1. The Federal Government! By: Connor Grose & Robert Taylor Period 1

2. How does the government spend its money? * National Debt In 2005 the federal government spent $497 billion on national defense also about 31 billion on homeland security. This was 21.5 of the government spending. In other words, out of every dollar the government spent in 2005, 21.5 cents to the national defense. * Income Security, Retirement, and Disability This is referring to housing assistance, food and nourishment assistance for the poor, unemployment, etc. $197 billion was spent on this. Retirement and disability programs was $147 million. Sum total o both is $344 billion 14% of government spending. *Social Security $516 billion o social security. 21% of federal gov. spending. *Medicare $297 billion on Medicare, which is 12.1% of the spending.

3. Government Spending

4. Net Interest on National Debt *When the government spends more money than it receives in tax revenues, it is said to run a budget deficit. *For example if the government spends 2,000 billion and the tax revenue is 1,800 billion the government has to borrow 200 billion in the same way people have to borrow money. Although this is true, this borrowed money accumulates if not taken care of. This is called national debt.

5. The Cost/Benefits of Government Spending Programs *According to economists, a government spending program is not worth pursuing unless the benefits outweigh the cost. *For example if a program produces $100 billion and cost $40 billion it is thought to be worth it in $60 billion in net worth.

6. The Budget Process *In the federal budget, the federal government specifies how it will spend the money it has. IT has several options such as national defense or health care. *The process to prepare a budget begins with the president, including the entire executive branch of the government. *The president’s budget recommends to Congress how much should be spent for national defense and income security programs.

7. Budget Process Continued *Once the president’s budget is in the hands of Congress, it is scrutinized by the members of the many congressional committees and subcommittees. *The Congressional Budget Office advises the members of the committees and subcommittees on technical details of the president’s budget. *Congress is obligated to pass a budget by the beginning of the fiscal year. Once passed, the details of the outline are passed as a law.

8. Key Terms Budget Deficit: the amount by which government expenditure exceeds income from taxation or custom duties in one fiscal year Surplus: an amount or quantity that is greater than needed after the requirements have been met National Debt: the financial obligations of a national government resulting from deficit spending

9. United Federal Revenues & Expenditures 2000-2020

10. Works Cited "Surplus | Define Surplus at Dictionary.com." Dictionary.com - Free Online English Dictionary. N.p., n.d. Web. 7 May 2013.. " National Debt vs. Budget Deficit · The National Debt Crisis." The National Debt Crisis. N.p., n.d. Web. 13 May 2013.. Category. "Federal Deficit and the National Debt - Difference Between the Federal Deficit and the National Debt." U.S. Government Info - Resources. N.p., n.d. Web. 13 May 2013. http://usgovinfo.about.com/od/federalbudgetprocess/a/debt-vs- deficit.htm "Does the federal government spend half its revenue on health care? | The Incidental Economist." The Incidental Economist. N.p., n.d. Web. 13 May 2013..