1. Federal Government Expenditures

2. Warm Up 1. What is the incidence of tax? 2. Give an example of how the incidence of tax can be shifted.

3. Establishing the Federal Budget 2/3 of budget is on mandatory spending (required by law) Discretionary spending must be reviewed annually Gov’t fiscal year Oct 1- Sep. 30 Pres. determines general budget guidelines Deficit occurs when mandatory/discretionary spending more then revenues

4. Action by Congress Congress can approve, modify or disapprove Pres budget House only debates discretionary spending Sets budget target, splits budget into 13 parts which 13 subcommittees break down Indiv apportions bills get delayed, Reps. want to work on specific ones Senate can accept House budget or go through own process If differences House-Senate conference committee works out

5. Approval and Major Spending Categories Once Congress agrees on budget submitted to Pres, can sign or veto If unable to compromise gov’t shut down or operate at prior year levels Soc Sec (mandatory) & Nat Defense (discretionary) largest expenditures Interest on fed debt 6 th largest expenditure

6. Proposed Budget & Discretionary Spending (2015)

7. Military Spending by Country 2012 (in billions) http://www.forbes.com/sites/kenrapoza/2013/09/02/russia-uae-to-team-up-to-build-helicopter-drones/