Creating a Budget

Chapter 14

Budget Process

Deficit v. Surplus

• Deficit occurs when expenditures exceed revenues in a year– $1.3 trillion in 2010

• Surplus occurs when revenues exceed revenues in a year

Federal Revenues

Federal Expenditures

Trends in National Defense Spending

Trends in Social Service Spending

Uncontrollable Expenditures

Uncontrollable Spending

Spending that the president and Congress are unwilling to cut, includes interest on

national debt and entitlement programs, such

as Social Security and Medicare

Entitlement Programs

Government programs that provide guaranteed/required benefits to those who meet

eligibility requirementsEx.) Social Security – costs

$700 billion per yearPaid for through payroll taxes

of current workers

Uncontrollable Expenditures v. Discretionary Spending

• Uncontrollable expenditures – spending that is required– About 61% of the budget

• Discretionary spending – fluctuates each year depending on changing priorities of Congress + President– Incrementalism – best predictor of this year’s

budget is last year’s budget plus a little more

Federal Debt

• All of the money borrowed over the years that has not been paid

• Currently about $13.7 trillion

Federal Debt

US Debt Clock

• http://www.usdebtclock.org/