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Economics

Economics. Chapter 10 – Government Spending. Objectives. Explore the role of the federal government in our economy. Analyze government spending. Assess federal, state, and local government expenditures. Identify the reasons behind our national debt.

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Economics

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  1. Economics Chapter 10 – Government Spending

  2. Objectives Explore the role of the federal government in our economy. Analyze government spending. Assess federal, state, and local government expenditures. Identify the reasons behind our national debt. Predict the state of our national debt in the future.

  3. WHAT DOES THE GOVERNMENT DO WITH YOUR MONEY?

  4. GOODS AND SERVICES

  5. GOODS AND SERVICES

  6. PORK Term used by some to describe a line-item budget expenditure that circumvents normal budget-building procedures.

  7. GOVERNMENT ART THAT SOOTHES THE SOUL Memphis is known for rhythm and blues, but it recently gained another moniker. In 2009, Forbes named Memphis the second most dangerous city in America.40 How have city leaders decided to fight crime? By spending $700,000 on government-funded art to scatter around the city, of course.41 In February 2010, a committee of the Memphis City Council approved a plan to give the Urban Art Commission the funding to erect murals and sculptures throughout the city. Apparently, the plan is to woo criminals with such breathtaking artwork that they immediately give up their wicked ways. It remains to be seen how well that works.

  8. Examples of Federal Pork • $1 million for genetic wheat research • $2.5 million for potato research • $1.8 million for genetic study of food allergies • $500,000 for study of the Brown Tree Snake • $10 million to include the “Lawnmower Exchange program” • $17 million to the International Fund for Ireland – to encourage, contact, dialogue, and reconciliation between nationalists and unionists throughout Ireland.

  9. Types of Government Spending Form of goods and services. Transfer payment – a payment for which the govt receives neither goods nor services in return – Social Security, unemployment, welfare Grant –in-Aid – a transfer payment that one level of govt makes to another – example interstate highway construction

  10. Impact of Government Spending • Affects resource allocation – example, farming subsidies • Distribution of Income – way in which income is allocated among families, individuals, or groups – ex. Welfare, grants • Competes with private sector – public vs. private colleges • Increasing the tax burden to pay for programs

  11. FEDERAL BUDGET

  12. Federal Expenditures Federal Budget – annual plan outlining proposed revenues and expenditures for the coming year. Fiscal Year – 12 month period from October 1st to September 30th Appropriations Bill – act of Congress that allows federal agencies to spend money for a specific purpose

  13. Federal Expenditures Con’t Budget Deficit – a excess of expenditures over revenue Budget Surplus – revenues are more than expenditures Mandatory Spending – spending authorized by law that continues without need for annual approval by Congress (ex. Social Security payments) Discretionary Spending – spending that must be approved annually by Congress (defense expenditures)

  14. Types of Federal Expenditures Income Security– SSI, subsidized housing, welfare, food stamps Medicare – health care program available to all senior citizens regardless of income – available at age 65 Medicaid– joint federal-state medical insurance program for low income individuals (TennCare in TN) Net Interest on Debt– from borrowed monies

  15. State Government Expenditures Intergovernmental Expenditures – ex. sales tax to be paid to a county or city Public Welfare Insurance Trust and Retirement– example, teachers Higher Education

  16. Local Government Expenditures Elementary/Secondary Education Utilities Public Safety and Health Transportation/Street Repairs

  17. NATIONAL DEBT

  18. U.S. National Debt Clock http://www.usdebtclock.org/

  19. CURRENT US SAVINGS RATE

  20. How can your generation lower the debt of our nation and raise individual savings? ECONOMIC PREDICTIONS

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