ECONOMICS Chapter 16.3: The Federal Budget and the National Debt Learning Target: Understand how the federal government prepares a budget and borrows; Understand the National Debt and the largest government expenses Success Criteria You should be able to… 1. Explain how Congress and the president work together in the budget making process 2. Describe a budget deficit, deficit financing and a budget surplus 3. Identify reasons why we have a national debt

ECONOMICS Chapter 16.3: The Federal Budget and the National Debt Learning Target: Understand how the federal government prepares a budget and borrows; Understand the National Debt and the largest government expenses Success Criteria You should be able to… 1. Explain how Congress and the president work together in the budget making process 2. Describe a budget deficit, deficit financing and a budget surplus 3. Identify reasons why we have a national debt

Who is involved in preparing the annual federal budget?   The President, OMB (Office of Management and Budget), and Congress. What is a fiscal year?   The year by which accounts are kept. For the federal government the fiscal year is October 01 to September 30 of the following year.

Explain the steps in the budget-making process.   1. President and OMB create a budget outline 2. Departments give feedback 3. President and OMB review requests and submit a budget to Congress 4. Committees review the proposed budget 5. Congress approves or disapproves the budget 6. If a budget is not submitted or one is disapproved Congress can pass a resolution extending the current budget 7. If a budget is not approved or a resolution is not passed by October 01 the government may shut down (this occurred in Oct. 2013).

ECONOMICS Chapter 16.3: The Federal Budget and the National Debt Learning Target: Understand how the federal government prepares a budget and borrows; Understand the National Debt and the largest government expenses Success Criteria You should be able to… 1. Explain how Congress and the president work together in the budget making process 2. Describe a budget deficit, deficit financing and a budget surplus 3. Identify reasons why we have a national debt

What is the president’s role in preparing the national budget?   The president works with OMB to create the budget and presents it to Congress by January. What is a budget deficit?   When the government spends more than it takes in (government spending exceeds its receipts). The government raises funds by selling securities to cover the deficit.

Let’s Review With whom does the federal budget begin? Discuss at your table. With whom does the federal budget begin? Who approves the federal budget? When does the fiscal year begin? What is a budget deficit? Are you on target (white, black, blue, red or yellow)? Did you hit the bullseye? Learning Target: Understand how the federal government prepares a budget and borrows; Understand the National Debt and the largest government expenses

ECONOMICS Chapter 16.3: The Federal Budget and the National Debt Learning Target: Understand how the federal government prepares a budget and borrows; Understand the National Debt and the largest government expenses Success Criteria You should be able to… 1. Explain how Congress and the president work together in the budget making process 2. Describe a budget deficit, deficit financing and a budget surplus 3. Identify reasons why we have a national debt

What is the Current National Debt? See www.usdebtclock.org What is deficit financing?    A government policy of spending more money than it is able to bring in through revenues. What is the national debt? Why do we have one?   The total amount of outstanding debt for the federal government. The government continues to spend more than it takes in and must pay interest on the debt. What is the Current National Debt?   See www.usdebtclock.org

ECONOMICS Chapter 16.3: The Federal Budget and the National Debt Learning Target: Understand how the federal government prepares a budget and borrows; Understand the National Debt and the largest government expenses Success Criteria You should be able to… 1. Explain how Congress and the president work together in the budget making process 2. Describe a budget deficit, deficit financing and a budget surplus 3. Identify reasons why we have a national debt

Where does federal government tax money come from? Budget surplus   When government receipts are larger than its expenditures (revenue exceeds expenditures). Figure 16.3 Where does federal government tax money come from?  Individual Income taxes – 42.9% Social-Insurance taxes – 39% Corporate Income taxes – 11.3% Excise taxes – 3.6% Other – 3.2%

What does the federal government spend money on? Figure 16.3 What does the federal government spend money on?   Social-Insurance programs (Social Security, Medicare, etc.) – 48.3% National Defense – 18.8% Other – 13.4% Health – 10.5% Net Interest – 7.4% International affairs – 1.6%

Let’s Review What is deficit financing? Discuss at your table. What is deficit financing? What is the current national debt? What is a budget surplus? Where does the majority of federal tax revenue come from? What does the federal government spend the most on? Are you on target (white, black, blue, red or yellow)? Did you hit the bullseye? Learning Target: Understand how the federal government prepares a budget and borrows; Understand the National Debt and the largest government expenses

ECONOMICS Chapter 16.3: The Federal Budget and the National Debt Learning Target: Understand how the federal government prepares a budget and borrows; Understand the National Debt and the largest government expenses Success Criteria You should be able to… 1. Explain how Congress and the president work together in the budget making process 2. Describe a budget deficit, deficit financing and a budget surplus 3. Identify reasons why we have a national debt

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