Money Money MattersMatters$ $

$INTRO TO TAXING AND

SPENDING

Pre Class

How much money do you think the government spends each year?

What do you think it spends the MOST money on??

Why should we care about the government’s expenses???

$The government spends

roughly…

$3,600,000,000,000Per year!

Where Does Federal Money Come Where Does Federal Money Come From?From?

$

TAXES!Revenue - Money that the government

raises through taxes; all revenue bills MUST begin in the House of Representatives

$TAXES – why should we care?TAXES – why should we care?

Income Tax

Social Security

Corporate Income Tax

Excise Tax

Other Taxes

is based on a percentage of what you make. The more you make, the higher percentage you pay!

is taken to provide retired people with income they need. In 2010 it was 6.2%

of your total income!

Just like the personal income tax,

corporations must pay income taxes!

paid on certain goods like alcohol,

cigarettes, jewelry, and gas.

This includes estate taxes (when someone dies) and taxes on goods

brought from other countries (tariffs).

TAXING Bills

House of Rep. – has power to start revenue bills House Ways and Means Committee –

decides whether or not to go along with President’s request for tax cuts/increases

Makes rules for determining who will pay how much Closed rule – no changes to the bill can be made from the

floor of the House

Senate Finance Committee Proposes amendments to the tax bills passed by the

House Bills become “Christmas trees” – decorated with riders

(provisions that about subjects other than the subject of the bill!)

SPENDING Bills

Spending requests usually come from the executive branch (ex. The President’s annual budget)

ONLY Congress has the power to appropriate money, or approve of government spending It must APPROVE spending before other departments and

agencies can actually spend it!

2 Step Process Authorization bill - sets up a federal program and specifies

how much $$$ can be appropriated for it Appropriations process – appropriations committees study

requests and create bills stating how much $$ they will grant

Signs a bill that will build rec centers in inner cities - $30 million can be spent

Says the Department of Housing and Urban Development (HUD) will administer the program

HUD doesn’t have the money!!!! So, it asks Congress for the $30 million (this is an appropriations bill!)

HUD’s budget will become part of the annual budget that the President submits to Congress!

Appropriations subcommittees – become familiar with federal agencies (like HUD) because each year heads of those programs must speak before the committee, and explain why they need the funds they are requesting

Special interest groups – try to influence the members of the subcommittees Ex. A private aeronautics firm might try to get more $

$ for the defense Department to build a certain kind of aircraft

Where Does the Money Go???Where Does the Money Go???$

FEDERAL BUDGET: A plan for how the government brings in and spends revenue

Where Federal Money Comes Where Federal Money Comes FromFrom

$

In 1933, federal government spending was 4.6 billion per year – today, that amount would pay for less than one day of the federal government’s expenditures!!!

Where do your taxes go?

Types of Spending

Mandatory (2/3 of budget) Direct benefits – entitlement programs such as

Medicare, Medicaid, Social Security Interest on the national debt Uncontrollables – earlier legislation that legally

commits the govt to spend $ - spending NOT controlled by current Congress! Make up MOST of our spending!

Discretionary – subject to Congressional appropriates (Congress must approve it each year) Defense, environment, transportation

$

Two Possible Outcomes for the Two Possible Outcomes for the BudgetBudget

Deficit More money is spent than earned.

In fact the government must borrow money to complete the

budget, which increases the DEBT!

Trillions of Dollars

SurplusLess money is spent than earned.

$

Two Possible Outcomes for the Two Possible Outcomes for the BudgetBudget

The government can use the money that is left over for other

projects!

Trillions of Dollars

$Two Possible OutcomesTwo Possible Outcomes

Surplus: Surplus: less money spent than earned

Deficit: Deficit: more money spent than earned

Budget Process

Conflicting Feelings about Government Benefits

Where do some residents who were interviewed stand on government spending on

social programs?

Where do YOU think about government spending?

Special Interest Groups

any organization that seeks to influence public policy

Examples: American Civil Liberties Union –

civil liberties/rights National Rifle Association – gun

ownership rights Sierra Club – protecting the

environment Veterans of Foreign Wars –

Veterans’ healthcare and benefits These groups lobby Congress

contact members of Congress or other government officials directly to influence their law making

Jack Abramoff

Federal Budget Game