Managing Our Country’s Money Paying for Government Managing Our Country’s Money

Collecting Public Money At the federal level, the collection of taxes is handled by the Internal Revenue Service (IRS) State and local governments establish their own tax collection agencies After tax money is collected, it is sent to the treasuries of the various governments Federal level: spending is authorized by Congress State and local level: Comptrollers act as “watchdogs of the treasury” and ensure funds are being spent as authorized by state legislature or city council Collecting Public Money

Planning Government Spending All governments have budgets Lists the amount of expected revenue How this revenue will be spent/specifies the proposed expenditures Intended to pay for the government’s operations for one year Managing public funds is divided between executive and legislative branches Chief executive draws up the budget (President, Governor, Mayor, etc. etc.) Legislative branch is responsible for passing the budget and executive branch must ensure the money is being spent according to the budget Judicial courts settle any disputes over collection and spending of public money Planning Government Spending

Preparing the Federal Budget At the federal level, the president recommends how public funds should be raised and spent Needs the help of several government agencies Office of Management and Budget (OMB) helps president prepare the federal budget President and OMB study many financial request and establish priorities for how public funds will be spent After a budget is prepared, it is published in book form Actually several books and is usually thousands of pages long Preparing the Federal Budget

Congress and the Budget Congress studies the proposed budget from the President and OMB ONLY Congress has the power to raise and spend money Budget must be approved by both houses of Congress Budget is passed in the form of 13 appropriations bills which officially authorize the spending of funds Bills are then sent back to the President to be approved or vetoed Process of passing the federal budget takes many months and involves many heated debates Congress and the Budget

The National Debt Government budgets are rarely balanced Surplus: government collects more money than it spends Deficit: government spends more money than it takes in 1970-1997: government operated at a deficit each year 1998-2000: the budget was balanced and we ended up with a surplus 2001-present: recession in 2001, 2003, 2008 and 9/11 attacks caused long-running deficits Debt is now at $19 trillion The National Debt

Part of government revenue collected each year must be used to pay off interest on national debt Interest on the debt is so high that future generations will be repaying money that is borrowed now No constitutional limit on the size of the national debt Congress tries to establish a limit but continuously raises it as the need for more spending arises The National Debt

Public Money is Public Trust To ensure funds are spent according to law, all levels of government provide an audit of their accounts Careful examination by trained accountants of every item of income and every expenditure in a budget Well-being of our country depends on how wisely our government handles public funds We must make our voices heard on these issues and stay informed Public Money is Public Trust

? Who collects taxes at the federal level? What are the three things budgets are supposed to do? Explain the three ways in which managing public funds is a task that is divided between the executive and legislative branches. What is the purpose of the Office of Management and Budget (OMB)? What is the difference between a surplus and a deficit? ?