Standard SSEMA3b-Explain the

government’s taxing and spending decisions

Ways of SpendingPurchase- government buys goods

and services as well as pays wages and salaries

Transfer- payment where no good or service is received in return

Types of SpendingDiscretionary- must receive

authorization by the HouseMandatory- spending authorized by

law

Biggest spending categories1. Defense2. Healthcare3. Social Security

Impact of Spending

Resource Allocation

Redistribution of

income

Competing with private

Sector

How is the budget set?

SenateMust approve the bill sent by the

House

House

Approve, modify, or disapprove

Set initial budget targets for spending

Executive

President establishes the budget