The Government Budget and the National Debt Chapter 20 Have students do Vocabulary - p.257.

Arguing Over a Budget Every six months a (hypothetical) married couple sits down to plan their budget. The wife likes to spend money on things for the house (e.g. furniture, appliances). While the husband likes to save money (for retirement, vacation). This can lead to arguments. This can lead to arguments between the couple. If two people (husband/wife) can have serious disagreements over the family budget, you can imagine the arguments that members of Congress can have over our Nations budget!!

The Government Budget The money that government brings in from taxes is called government revenue. Government leaders decide how to spend the revenue (e.g.military, education, roads, etc.). These are called expenditures. If they spend less than the government revenue, there is a budget surplus. If they spend more than the government revenue, there is a budget deficit.

Borrowing and the National Debt When the government needs to raise money to cover expenditures, it can raise taxes and sell bonds (i.e. IOU’s). The National Debt is all the money that the federal government owes. Examine the handout to see how much the National Debt has increased over the years!!! Distribute p. 259 handout and p. 259 questions.

National Debt Debate Although the National Debt has grown very large in recent years, it does not mean that the government is going bankrupt. Handout p. 261 chart and questions on p. 261.

Economic Thinkers: John Maynard Keynes Keynes wrote a book called “The General Theory of Employment, Interest and Money”. In this book he stated that a way to end depressions is for the government to spend money on programs that would give people jobs, even if the government went into debt. Do you agree with Keynes?