Splash Screen. Chapter Intro 2 Section 1: The Federal Government Under our federal system, the...
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Transcript of Splash Screen. Chapter Intro 2 Section 1: The Federal Government Under our federal system, the...
Splash Screen
Chapter Intro 2
Section 1: The Federal Government
Under our federal system, the executive, legislative, and judicial branches share the responsibility of governing the nation. The president and Congress work together to create the budget—a blueprint for raising and spending the nation’s money.
Chapter Intro 2
Section 2: State and Local Governments
Political and economic institutions evolve to help individuals and groups accomplish their goals. State and local governments have their own revenue sources and decide how to spend the money they take in.
Chapter Intro 2
Section 3: Managing the Economy
Political and economic institutions evolve to help individuals and groups accomplish their goals. Governments use various tools to manage the economy.
Chapter Preview-End
Section 1-Main Idea
Guide to Reading
Big Idea
Under our federal system, the executive, legislative, and judicial branches share the responsibility of governing the nation.
Section 1
Preparing the Budget
The federal budget, created by the president and Congress, is the government’s blueprint for raising and spending money.
Section 1
Preparing the Budget (cont.)
• The president and Congress create the federal budget, which determines how the government raises and spends money.
• Government’s fiscal year (FY): October 1 to September 30
Section 1
• Budget process:
– President proposes budget to Congress by first Monday in February
– President sends proposed budget to Congress, with annual budget message
Preparing the Budget (cont.)
Section 1
– Congress passes budget resolution
• Mandatory spending does not need annual approval
• Discretionary spending (about one-third of the budget) is approved each year
Preparing the Budget (cont.)
Section 1
– Both houses must approve appropriations bills
– President signs into law or vetoes
Preparing the Budget (cont.)
Section 1
Revenues and Expenditures
The federal budget has two main parts—revenues and expenditures.
The Federal Budget, FY 2007
Section 1
Revenues and Expenditures (cont.)
• Revenues:
– Half from individual income tax returns
– Corporate income tax
– Payroll taxes fund Social Security and Medicare
Section 1
– Other taxes:
• Excise tax on gasoline, tobacco, telephone
• Estate tax on wealth to heirs
• Tax on gifts
• Miscellaneous income such as national park fees
Revenues and Expenditures (cont.)
The Federal Budget, FY 2007
Section 1
• Forms of taxation:
– Proportional tax—same percentage from everyone
– Progressive tax (such as the federal income tax)—proportion increases with income
– Regressive tax—proportion decreases with income
Revenues and Expenditures (cont.)
The Federal Budget, FY 2007
Section 1
• Expenditures:
– Social Security—largest category in 2007
– Income security
– Health costs
– Defense—second largest category—17.4 cents of every dollar spentin 2007
Revenues and Expenditures (cont.)
The Federal Budget, FY 2007
Section 1
– Interest on debt
– Programs such as education, highways, natural resources
Revenues and Expenditures (cont.)
The Federal Budget, FY 2007
Section 1
• Changes to budget:
– Early government had few expenditures
– Budget and Accounting Act of 1921
– Increased role of President
Revenues and Expenditures (cont.)
The Federal Budget, FY 2007
Section 1-End
Section 2-Main Idea
Guide to Reading
Big Idea
Political and economic institutions evolve to help individuals and groups accomplish their goals.
Section 2
Revenues
State and local governments have their own revenue sources.
Section 2
Revenues (cont.)
• State and local governments have their own budgets, revenues, and expenditures.
State and Local Governments:Revenues and Expenditures
Section 2
• State government revenues in order of importance:
– Intergovernmental revenues from federal government
Revenues (cont.)
• For welfare, highways, hospitals, etc.
State and Local Governments:Revenues and Expenditures
Section 2
– State sales tax
Revenues (cont.)
– Contributions from state employees to retirement funds
• Five states have no sales tax
• Other states charge 2.9 to 7.25 percent
State and Local Governments:Revenues and Expenditures
Section 2
– Income tax
Revenues (cont.)
• Seven states have none
• Some charge percentage of federal income tax
• Some charge single rate
• Some use progressive tax
State and Local Governments:Revenues and Expenditures
Section 2
• Local government revenues:
– For many local governments, most comes from state
– Property taxes, usually only on real property
Revenues (cont.)
• Real property—land and buildings
• Personal property—portable objects
State and Local Governments:Revenues and Expenditures
Section 2
– Local sales tax
– Fines and fees
– Revenue from water and utilities
Revenues (cont.)
