FEDERAL BUDGET AND ECONOMIC POLICY

SO WHAT DO WE SPEND MONEY ON?

That’s right! 7% of our money goes to just paying for the interest on all the money we have borrowed

JOURNAL WRITING

Does this pie chart place emphasis on the things that you think are important in our country?

What should emphasis be placed on?

TYPES OF SPENDING Mandatory Spending- programs that require

that the federal government pay back the contributions previously taxed from the citizens

Discretionary Spending- spending on programs like defense, roads, schools, and running the government

Budget Processes President puts together budget (EOP’s Office of

Management and Budget compiles it) House of Representatives- Spending Bills originate

here Passed in HoR and Senate President signs or vetos Can be passed by 2/3 votes in HoR and Senate

PAST PRESIDENTIAL ECONOMIC PROGRAMSTrust Busting/Progressivism

T. RooseveltEarly 1900’s

These efforts were results of the late 1800’s Populist votes and growing demands for industrial reforms

New Deal FDR 1930’s Massive help from government programs was needed and became key social efforts.

Fair Deal H.Truman 40’s Early efforts at civil rights equality began in federal programs such as the military & housing

New Frontier J.Kennedy 60’s Civil rights laws get passed. Early forms of affirmative action and environmental plans.

Great Society L.Johnson 60’s Vast attempts were made to rebuild inner cities, give jobs, and provide assistance.

Price ControlsNew Federalism

R.Nixon 70’s Rapid inflation was met with attempts to stop price increases through mandates

Whip Inflation Now (WIN)

G. Ford 70’s More federal attempts at stopping rapid price increases were required but did not help.

Reaganomics/Trickle-DownSupply Side/Devolution

R. Reagan 80’s

The goals were to cut federal programs and business regulations. Tax cuts in the name of econ expansion were central programs.

TWO SCHOOLS OF ECONOMIC THOUGHT

Laissez-Faire, Classical Capitalism, Supply-side policies Allows the private sector to compete and run the

economy on their own Taxes should be low, profit motives should be

rewarded, and helping the rich conduct more business will help the middle class and poor find more jobs.

Trickle down Economics/Voodoo Economics Reduce regulations on business and business will be

able to create more jobs (and therefore wealth) for poorer

THINK, PAIR, SHARE

Do you find anything wrong with this ideology? What is left unaccounted for or why is it right?

TWO SCHOOLS OF ECONOMIC THOUGHT Keynesian

Named after economist John Maynard Keynes New Deal type policies Argues that when the economy stalls and falls into

recessions/depressions, Congress should lower taxes and create jobs. When the economy overheats and suffers from inflation, congress should raise taxes and cut jobs.

Assumption is that laissez-faire policy leaves the nation vulnerable to drastic cycle swings.

Monetary When the economy is in recession, government should

force lower interest rates (the Fed) and buy bonds from the public. Most conservatives also believe in this intervention in addition to their supply side beliefs.