Political Science paper for 2 page
qiao1159
Day15-TheFederalBudget.pptThe Federal Budget
Professor
Matthew N. Beckmann
LBJ – Great Society (& Vietnam)
NIXON
Great Society
Social Security +
Medicare
Dem Congress
Vietnam
(Oil Embargo)
Short-Term Solutions
Price Controls
Wage Controls
FORD & CARTER
Outline
The Economy and the US Government
Where the Money Goes
- Discretionary Spending
- Non-Discretionary Spending (Entitlements)
Where the Money Comes From
- Income Taxes
- Payroll Taxes
II. You Balance the Budget!
The Budget
Fiscal Policy:
The use of government spending and revenue to influence the economy. In short, fiscal policy is like the federal government’s checking account.
The Budget
Early Feb: President Submits Budget
April(ish): Congressional Budget Resolutions
- 20 categories
- divide the pie
By October: Authorizing and Appropriating
(Note: Congress Routinely Misses Its Deadlines;
Hasn’t been on time since 1997.)
Where the Money Goes
The Federal Budget:
Two Categories of Spending
Where the Money Goes:
Non-Discretionary Spending
Where the Money Goes: Discretionary Spending
Why is it Non-Discretionary?
Neither the current President nor Congress really “decides” how much to spend on Social Security or Medicare or Unemployment and the like.
Instead, these programs result from previous laws, and when people become eligible, they get the benefits.
The Growth of
Non-Discretionary Spending
In terms of its cost, which one has grown the most in the last generation?
Medicare/Medicaid
or
Social Security
Where the Money Comes From
Where the Money Comes From
Income Taxes
Where the Money Comes From
Income Taxes
Where the Money Comes From
Income Taxes
http://qz.com/37639/check-your-us-tax-rate-for-2012-and-every-year-since-1913/
Where the Money Comes From
Income Taxes
Few paid 91% tax rate (Only 8 people in 1960).
The main effect was pushing businesses to distribute profits differently – away from top.
Where the Money Comes From
Income Taxes
Where the Money Comes From
Income Taxes (Deductions)
Where the Money Comes From
Payroll Taxes
Payroll Taxes Are Designated for “Entitlement” Programs.
Social Security = 6.2% (cap now at $137,700)
Medicare = 1.45% (no cap)
(Matched by your employer.)
Where the Money Comes From
Payroll Taxes
Where the Money Comes From
Payroll Taxes
Where the Money Comes From
Payroll Taxes
Where the Money Comes From
Payroll Taxes
Income & State
Taxes
Revenues – Outlays = Surplus/Deficit
The Economy & The US Gov’t
revenues and spending
Balance the Budget!
If you wanted to balance the budget, what would you do?
Cut Spending
or
Raise Taxes
The Budget,
Accountability, and Leadership
During the Great Depression, FDR helped enact Social Security – a program to help ensure seniors did not end their life bankrupt.
LBJ extended that safety net to include Medicare – a program that guaranteed seniors would have affordable healthcare at the end of their lives.
The Budget,
Accountability, and Leadership
These “entitlement” programs have been very successful at their stated goals – helping Americans retire (and stop getting an income) yet avoid ending up sick and broke.
Not surprisingly, they are popular, especially with seniors.
But they are also expensive!
The Budget,
Accountability, and Leadership
The other big-ticket budgetary item is national defense. We spend more on the military than the next 8 countries combined – and we have for generations!
This has many advantages – diplomatically, militarily, and even economically.
But it is also expensive!
The Budget,
Accountability, and Leadership
Everything else comprises fairly small pieces of the federal budget – and often those pieces are popular (e.g., Pell Grants; School Lunches; Roads; Hospitals; Veterans Benefits).
The reality is there is not much fraud, waste, or abuse in the federal budget. Rather, we spend money on a few major programs plus a bunch of (pretty popular) minor ones.
The Budget,
Accountability, and Leadership
Of course, taxes aren’t popular either!
The Budget,
Accountability, and Leadership
The question for politicians, then, is what are your priorities given the basic budgetary realities.
There is no magic bullet; tradeoffs are a must.
Trump
President Trump has not touched Medicare or Social Security, and he helped increase defense spending.
President Trump also signed into a law a fairly large tax cut.
Eventually, something will have to give. But for now, we can borrow the difference (at low rates).
Midterm
Nice Job.
- Do Readings!
- Come to Class!
- Cite Course Materials!
- Answer Questions!
- Explain the Logic of Your Answer.
Mean 83
Median 85
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