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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

Economics

Chapter 10 – Government Spending


Objectives

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.


What does the government do with your money

WHAT DOES THE GOVERNMENT DO WITH YOUR MONEY?


Economics

GOODS AND SERVICES


Economics

GOODS AND SERVICES


Economics

PORK

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


Economics

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.


Examples of federal pork

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.


Types of government spending

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


Impact of government spending

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


Federal budget

FEDERAL BUDGET


Federal expenditures

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


Federal expenditures con t

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)


Types of federal expenditures

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


State government expenditures

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


Local government expenditures

Local Government Expenditures

Elementary/Secondary Education

Utilities

Public Safety and Health

Transportation/Street Repairs


National debt

NATIONAL DEBT


U s national debt clock

U.S. National Debt Clock

http://www.usdebtclock.org/


Economics

CURRENT US SAVINGS RATE


How can your generation lower the debt of our nation and raise individual savings

How can your generation lower the debt of our nation and raise individual savings?

ECONOMIC PREDICTIONS


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