FrontPage: Why do people say that “money is power?”

The Last Word: Finish 6.1 for Wednesday

Today, I will scare you…

Congressional Powers:

Powers of the Purse

What are the Power$ of the Purse?

The Power$ of the Pur$e are the MOST IMPORTANT of all Congressional powers…

Why…?

Let’s discuss the first “Power of the Pur$e”…

But first, let’s learn a bit of wisdom from a founding father…

Ben Franklin said that in life, only 2 things are certain…

What are these 2 things…?

One is Death…

The other is…

Taxes…

The Power of Taxation…

• Congress has the sole power to levy (“set” or “apply”) many different national taxes…

• Why does Congress tax the American people

• Revenue

Originally, there was only one source of revenue for the national government…tariffs.

What are Tariffs?

So, what did the government do to fix this?

Passed the 16th amendment:Created the income tax…–This has become a

major source of income for the government…

…And a despised part of everyone’s paycheck!

Sources of revenue - 2010

42%

40%

9%6%

3%

Individual Income TaxesSocial Insurance TaxesCorporate Income TaxesOtherExcise Tax

Total Revenue = $2.1 Trillion

$pending Power When Congress allocates (spends, or

gives) money to a program, agency or other part of the government, this funding is called…– Appropriations

All bills for taxing or spending must start in which house of Congress?

Federal Spending - 20106% 12

%

19%

20%20%

23%

Interest on the DebtOther Required SpendingDiscretionaryDefenseSocial SecurityMedicare/Medicaid

Total Spending – $3.4 Trillion

What we “choose” to spend on…

The Federal Budget

This is an outline of how much the government will spend in a given year

Where is all of this spending recorded so we can keep track of it?

The Federal Budget:Terms to Know

Budget Surplus– Occurs when government spends less

in a single year than it brings in  Budget Deficit

– Occurs when the government spends more in a single year than it brings in

 **For example: In 2010, the US government took in about $2.1 trillion and spent about $3.4 trillion.

Why would the government need to spend more than it brings in?

When this happens, Congress must use another “Power of the Pur$e”…

**Which power of Congress enables it to spend more than it has?

The Power to Borrow Money

But when Congress does this, it contributes to the…

The total accumulated amount that government owes; Occurs because more deficit years occur than surplus years.

National Debt

The estimated population of the United States is 311,485,011so each citizen's share of this debt is $47,755.61.

The National Debt has continued to increase an average of

$3.97 billion per day since September 28, 2007!

Source: http://www.brillig.com/debt_clock/

The US National Debt on Oct 14th 2011 was:

The increase of the National Debt

$cary, isn’t it?

What is the consequence of all this “deficit spending”?– How might we start to reduce our

yearly deficit, and our national debt?