Managing the Country’s Money 7th Grade Civics Miss Smith *pgs. 305-308

Collecting Public Money Each level of government has a department responsible for collecting taxes Ex: Internal Revenue Service (IRS) After tax money is collected, it goes to the treasuries of various govs. The comptroller makes sure public funds are used only with legislative approval What agencies collect government revenue? The IRS, state and local tax collection agencies, U.S. Customs Service What happens to tax money after it is collected? It is sent to the treasuries of the various governments

Planning Government Spending Budgets list the amount and sources of expected revenue (or income) They also show what the expected expenditures will be/ how the money will be spent Management of public funds is divided btwn the executive and legislative branches Executive branch prepares the budget, legislative passes the budget What two branches of government are involved in managing public funds? Executive and legislative

Preparing the Federal Budget The president prepares the federal budget The Office of Management and Budget (OMB) help the president Each dept. sends the OMB an estimate of how much they plan to spend the next year

Congress and the Budget The pres. sends the budget to Congress with a message explaining it The House and Senate review and debate the budget Both houses of Congress must approve it The budget is passed as appropriation bills The pres. then approves or vetoes them

The National Debt Balanced budget- budget in which revenue equals expenditures The amount of money collected equals the amount of money spent Surplus- excess of money, such as when a government collects more money than it spends Deficit- shortage of money, such as when a government spends more money than it collects What events might cause a government to have a surplus? increased tax revenues from a strong economy, a decrease in government spending

The National Debt When the gov. runs a deficit, it must borrow money to make up the difference This adds to the national debt The country can also either decrease expenditures or increase revenues (taxes, fees, etc.) to lower the deficit Part of the country’s revenue is set aside each year to pay down the interest

Accounting for Public Money Audit- careful examination by trained accountants of every item of income and every expenditure Who conducts audits at the federal level? The Government Accountability Office How do audits ensure that funds are spent according to law? When accountants examine income and expenditures, they make sure that they are accurate and fulfill lawful purposes What do you think might happen if citizens did not keep an eye on government revenue and spending? Funds might not be allocated to issues that the public is most concerned with. The government might overspend