Introduction to Economics Johnstown High School Mr. Cox Federal Budget Introduction to Economics Johnstown High School Mr. Cox

Federal Budget The earning and spending plan of our federal government Revenue – all money brought in to a company, government Expenditure – all money spent

Surplus/Deficits Balanced Budget: when the government collects the same in revenue (taxes) as it spends. Budget Surplus: When the government takes in more revenue than it spends. Budget Deficit: When the government spends more than it takes in. National Debt: money owed due to sustained deficits External Debt: money owed to foreign entities Foreign governments, companies, investors, etc

Mandatory Spending Programs which our government must spend legally Entitlement programs Social Security Medicare/Medicaid Welfare Programs 65% of all spending in mandatory

Discretionary Spending Def. Spending category where government can choose how to fund. (29% of all spending) Ex. Defense (#1 discretionary spending), education, research, student loans, technology, law enforcement, national parks and monuments, the environment, housing, transportation, disaster aid, foreign aid, farm subsidies, etc. Subsidies – Gov will help consumers pay for certain goods Vaccines Solar Panels Both have positive externalities

2015 Expenditures: Fed Government

Revenues Majority of money the government makes comes from taxation (95%) Personal Income Tax Payroll Tax (FICA) Corporate Tax Excise Taxes

2015 Revenues: Fed Government

Entitlement Programs Def. Social welfare programs that people are “entitled to” if they meet certain requirements. Congress must fund these programs. Entitlements are very expensive because Congress cannot control how many people receive the benefits. Ex. Social Security (#1spending), Medicare, Medicaid, Food Stamps, etc.