the federal money tree unit v/vi. $$$$$ managing the federal coffers president advises, congress...
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The Federal Money TreeUnit V/VI
$$$$$
Managing the federal coffersPresident advises, Congress delegates somewhat harmoniously
Who bears the burden of paying?
Who receives the benefits?
How does one maintain prosperity?Liberal vs. Conservative Ideology
Will government continue to fund all those GREAT programs?
Budget
Government collects $$$ by taxes and spends it via expenditures. If tax allocations are higher, it is a …..surplus.
Always debate who was the key…
Economic surge really helped / Should we give it all back?
If expenses are higher, it is a ……deficit which is then added to the national debt.
Interest on the debt
National Debt Clock
Old Photo?
Federal Income Sources
Income Tax –16th Amendment power to tax people via the IRS—50%
Direct taxes---one who is taxed pays the tax. Must be equally apportioned. [House]
Progressive taxes---higher incomes pay more supposedly. Impact?
Flat tax?
Loopholes?
Federal Tax SourcesRegressive Taxes---levied at a flat rate [Sales tax]
Excise Taxes---Sale or consumption of a productSIN tax
Corporate Tax—10%
Social Security- FICA---33% (Regressive)
BorrowingDebt load shifts burden to future taxpayers. Balanced budget amendments with certain provisions?
Lost IncomeLoopholes, deductions, tax breaks, off shore, cash money
Expenditures
Social SecurityElderly, needy, poor
Social Security Act of 1935, Medicare 1965, Medicaid 1965
1/3 of federal budget
Will it be available to you? 2042
How it works?
Issue---too much going out, and not enough going in
The Fix?
Expenditures
National Defense
Interest on Debt
Discretionary SpendingBridge to nowhere, Pell Grants, the Fence
Some programs are funded annually while some have sunsets
Budget Process
Controlled expendituresIncrease last years budget by an “increment” to satisfy this years budget. Discretionary allocations
Uncontrolled expenditures2/3 of budget
EntitlementsYou qualify, you get them no matter what the cost to the government even if we have no money
Level of benefit X number of recipients
The Budget Battle
$ 3.2 Trillion + draws a lot of participants. Discretionary decisions
SIGS
Bureaucratic agencies
Office of Management and Budget—President
President
Congressional Budget Office
Subject matter committees—Ag, Science, Energy
Appropriations committees
Government Accounting Office
Partisan politics---Party Issues
Budget Reform
Fixed Budget Calendar (October 1 to September 31)
Budget Committees
Congressional Budget Office
1974 Reforms-budget resolution established in April sets the bottom line
Spending limits
1993 Gramm-Rudman Act- Balanced Budget
Economic TheoriesMonetarism- Fed monitors interest rates
Goal-steady money supply growth with equal growth of economy. Free market principles
KeynesianismInspire demand with expenditures or cut it with higher taxes
Goal-government is central figure
Price & Wage Government monitors with fiscal and monetary policies
Goal-bailouts or subsidies impact market
Supple SideCut taxes, less government
Goal-little government, less taxes will inspire private sector to move on its own
So…
The Federal Money TreeUnit V/VI
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