1. American Government Unit Chapter 16
III. Spending and the Budget

2. 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.

3. What is the Federal Government spending money on?
Federal Budget

4. 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 bil
Defense – 636 bil
Public debt – 383 billion – must pay it – interest only

5. 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

6. 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

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

8. 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

9. Review – what is our money spent on?
Federal Budget