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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