Budget Simulations HW in the bin! Bell Ringer Please put your Budget Simulations HW in the bin! This helps to understand the US debt: • U.S. tax revenue: $2,170,000,000,000 • Fed budget: $3,820,000,000,000 • Deficit: $ 1,650,000,000,000 • National debt: $14,271,000,000,000 • Recent budget cut: $38,500,000,000 Let’s remove 8 zeros and pretend it’s a household budget: • Annual family income: $21,700 • Money the family spent: $38,200 • New debt on the credit card: $16,500 • Outstanding balance on the credit card: $142,710 • Total budget cuts: $385 In your opinion, why are American politicians still avoiding tackling the U.S. debt? Think about how spending cuts (welfare for those in poverty & the elderly, roads/infrastructure, education, research, etc.) and tax hikes would affect our everyday lives. http://www.usdebtclock.org/

Monetary Policy & Budget Process US Executive 3 Monetary Policy & Budget Process

Today we will … Review executive orders, impeachment & succession. Objectives Agenda Review executive orders, impeachment & succession. Describe the steps in creating the US national budget. Explain the role of The Federal Reserve in monetary policymaking. Compare/contrast fiscal & monetary policy. Presidential Odds & Ends Fiscal Policy - Creating US National Budget slides/notes Monetary Policy – The Fed video & questions Closure - Fiscal & Monetary Policy FRQ HW: Foreign Policy RQs (1/30) Topic Statement (’d 1/30)

Executive Orders A rule or regulation issued by the President that has the force of law. Congress acts in response to or in anticipation of executive orders (preempts and compromises)

Impeachment The House can “impeach” the President. The Senate conducts a trial & votes on impeachment. The Supreme Court Justice presides over the trial. Presidents: Andrew Johnson - acquitted Bill Clinton - acquitted Nixon resigned before impeachment The trial of President Johnson, however, focused on whether the President could remove cabinet officers without obtaining Congress’s approval. Johnson’s acquittal firmly set the precedent—debated from the beginning of the nation—that the President may remove appointees even if they required Senate confirmation to hold office.

VP role – preside over Senate and cast tie-breaker if necessary 25th Amendment – pres. informs congress of inability to perform duties or VP and majority of cabinet inform congress in writing that pres. is disabled

Check for understanding Specifically explain how a president can be removed from office. Provide at least one historical example of this process being used.

Overall goal is to regulate & ensure the stability of the economy. Economic Policy Overall goal is to regulate & ensure the stability of the economy. Fiscal Policy Monetary Policy Goal: put more $ in people’s pocket Manage the economy by controlling taxing & spending. How can the Pres. influence? How can the Congress influence? Goal: regulate money supply to increase or decrease the nations level of business We want a productive growing economy but it can’t grow too fast Inflation!

Inflation When the value of money goes down. This means that it costs more money to buy products.  The more money there is out there being spent, the less the money is worth. The supply is high, thus the value is comparatively lower. What this also means is that people are spending, and this is good. Proper balance between a healthy amount of spending and money in circulation & an acceptable level of inflation. Economists have placed "healthy" inflation at 2 - 3%. This shows spending growth and expansion, any more and we begin to worry.

Fiscal Policy Actions Raising & lowering taxes Spending Mandatory Spending – obligated by previously enacted laws Entitlements (ex: Social Security, Medicare) Interest on the debt Discretionary Spending – controlled thru regular budget process Defense budget Education Environmental Protection Agency Department of Veterans Affairs Mandatory = expenditures automatically obligated due to previously-enacted laws. This would include things such as Social Security and the interest on the national debt. Entitlements = benefits to which every eligible person has a legal right and that the government cannot deny. ex: social security Discretionary = federal spending on programs that are controlled through the regular budget process

Social Security & Medicare as % of GDP The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period - you can think of it as the size of the economy.

Fiscal Policy How National Budget is Prepared

Monetary Policy Federal Reserve Video – 14 min. https://www.youtube.com/watch?v=KN3kD4T3ltY&feature=re lated

Closure Fiscal & Monetary Policy FRQ