American Government Unit Chapter 16 III. Spending and the Budget

Objectives Identify the key elements of federal spending. Define controllable and uncontrollable spending Explain how the President and Congress work together to create the federal budget.

What is the Federal Government spending money on? Federal Budget

Federal Spending Entitlements – benefits that law says must be paid Medicare, Medicaid, OASDI (SS), food stamps, unemployment insurance, veterans pensions. People who qualify are entitled to these programs. OASDI – Old Age, Survivors, and Disability Insurance program – Social Security (FICA) 3rd largest program at 727.5 bil Defense – 636 bil Public debt – 383 billion – must pay it – interest only

What to do? Do not trust social security Second and third form of retirement 3% of people retire at there life style 403 b Roth IRA Straight stock market

Controllable and Uncontrollable Spending Controllable/Discretionary Spending – part of the budget that Congress and President can make choices Uncontrollable/Mandatory spending – budget must have these programs (OASDI, interest,…) All entitlements are mandatory To change, Congress must change law – political suicide. 60% of budget is Uncontrollable and growing

The Federal Budget Congress has the “power of the purse” – they approve everything (the people) President proposes budget Budget is a political statement. How?

How the budget is created President and the agencies with the help of the OMB (Office of Management and Budget) create the budget and send to Congress Goes to Budget Committees and Appropriations Committees in both houses CBO (Congressional Budget Office) helps Congress answer questions Hearings are held – lobbyists lobby – page 470 quote/bias? 13 concurrent resolutions must pass then to get budget approved. Continuing resolution – presidential order allowing office to stay open under last years budget until the budget is passed

Review – what is our money spent on? Federal Budget