Ch. 10- Government Spending

2012 total expenditures by federal, state, and local governments amounted to a little over $6 trillion Per capita (per person)- almost $19,408 for every man, woman, and child in the U.S.

What services should the government provide and what services should the private sector provide? Public Sector Part of the economy made up of federal, state, and local governments Private Sector Part of the economy made up of private individuals and privately-owned businesses

Two Kinds of Spending Goods and Services Transfer Payments Tanks, planes, ships, office buildings, land for parks, etc. Hire people to work in agencies/staff military Spend money to provide the public goods and services that most of us enjoy on a daily basis Transfer Payments Payment for which the government receives neither goods nor services in return Social Security, welfare, unemployment, aid for people with disabilities

Impact of Government Spending Affecting Resource Allocation Resources go where government spends money Redistributing Income Way in which income is spread out among families and individuals Competing with the Private Sector Public colleges vs. private Health care

Federal Government Spending Federal Budget Annual plan by the President outlining proposed spending for the coming year Prepared for a fiscal year Fiscal year- 12 month financial planning period October 1 through September 30

Where Does The Money Go? Federal Budget What's a Trillion Dollars?

State and Local Spending State Governments Public welfare, higher education, highway construction and road improvement Local Governments Elementary/secondary education, utilities, hospitals, police protection, interest on debt, public welfare, and highways Other- corrections, health, fire protection, parks and recreation, housing and community development

Deficits and the National Debt Deficit Spending Spending in excess of revenues collected SPENDING MONEY YOU DON’T HAVE Must borrow money from others which creates and adds to our country's debt How big is our National Debt?? U.S. National Debt Clock