Chapter 14: The Budget

1. Chapter 14: The Budget …or why we’re screwed

3. Focus: Does Your Family Have a Budget?

4. What happens when you go over?

5. What if there were no consequences?

6. What does a trillion dollars look like?

7. A packet of one hundred $100 bills is less than 1/2" thick and contains $10,000. Fits in your pocket easily and is more than enough for week or two of shamefully decadent fun.

8. Believe it or not, this next little pile is $1 million dollars (100 packets of $10,000). You could stuff that into a grocery bag and walk around with it.

9. While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a standard pallet...

10. And $1 BILLION dollars... now we're really getting somewhere...

11. Next we'll look at ONE TRILLION dollars. This is that number we've been hearing so much about. What is a trillion dollars? Well, it's a million million. It's a thousand billion. It's a one followed by 12 zeros.

13. Let’s look at a trillion dollars another way…

14. Four Major Concepts • The national deficit is $ we don’t have and the national debt is $ we owe. • Entitlement spending takes up most of the federal budget*. • The budget-making process is a political process that often prevents Congress from making tough choices. • Since World War II, Americans expect more and more from the federal government but show a reluctance for increases in taxes to pay for it.

15. Concept #1

16. Types of Taxes

18. Specific expenditures Environmental protection, Defense and security Education, etc. Congress and the Pres. decide how much will be spent Controllable Spending TYPES OF FED SPENDING PART OF THE FED BUDGET Uncontrollable Spending Congress and Pres. have no direct power To change Interest on the national debt Social Security & other Entitlement programs

20. WHAT THE GOV. BRINGS IN EXPENDITURES FEDERAL DEFICIT

21. How a Surplus Works

23. Clip

25. The National Debt

26. Concept #2

27. Where are YOU in this cartoon?

28. Social Security: A federal Ponzi scheme?

29. The future? YOU

30. What we CAN’T cut • Entitlement programs: • Social Security • Medicare • Medicaid What we CAN cut

31. ENTITLEMENT PROGRAMS GUARANTEED BY LAW BABY BOOMERS START RETIRING

32. How Social Security Works $

33. 1940 • Workers • Retirees

34. 1950 • Workers • Retirees

35. 2006 • Workers • Retirees

36. ??? • Workers • Retirees

39. Proposed Reforms • Increase retirement age • Raising the payroll tax • Invest some of Social Security trust fund into the stock market • Privatized accounts “THE THIRD RAIL”

40. The Third Rail

41. Concept #3

42. Budget Agents Tax Committees GAO Agencies OMB CBO • Incrementalism- • The idea that last year’s budget is the best predictor of this year’s budget, plus some.

43. CBO Projects debt to double by 2021 under the Obama budget

44. SIMPLIFIED

45. The Budget Process (in theory) 1

46. Concept #4

49. or...