1. CHAPTER 10: ECONOMICS OF SPENDING Chevalier Fall 2015

2. Government Spending  Why the increase in Gov’t. spending?  WWII  Public opinion  Success of large scale public works  Inevitable result of progress  Military spending  The aging of America  Growth of cities and their infrastructure  Deficit spending/ financing the debt

3. Two Kinds of Gov’t. Spending  Goods and Services-  Goods-  1. public sector vs. private sector spending Can the private sector do a better job? Prisons Military (Blackwater) Trash National parks Mail Education

4. Two Kinds of Gov’t. Spending  Transfer Payments  A payment for which the Gov’t. receives neither goods nor services in return Social security Welfare Unemployment Aid for people with disabilities

5. Forms of spending  Per capita  Per person 2003- 10,300/person 2007-11,200/person 2015- 11, 041/person  Gross or aggregate (total)  2003- 3 trillion  2007- 3.4 trillion  2015- 3.5 trillion

6. Impact of Gov’t. Spending  Where will the Government spend its resources?  Resource allocation  Guns vs. butter  Price supports

7. Impact of Gov’t. Spending  Redistribution of income  Transfer payments can directly affect family income  Closing of military bases in the 1990’s  Price supports  Progressive tax code

8. Impact of Gov’t. Spending  Competing with the private sector  Private vs. public college  VA hospital vs. a private hospital

9. Federal Gov’t Expenditures  Establishing the federal budget  House and senate  Mandatory vs. discretionary spending

10. Major spending categories

11. Deficit, surplus, and the nat’l debt  Balanced budget  Deficit spending  Federal debt-total amount borrowed from investors to finance the government’s deficit spending  How big is the debt?  1998- $2.2 Trillion  2009- $10.8 Trillion  2015- $18.4 Trillion

12. Impact of national debt  Who pays the national debt?  Has effects on people in America  Taxes and incentives  Foreign problems  American manufacturers

13. When finished…  Turn in quiz up front  Pick up chapter 13 handouts  Begin reading chapter 13 and working on handouts  PLEASE WORK QUIETLY-  Chap. 13 quiz will be 11/27 (next Tuesday)