Government Revenue and Spending
Chapter 14:
Government Revenue and Spending
Section 3:
Federal Government Spending
pgs. 428-433
Federal Expenditures
•
The programs & services
the federal government
funds are divided into two
categories.
1.
Mandatory spending
—or
spending that is required
by current law
2.
Discretionary spending
—
or spending that the
government must
authorize each year.
Mandatory Spending
•
This makes up well over half of
all federal spending and most
of it is in the form of
entitlements which are social
welfare programs.
•
Social Security
is a one of
these programs. As we saw in
the last section it aids older
citizens who have retired,
children who have lost a
parent or both parents, and
people with disabilities.
•
Social Security takes the
largest amount of federal
spending.
More Mandatory Spending Programs
•
The
Medicare
program was
introduced in 1966, to provide
people over 65 with medical
coverage.
•
Employers and employees
each pay 1.45% of employee
income.
•
In 2006, means testing was
added, so the most wealthy
would not received Medicare.
•
Medicaid
was started at the
same time as Medicare, to
give medical coverage to poor
people.
•
63% of Medicaid is paid for by
the federal government and
the rest is paid for by the
state.
Other Mandatory Spending Programs
•
The Food Stamp program
provides funds for about 26
million low-income people.
•
Veterans’ benefits include
health care coverage &
disability payments for injured
vets.
•
Vets also receive educational
benefits.
•
Vet benefits total $50 billion a
year.
•
Unemployment insurance is
also part of mandatory
spending.
•
Border protection and
enforcement of some
immigration laws.
Discretionary Spending
•
More than a third of federal
revenue goes to
discretionary spending, and
it includes:
•
Interstate highway system &
transportation programs,
like Amtrak
•
Natural resources & the
environment, including
conservation programs,
pollution clean-up, and
national parks
•
education, like college
tuition assistance
More Discretionary Spending
•
Science, space,
technology, and other
research programs
•
Justice administration,
including enforcement
agencies, such as the FBI,
and the federal court
system.
•
The largest discretionary
expenditure is national
defense and it takes up
50% of the discretionary
budget.
The Federal Budget & Spending
•
Each year the President and
Congress work together to
establish the
federal budget
, a
plan for spending federal tax
money.
•
The budget is prepared for a
fiscal year
, a 12-month period for
which an organization plans its
expenditures.
•
The federal government’s fiscal
year runs from October 1
st
to
September 30
th
.
•
The President’s budget is
prepared by the Office of
Management and Budget (OMB)
and takes into account estimated
tax receipts and requests by all
federal departments & agencies.
Congress Acts on the Budget
•
The Congressional Budget Office
helps the House and Senate
develop guidelines for different
appropriations
, which are set
amounts of money set aside for
specific purposes.
•
Members of Congress often make
deals to gain votes for
appropriations that they support.
•
Congress votes on the final budget
and sends it to the president for
approval.
•
If the budget is not approved by
the beginning of the new fiscal
year, the Congress passes
resolutions to keep the
government running on a day-to-
day basis.
Methods of Federal Spending
•
After budget approval, the funds
are spent in several ways.
•
One way is
direct spending
, by
which the government buys
goods and services that it needs.
•
A 2
nd
way is through
transfer
payments
—money distributed to
individuals who do not provide
goods or services in return.
Example: Social Security
•
The 3
rd
way is
grant-in-aid
transfer payment from the federal
government to state of local
government. Example: grants to
states, local governments, or
regions
The Impact of Federal Spending
•
B/c the federal gov. sends
trillions of dollars, it is a big
factor in the economy.
•
It influences the economy in
three ways:
1.
Resource Allocation
-the
federal gov. decides where it
is going to spend its money
2.
Income Redistribution
-for
example: transfer payments
for health care, retirement,
Food Stamp benefits, or how
the gov. awards contracts
3.
Competition with the
Private Sector
- for example
veterans’ hospitals, federal
housing, even education
Federal government spending is divided into two main categories: mandatory and discretionary spending. Mandatory spending includes entitlement programs like Social Security, Medicare, and Medicaid, while discretionary spending covers areas such as transportation, education, and national defense. Explore the breakdown of federal expenditures and learn about key spending programs in this comprehensive overview.
