Government spending
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Transcript of Government spending
Government Spending
Where does the Government get its money?
How does the Government spend its money?
Mandatory and Discretionary Spending
Mandatory –spending on certain programs that is mandated or required by law.
Ex. Social Security, Medicare
Discretionary – government planners can make choices about how money is spent.
Ex. Defense, Education
Federal & State SpendingFederal (National Issues)-Defense-Energy-Agriculture-Transportation-Education-Health
State-Education-Public Welfare-Hospitals-Health-Corrections-Natural Resources-Highways-Government Employees and Benefits
Federal SpendingThe federal government devotes much of its spending attention to Entitlement program.
Entitlements – social welfare programs that people are entitled to if they meet certain eligibility requirements.
Social Security Medicare Medicaid
Social SecuritySocial Security is one of the largest categories of mandatory federal spending.
Over 50 Million people receive monthly payments from Social Security.-Retired-Disabled-Families of those who already receive benefits
Medicare
Serves about 42 million people, most over the age of 65
Pays for hospital care and for the cost of physicians and medical services.
Pays the health care bills for people that suffer from certain disabilities and diseases.Ex. Schizophrenia, Mental Retardation
Medicaid
Medicaid provides medical benefits for low-income families and the elderly in nursing homes
It is the largest source of of funds for medical and health related services for some of the poorest Americans
The federal government shares the cost of Medicaid with the states
Other Mandatory Spending
Food Stamps
Retirement benefits for Federal workers
Veteran’s Pensions
Unemployment Insurance
Etc.
Federal Deficits and Surpluses Deficit – when the the outlays (money paid out by the federal government) exceeds revenues (the money received by government through taxes) a deficit is created.
Current US Deficit – $10,635,772,096,222.74
Current US Population – 305,577,611
Translation - $34,805 per person
Surplus – when revenues exceed outlays
The last federal surplus occurred during the Clinton Administration.
State BudgetsStates operate under two kinds of budgetary guidelines
Operating Budget – pays for day-to-day expensesEx. Salaries of state employees, maintenance of state assets (Parks, Roads, Bridges)
Capital Budget –pays for major capital or investment projectsEx. New Bridges and Highways, New State Buildings
Most capital investment project expenses are met by long-term borrowing or the sale of bonds.
Balanced Budget – revenues are equal to spending (required by law in many states)
States can also borrow money from the federal government if needed
Pork Barrel Spending and Earmarks
Pork Barrel Spending – government spending that benefits the constituents of a politician in a certain area (State, County)
Ex. New Hospitals, Parks, Recreation Areas
Earmarks – government spending measures inserted by members of Congress into bills to direct taxpayer dollars to fund “pet projects” (Projects that benefit a certain number of people in a given location)
Examples of Pork Barrel Spending
The Absurd
-$375,000,000 for an unrequested and unneeded amphibious assault vehicle in the state of Mississippi.
-$1.2 Million to study the breeding habits of woodchucks
-$219,000 to teach college students how to watch TV
-$1 Million to study why people do not ride bikes to work
Examples of Pork Barrel Spending
Private Concerns
-$3.1 Millions to convert a ferry boat into a crab restaurant in Baltimore
-$33 Million to pump sand onto the private beaches of Miami hotels
-$13 Million to repair a privately owned damn in South Carolina
-$3 Million to repair private garages in Chicago
Examples of Pork Barrel Spending
For Congress Itself
-$6 Million to upgrade to two-block long Senate subway
-$350,000 to renovate the House beautiful salon
-$150,000 for therapeutic horseback riding
-Congress approved a total of $110 Billion of pork barrel spending for the 2007/2008 fiscal year