1. Managing Our Country’s Money
Paying for Government
Managing Our
Country’s Money

2. Collecting Public Money
At the federal level, the collection of taxes is handled by the Internal Revenue Service (IRS)
State and local governments establish their own tax collection agencies
After tax money is collected, it is sent to the treasuries of the various governments
Federal level: spending is authorized by Congress
State and local level: Comptrollers act as “watchdogs of the treasury” and ensure funds are being spent as authorized by state legislature or city council
Collecting Public Money

3. Planning Government Spending
All governments have budgets
Lists the amount of expected revenue
How this revenue will be spent/specifies the proposed expenditures
Intended to pay for the government’s operations for one year
Managing public funds is divided between executive and legislative branches
Chief executive draws up the budget (President, Governor, Mayor, etc. etc.)
Legislative branch is responsible for passing the budget and executive branch must ensure the money is being spent according to the budget
Judicial courts settle any disputes over collection and spending of public money
Planning Government Spending

4. Preparing the Federal Budget
At the federal level, the president recommends how public funds should be raised and spent
Needs the help of several government agencies
Office of Management and Budget (OMB) helps president prepare the federal budget
President and OMB study many financial request and establish priorities for how public funds will be spent
After a budget is prepared, it is published in book form
Actually several books and is usually thousands of pages long
Preparing the Federal Budget

5. Congress and the Budget
Congress studies the proposed budget from the President and OMB
ONLY Congress has the power to raise and spend money
Budget must be approved by both houses of Congress
Budget is passed in the form of 13 appropriations bills which officially authorize the spending of funds
Bills are then sent back to the President to be approved or vetoed
Process of passing the federal budget takes many months and involves many heated debates
Congress and the Budget

6. The National Debt Government budgets are rarely balanced
Surplus: government collects more money than it spends
Deficit: government spends more money than it takes in
: government operated at a deficit each year
: the budget was balanced and we ended up with a surplus
2001-present: recession in 2001, 2003, 2008 and 9/11 attacks caused long-running deficits
Debt is now at $19 trillion
The National Debt

7. Part of government revenue collected each year must be used to pay off interest on national debt
Interest on the debt is so high that future generations will be repaying money that is borrowed now
No constitutional limit on the size of the national debt
Congress tries to establish a limit but continuously raises it as the need for more spending arises
The National Debt

8. Public Money is Public Trust
To ensure funds are spent according to law, all levels of government provide an audit of their accounts
Careful examination by trained accountants of every item of income and every expenditure in a budget
Well-being of our country depends on how wisely our government handles public funds
We must make our voices heard on these issues and stay informed
Public Money is Public Trust

9. ? Who collects taxes at the federal level?
What are the three things budgets are supposed to do?
Explain the three ways in which managing public funds is a task that is divided between the executive and legislative branches.
What is the purpose of the Office of Management and Budget (OMB)?
What is the difference between a surplus and a deficit? ?