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Published byClemence Potter Modified over 9 years ago
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Warm-up 5/10/12 Yesterday we talked about welfare programs to help people in need. How does the government pay for these programs? What limits how much they can pay towards these programs?
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Unit VI – Government Finances Fiscal Policy, Taxing, and Spending
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Government spending Mandatory spending – federal spending required by law; does not need annual approval by Congress Social Security, interest payments on national debt Discretionary spending – federal spending that requires annual approval Defense spending, highway construction,
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Appropriations Bill Approve spending for a particular activity
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Where does the government get its money? Taxes, taxes, taxes. And some other stuff like selling bonds, but mostly taxes (approx 92%). Pg 679
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Intergovernmental revenue Money that one level of the government receives from another level. EX – Federal gov’t gives the states money for welfare, highways, hospitals, etc.
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Local government services Education Police & fire protection Water, sewer, sanitation services
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Entitlement Programs Provide health, nutritional, or income supplements to individuals who meet certain requirements.
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Government Budget When the government spends more than it collects in revenue, it has a deficit and when it collects more than it spends it has a surplus.
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How does the Government borrow money? Selling bonds
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National Debt All money that has been borrowed and not paid back by the federal gov’t. 1900 – $1.3 billion 1940 – $50.7 billion 2006 – $4.9 trillion 2012 – $??? http://www.brillig.com/debt_clock/
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Impact of the national debt Interest – interest on debt must be paid every year Who pays this debt? Interest Rates – when the government borrows more money, there is less for citizens to borrow.
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Balanced Budget Spending equals revenue Not required by Fed, but 48 states are required (NC can not spend more than it makes).
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How to reduce the national debt Cut spending – get rid of unnecessary programs and costs (not that easy) Raise taxes – higher tax on wealthy class, higher (only option if spending can not be cut)
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Deficit Spending To pay for necessary expenditures in times of recession I.e. – we still have to pay for some SS, welfare, highways, etc when in a recession. Funding may get reduced, but it does not go away.
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