1. SS.912.E.2.9 Analyze how changes in federal spending and taxation affect budget deficits and surpluses and the national debt Standard 2 Understand the fundamental concepts relevant to the institutions, structure, and functions of a national economy SS.912.E.2.9 Analyze how changes in federal spending and taxation affect budget deficits and surpluses and the national debt

2. Definitions Balanced budget: revenues = expenditures Budget surplus: revenues > expenditures Budget deficit: revenues < expenditures Budget surplus funds can either be spent as additional expenditures or used to pay off existing debt For now, assume surplus is used to pay off debt

3. Definitions National deficit: yearly budget deficit for federal government National debt: cumulative amount of deficits or surpluses See national debt clock, http://www.brillig.com/debt_clock/ http://www.brillig.com/debt_clock/

4. Fiscal policy Expansionary fiscal policy: reduce taxes and/or increase expenditures; goal is to expand or stimulate the economy Restrictive fiscal policy: raise taxes and/or decrease expenditures; goal is to slow economy

5. Scenarios Expansionary policy will likely lead to budget deficit (or shrink current surplus); will result in larger national debt Restrictive policy will likely lead to budget surplus (or shrink current deficit); will result in smaller national debt

6. Focus: Understanding Economics in Civics and Government Lesson 5 Government Spending

7. Video: HOAE Chap 26 video

8. The Great Economics Mysteries Book Chapter 4 Lesson 6 How We Almost Got a Sixth Great Lake

9. Focus: Understanding Economics in Civics and Government Lesson 12 Federalism

10. Video: Stossel 2011 Are we heading toward a debt crisis?

11. Video: Tim Hawkins the government can

12. Video: Learn Liberty how big is the US debt

13. Those are big numbers Video: How much is a billion dollars-Dave Walker

14. The debate about how much government should be involved in economic affairs has been ongoing for centuries Two fun ways to summarize: Fear the boom and bust-Keynes vs Hayek Fight of the century-Keynes vs Hayek round 2