Government Spending Deficits, Surpluses, and The National Debt

Tomorrow’s Test GDP (included/not included) Real GDP & Economic Growth Aggregate Supply & Aggregate Demand (shifters) Inflation (CPI, GDP deflator, calculating) Unemployment (Calculate,Types) Fed Structure/Roles Monetary Policy

Study The GDP Notes Handout The Unemployment Types Notes Handout Written Notes Fed/Monetary Policy Notes Handout

Government Spending in Perspective Total gov’t spending was $6.5 trillion in 2009—about $21,000 per person.

Government Spending in Perspective Total Federal and Combined State and Local Spending per Household, 1965–2007

Federal Government Spending Categories 4 th -Income Security 5 th -Health 6 th -Net Interest The biggest categories of federal spending: 1 st -National Defense 2 nd -Social Security 3 rd -Medicare

What the Federal Government Spends it’s Money On

I. From the Deficit to the Debt Deficit- expenditures > revenues in 1 yr. Surplus- revenues > expenditures in 1 yr. Federal debt- total owed National Debt National Debt

Dice Game 1 roll is for government expenditures. 1 roll is for government revenue (taxes). 5 rounds (10 rolls) Keep a tally: –Each year’s deficit/surplus –Total debt accumulated

Deficits/Surpluses

Debt Clock Debt Clock U.S. Treasury Web Site U.S. Treasury Web Site

I. From the Deficit to the Debt - Continued When there’s a deficit, gov’t can sell bonds (borrow)

II. Impact of the National Debt 2 ways it hurts economy: –More debt = more interest. –When gov’t borrows, interest rates rise.

II. Impact of the National Debt - Continued 1/2 of debt is owed to the Fed.

II. Impact of the National Debt - Continued China, Japan, UK = hold most debt.

II. Impact of the National Debt Social Security & Medicare spending is growing.

II. Impact of the National Debt -

1. What is the term for when revenues exceed expenditures over the course of 1 year? A) Deficit B) Surplus C) Debt

2. The U.S. government owes over $11 trillion total. What is the term for this? A) the deficit B) the surplus C) the debt

Healthcare The Issues

I. The Issues Health care spending is rising faster than inflation and economic growth. The leading cause of personal bankruptcy in U.S. is medical debt. Health care in U.S. costs more per person than any other nation on earth. U.S. is the only wealthy, industrialized nation that doesn’t have universal coverage.

I. The Issues In ‘07 15% of U.S. population (45.7 million people) did not have health care. We spend more for our health care but get less.

alth/map.health.global/index.html alth/map.health.global/index.html

II. The Causes Diet –Obesity –Late-Onset Diabetes –Estimated 70% of increases in costs are lifestyle related. Prescription drugs cost more in U.S. than in other countries. –Gov’t Health Care = Monopsony –Intellectual Property Right Enforcement –Gov’ts Sometimes Use Price Controls

II. The Causes Inadequate competition among insurers. Inadequate info for –users of health care. –providers of health care. Doctors paid for services provided rather than by salary. Medical malpractice Lawsuits.

III. Possible Remedies 2 schools of thought: costs vs. coverage Create a national market. Tax credits or subsidies. Coverage mandates. Create a Public Sector Competitor.

Take A Stand! Consider the ideas to “fix” healthcare. To what extent should the government get involved? Look at the signs around the classroom. In a moment, go to the sign that best represents your opinion. Talk with the other people in your group, and be ready to share why you believe as you do.

Patient Protection and Affordable Care Act Insurance Mandate-You must get insurance. Tax credit for poor Prohibits Pre-Existing Condition Exclusions No cancellation of coverage except for fraud. Limits out-of-pocket expenses to $5k individual/yr Public option National market for health insurance Taxes –employers who don’t offer coverage –individuals w/ incomes > $350k

IV. Who’s For It? AARP, AMA, ANA, AFL-CIO, AFT The President and many democrats.

V. Who’s Against It? People worried about costs/ deficit spending. People worried about becoming less Capitalist/ more Socialist. The health insurance industry. Most Republicans.

Quote of the Day “My medical plan was to not get shot.” Boots Riley

Listen When Social Security was created in the 1930s, the life expectancy was 60. It was 75 in the 80s, and is 78 today.

II. Impact of The National Debt - Continued

I. Government Spending in Perspective - Continued Total gov’t spending was $6.5 trillion in 2009—about $21,000 per person.

I. Government Spending in Perspective Total Federal and Combined State and Local Spending per Household, 1965–2007

III. III. Impact of Government Spending

I. From the Deficit to the Debt

Guarantee access for pre-existing Lawsuits Can’t cancel unless fraud Small businesses form health care groups National market