Budget / Debt / Deficit

•1st Assignment: Budget 101 •$3.8 Trillion for 2015 Federal Budget

IF I HAD A TRILLION DOLLARS

Red Text – do not need to know for test

•How high is a trillion in $1000 bills?•1 trillion dollars = 63 miles high

(give or take a foot or two) • If a person’s salary is $40,000 per year it would take:•$1 Trillion you would have to save $34 Million each

day of your life•1 trillion seconds = 30,000 B.C.

(give or take a decade or two)

Mandatory vs. Discretionary Spending

•Mandatory Spending • – spending that already is decided upon by existing

laws. Do not have to be approved year to year • Ex’s: Social Security, Medicare, Food Stamps

•Discretionary Spending – • spending decided on by Congress each year • Ex’s: Military, Education, Government (jobs/payroll)

Government Programs You Need to Know • Social Security –•A United States federal program of social insurance

and benefits developed in 1935. • The Social Security program's benefits include

retirement income, disability income, death and survivorship benefits.

• Medicare – • A U.S. federal health program that subsidizes people who meet one of

the following criteria:• 1. An individual aged 65 or older who has been a U.S. citizen or

permanent legal resident for five years.• 2. An individual who is disabled and has collected Social Security for a

minimum of two years.• 3. An individual who is undergoing dialysis for kidney failure or who is

in need of a kidney transplant.• 4. An individual who has Amyotrophic Lateral Sclerosis (Lou Gehrig's

disease).• Medicare helps out people at a time in their lives when they may have

serious health problems but lack the funding for treatment.

•Medicaid-• A joint federal and state program that •helps low-income individuals or families pay for the

costs associated with long-term medical care, provided they qualify. •Although largely funded by the federal government,

Medicaid is run by the state where coverage may vary.

•Welfare • A government program which provides financial aid • to individuals or groups who cannot support themselves. •Welfare programs are funded by taxpayers and • allow people to cope with financial stress during rough

periods of their lives. • In most cases, people who use welfare will receive a

biweekly or monthly payment. • The goals of welfare vary, as it looks to promote the

pursuance of work, education or, in some instances, a better standard of living.

2nd Assignment: Debt – Who We OweAbout ¼ of the debt is owed to the Federal Government HOW?????? Example – the tax revenue that is collected for Social Security – the government has used some of that money to use for other spending….so the government owes the Social Security fund

the Federal Reserve buys Govt. bonds – so the government owes the Federal Reserve

•About ¼ of the debt is owed to China, Japan and other countries •China is the country we owe the most to (1.3 trillion)

3rd Assignment: YOU FIX THE BUDGET

Student Reaction - Easiest

Hardest

NY Times Readers Selections • Reduce the size of the military rather than reduce pay for noncombat members of the military.

• Impose a millionaire’s tax rather than cut deductions for high-income households.

• Cap the growth of Medicare spending rather than raise the eligibility age.

• two groups: •those who far prefer spending cuts, •and those who want to mix cuts with tax increases. •The responses also point to a deep divide between those two sides, illustrating why a solution is difficult.

• The single least popular choice was allowing the expiration of the Bush tax cuts on income below $250,000 a year.

• But when it came to tax cuts for incomes above $250,000, people’s opinions appeared to diverge according to their political views. --conservative groups generally wanted this tax cut to remain in place. --liberal group — the expiration of the tax cut was the single most selected policy.

• The most popular option among all respondents? •80% of responses included – •Reducing the military to less than its size before the

Iraq war —•But cutting pay and benefits for the military was a

choice of only 40 percent.

In this world nothing can be said to be certain, except death and taxes.

-Benjamin Franklin

3 Types of Taxes You Need to Know

INCOME TAXES • imposed on income earned by individuals or

businesses. Federal and State Income Taxes (some states don’t have income tax) • income taxes are typically withheld automatically

from paychecks and sent to the government.• actual "take home pay" for a worker often measures

substantially less than his stated monthly salary or wage earned.• Income taxes in the U.S. increase as a percentage of

income for higher income earners. = called – Progressive (organized in TAX BRACKETS)

Deductions-lowers your taxable income

Income Tax (Social Security and Medicare) • Federal Insurance Contributions Act (FICA) • also known as payroll taxes. • The FICA tax includes two different taxes: • the social security tax and the medicare tax. •½ paid by employer ; ½ paid by employee• Approx 14%: 7% paid by employer, 7% paid by employee

•Sales taxes •are taxes imposed on the sales of goods and services.• In the U.S., sales taxes are imposed by state and local governments. •Some states do not have sales taxes.

•Property taxes • charged for owning certain types of property. • If you own a home or land, you may have to pay

property tax on the value of the home and/or land. •Property taxes may also be imposed on owners of

vehicles and boats.