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Presentation Transcript
Chapter 14: Government Revenue and Spending Section 3: Federal Government Spending pgs. 428-433
Federal Expenditures https://media.nationalpriorities.org/uploads/total_spending_pie,__2015_enacted.png The programs & services the federal government funds are divided into two categories. 1. Mandatory spending or spending that is required by current law 2. Discretionary spending or spending that the government must authorize each year.
Mandatory Spending This makes up well over half of all federal spending and most of it is in the form of entitlements which are social welfare programs. Social Security is a one of these programs. As we saw in the last section it aids older citizens who have retired, children who have lost a parent or both parents, and people with disabilities. Social Security takes the largest amount of federal spending. https://www.ssa.gov/framework/images/icons/png/logo-fb-share.png
More Mandatory Spending Programs The Medicare program was introduced in 1966, to provide people over 65 with medical coverage. Employers and employees each pay 1.45% of employee income. In 2006, means testing was added, so the most wealthy would not received Medicare. Medicaid was started at the same time as Medicare, to give medical coverage to poor people. 63% of Medicaid is paid for by the federal government and the rest is paid for by the state. http://teststripz.com/wp-content/uploads/2014/02/Medicaid-Medicare-and-Dual.jpg
Other Mandatory Spending Programs http://sustainfloyd.org/wp-content/uploads/2011/07/SNAP.jpg The Food Stamp program provides funds for about 26 million low-income people. Veterans benefits include health care coverage & disability payments for injured vets. Vets also receive educational benefits. Vet benefits total $50 billion a year. Unemployment insurance is also part of mandatory spending. Border protection and enforcement of some immigration laws.
Discretionary Spending More than a third of federal revenue goes to discretionary spending, and it includes: Interstate highway system & transportation programs, like Amtrak Natural resources & the environment, including conservation programs, pollution clean-up, and national parks education, like college tuition assistance http://www.in.gov/dva/images/amtrak-train1.jpg
More Discretionary Spending Science, space, technology, and other research programs Justice administration, including enforcement agencies, such as the FBI, and the federal court system. The largest discretionary expenditure is national defense and it takes up 50% of the discretionary budget. http://3ynk0w1orym5czc542xmo55k.wpengine.netdna-cdn.com/wp-content/uploads/2016/01/FBI.jpg
The Federal Budget & Spending https://media.nationalpriorities.org/uploads/total_spending_pie,__2015_enacted.png Each year the President and Congress work together to establish the federal budget, a plan for spending federal tax money. The budget is prepared for a fiscal year, a 12-month period for which an organization plans its expenditures. The federal government s fiscal year runs from October 1stto September 30th. The President s budget is prepared by the Office of Management and Budget (OMB) and takes into account estimated tax receipts and requests by all federal departments & agencies.
Congress Acts on the Budget The Congressional Budget Office helps the House and Senate develop guidelines for different appropriations, which are set amounts of money set aside for specific purposes. Members of Congress often make deals to gain votes for appropriations that they support. Congress votes on the final budget and sends it to the president for approval. If the budget is not approved by the beginning of the new fiscal year, the Congress passes resolutions to keep the government running on a day-to- day basis. https://fcw.com/Blogs/FCW-Insider/2013/09/~/media/D95692762FF04E0D8EB331F8021855C1.ashx
Methods of Federal Spending http://coe.sdsu.edu/doc/Current/Grants-bagofmoney.png After budget approval, the funds are spent in several ways. One way is direct spending, by which the government buys goods and services that it needs. A 2ndway is through transfer payments money distributed to individuals who do not provide goods or services in return. Example: Social Security The 3rdway is grant-in-aid transfer payment from the federal government to state of local government. Example: grants to states, local governments, or regions
The Impact of Federal Spending B/c the federal gov. sends trillions of dollars, it is a big factor in the economy. It influences the economy in three ways: 1. Resource Allocation-the federal gov. decides where it is going to spend its money 2. Income Redistribution-for example: transfer payments for health care, retirement, Food Stamp benefits, or how the gov. awards contracts 3. Competition with the Private Sector- for example veterans hospitals, federal housing, even education http://images.slideplayer.com/15/4728754/slides/slide_13.jpg
