1. Oct 14, 2009 I.Savings and Investment A.The Savings and Investment Identity II.Deficits and Debt III. Problems with the debt

2. Today’s News

3. The Algebra of Savings and Investment 1. GDP = C+I+G+NX expenditures = output= income 2. Ignore ROW, so Y = C+I+G 3. Y – C – G = I 4. Y – C – G = S 5. S = Y (– T + T) – C – G 6. S = (Y – T – C) + (T – G) 7. Total Savings = Private Savings + Public Savings

4. Where does the Federal government get its revenues? 1. Income Taxes ____% 2. Social Security Taxes ____% 3. Corporate Taxes ____% 4. Sales Taxes ____% 5. Property Taxes ____% 6. Excise Taxes (gas, tobacco, alcohol) ____% 7. Tariffs ____% 8. Estate Taxes ____% 9. How much tax revenue did the federal government collect in FY08? $ ____

5. Where does the Federal government get its revenues? (FY08) 1. Income Taxes ($1,146 b) 45% 2. Social Security Taxes ($900 b) 36% 3. Corporate Income Taxes ($304b) 12% 4. Sales Taxes ($0) 5. Property Taxes ($0) 6. Excise Taxes (gas, tobacco, alcohol) ($67b) 3% 7. Tariffs ($28b) 1% 8. Estate Taxes ($29b) 1% 9. Other ($50b) 2% 10. How much tax revenue did the federal government collect in FY08? ($2,524 billion) (Source: http://www.gpoaccess.gov/usbudget/browse.html

7. Where does the Federal government spend its money? $ Amount Percent of Total Defense Social Security Medicare Medicaid Interest Income security Other retirement International Other Total100%

8. Where does the Federal government spend its money? $ Amount ($bil)Percent of Total Defense$61621% Social Security$61721% Medicare$45615% Medicaid$2017% Interest$2549% Income security$2609% Other retirement$1294% International$291% Other$42114% Total$2,983100%

10. Federal Surplus/Deficit (G-T)

11. Recent Deficit/Surplus

12. Deficit/Surplus as Share of GDP

13. Recent History

14. Debt (not deficit)

17. International Comparisons