State and Local Governments:Revenues and Expenditures
Section 2
Expenditures
State and local governments use the revenues they receive to fund many different expenditures.
Section 2
Expenditures (cont.)
• State and local governments use revenues to fund many human services.
State and Local Governments:Revenues and Expenditures
Section 2
• State governments
– Entitlement programs for the poor
– Subsidize college tuition
– Maintain highways
– Retirement, hospitals, corrections, education
Expenditures (cont.)
State and Local Governments:Revenues and Expenditures
Section 2
• Local governments
– Public schools
– Police and fire protection
– Water supply
– Sewage and sanitation
Expenditures (cont.)
State and Local Governments:Revenues and Expenditures
Section 2-End
Section 3-Main Idea
Guide to Reading
Big Idea
Political and economic institutions evolve to help individuals and groups accomplish their goals.
Section 3-Key Terms
Guide to Reading
Content Vocabulary
• surplus
• deficit
• bond
• debt
• balanced budget
• automatic stabilizer
Academic Vocabulary
• precise • ideological
Section 3
Surpluses and Deficits
Government budgeting can result in either a surplus, a deficit, or a balanced budget.
Section 3
Surpluses and Deficits (cont.)
• Surplus—the government budgets more than it spends
The Deficits and the Debt
Section 3
• Deficit—government spends more than planned
– Issue bonds to raise extra funds
– Outstanding bonds are government’s debt
– Federal debt about $4.9 trillion in October 2006
Surpluses and Deficits (cont.)
The Deficits and the Debt
Section 3
• Balanced budget—spending equals revenues
– Not required of federal government
– Required of many state and local governments
– Must cut spending if revenues drop
Surpluses and Deficits (cont.)
The Deficits and the Debt
Section 3
• Effects of national debt:
– Taxpayers must pay interest rather than funding services
– Higher consumer interest rates
Surpluses and Deficits (cont.)
The Deficits and the Debt
Section 3
Fiscal Policy
The tool of fiscal policy can help governments control the economy.
Section 3
Fiscal Policy (cont.)
• Fiscal policy is the government using taxes and spending to help the economy grow.
– Theory: to increase spending, cut taxes in recession; to reduce spending, increase taxes in boom.
– Practice: hard to raise taxes or cut services
Section 3
• Many oppose spending increases, while others oppose tax cuts on ideological grounds, or on principle
• Politics hamper quick action
Fiscal Policy (cont.)
Section 3
• Automatic stabilizers always in place
– Unemployment and welfare
– Progressive income tax
Fiscal Policy (cont.)
Section 3-End
VS-End
Figure 1
Figure 2a
Figure 2b
Figure 3a
Figure 3b
TIME Trans
DFS Trans 1
DFS Trans 2
DFS Trans 3
Vocab1
budget
a plan for making and spending money
Vocab2
mandatory spending
federal spending required by law that continues without the need for annual approvals by Congress
Vocab3
discretionary spending
spending for federal programs that must receive annual approval
Vocab4
appropriations bill
legislation earmarking funds for certain purposes
Vocab5
Social Security
federal program that provides monthly payments to people who are retired or unable to work
Vocab6
Medicare
government program that provides some health care to the elderly
Vocab7
enormous
very large
Vocab8
intergovernmental revenue
funds one level of government receives from another level of government
Vocab9
sales tax
tax levied on a product at the time of sale
Vocab10
property tax
tax on land and property
Vocab11
entitlement program
a program using eligibility requirements to provide health, nutrition, or income supplements to individuals
Vocab12
subsidize
to aid or promote with money
Vocab13
revenue
the income that a government collects for public use
Vocab14
utilize
to make use of
Vocab15
resource
the money, people, and materials available to accomplish a community’s goals; wealth
Vocab16
surplus
situation in which quantity supplied is greater than quantity demanded; situation in which government spends less than it collects in revenues
Vocab17
deficit
situation in which government spends more than it collects in revenues
Vocab18
bond
contract to repay borrowed money with interest at a specific time in the future
Vocab19
debt
money borrowed and not yet paid back
Vocab20
balanced budget
annual budget in which expenditures equal revenues
Vocab21
automatic stabilizer
program that automatically provides benefits to offset a change in people’s incomes
Vocab22
precise
to be exact
Vocab23
ideological
a body of opinions
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