CHAPTER 16 FINANCING GOVERNMENT - THE BUDGET

 Taxes  Progressive Taxes – get bigger the more money you make  Income Tax  Regressive Taxes – the same for everyone  Sales Tax  Selective Sales Tax – on specific items  Excise Tax (luxury tax)

 Deficit spending – the government spends more $ than it brings in.  Surplus – the government brought in more $ than is spent (doesn’t usually happen)  Public Debt – All of the money the government has borrowed and not yet repaid, including the interest due.

 Uncontrollables – money that Congress is committed to spend.  Entitlements – benefits that are guaranteed to those people who qualify  Largest – Social Security  Controllable – money that may or may not be spent, it is up to Congress to decide  AKA – Discretionary Spending  Ex. – Shelter houses at National Parks

 GDP – total value of all goods & services sold by the United States  Inflation – increase in prices  Deflation – decrease in prices  Fiscal Policy – the governments power to tax & spend.  How much of each?

 Should we spend more $, then…  Raise taxesOR  Go further into debt?  Should we cut spending, but…  Not have to raise taxes  Not be able to fund as many programs