possible fixes or solutions that could help save Social Security.