PADM530Wk5

Introduction

Our focus this week will be on The U.S. economy and healthcare. The U.S. economy is one of the largest in the world, but other countries, such as

China, are catching up. The Bureau of Economic Analysis (BEA)  , a part of the Department of Commerce, is responsible for monitoring and

analyzing the U.S. Economy. Though it is not as large as many federal agencies, it provides statistics and information that is used throughout the

country and the world. We will look at the healthcare policy in the United States as well.

The Federal Budget Process

Please take some time to review the federal budget process .

The President

A�er the President collects information about the budget needs from the various areas of the executive branch assisted by the O�ce of

Management and Budget  (OMB), he submits a budget request to Congress. This request is sent usually in February for the next �scal year,

which begins October 1 of the current year.

Each chamber of Congress sends the President’s budget to various committees and the Congressional Budget O�ce (CBO) for review. The CBO

creates and publishes an analysis of this budget in March for the committees before each committee submits a budget resolution to its chamber

of Congress. Either chamber may propose its own resolution instead. If no budget is passed, each chamber can adopt special procedures to set

spending levels. Each chamber must continue to work on its budget until it passes that chamber. Selected Representatives and Senators then

negotiate a report to reconcile di�erences. The report must be approved in the exact same version by both chambers. This resolution becomes a

blueprint for appropriations for the bill.

Congress

The Federal Budget Process

Please take some time to review the federal budget process .

Congress

A�er the President collects information about the budget needs from the various areas of the executive branch assisted by the O�ce of

Management and Budget  (OMB), he submits a budget request to Congress. This request is sent usually in February for the next �scal year,

which begins October 1 of the current year.

Each chamber of Congress sends the President’s budget to various committees and the Congressional Budget O�ce (CBO) for review. The CBO

creates and publishes an analysis of this budget in March for the committees before each committee submits a budget resolution to its chamber

of Congress. Either chamber may propose its own resolution instead. If no budget is passed, each chamber can adopt special procedures to set

spending levels. Each chamber must continue to work on its budget until it passes that chamber. Selected Representatives and Senators then

negotiate a report to reconcile di�erences. The report must be approved in the exact same version by both chambers. This resolution becomes a

blueprint for appropriations for the bill.

The President

The Budget Deficit

When government spending exceeds tax collections during a �scal year, there is a budget de�cit. The government must borrow money to fund the

di�erence. The federal budget de�cit for March 2021 was $660 billion (Peter G. Peterson Foundation, 2021). Sometimes, the federal government

“prints  ” money, which causes it to lose value.

Government Spending

Moderate de�cits

There are a number of reasons why de�cits have been larger than typically seen in the last decade.

In recent decades, the government uses the �rst part of Keynesian Economics to stimulate the economy without using the second part.

Keynesian Economics states the government should borrow and spend money to stimulate the economy AND pay back the loans it took as soon as the economy improves (Maynardkeynes.org, 2021). Politicians tend to like to spend money for programs for their

constituents in order to be re-elected.

When a moderate de�cit in the budget is experienced, it increases economic growth and is not an immediate crisis. It gives businesses and

families the means to spend more money, and in turn help create a stronger economy. Under these circumstances, the United States always pays

back the debt that it incurs, giving its lenders no reason to worry. But when the debt-to-GDP ratio approaches or exceeds 100 percent, lenders

develop cause for concern.

The terrorist attacks that occurred on September 11, 2001, led to wars that increased military spending. •

Mandatory spending, which includes funds spent on programs such as Social Security and Medicare continues to increase. Changing

these expenditures would require an Act of Congress that would involve a majority vote in both houses. Current bene�ciaries of these

programs, who have shown to be a powerful voting demographic, would be the ones to su�er and would also be likely to show their

disapproval at the polling station.

•

The Great Recession: E�orts to curb the Great Recession included several economic stimulus packages, spending billions of dollars each.•

The COVID-19 Recession: Several COVID-19 stimulus packages passed Congress, spending trillions of dollars each.•

Reasons for Larger Deficits

The Basics of U.S. Health Care Policy

At the federal level, the key organization regarding health care policy in the United States is the Department of Health and Human Services 

(DHHS). There are a number of organizations within DHHS that deal with various aspects of U.S. Health Care.

Select each item to learn more.

Close All Panels

Food and Drug Administration (FDA)  is responsible for regulation of medications, supplements, and other products (U.S. Food and Drug

Administration (FDA), 2021).

Food and Drug Administration ( FDA)

Centers for Disease Control  (CDC) works to prevent disease, disability, and injury (Centers for Disease Control, 2021).

Centers for Disease Control (CDC)

Health Resources and Service Administration  (HRSA) works to improve health care accessibility for those who are medically vulnerable,

geographically isolated, or without health insurance. (Health Resources and Service Information, 2021).

Health Resources and Service Administration (HRSA)

National Institutes of Health  (NIH) works to prevent, detect, and diagnose health issues of all kinds. It provides support for scientists in

universities, medical schools, hospitals, and research institutions throughout the country and abroad and the communication of medical and

health sciences information (National Institutes of Health, 2021).

National Institutes of Health (NIH)

The Budget Deficit

When government spending exceeds tax collections during a �scal year, there is a budget de�cit. The government must borrow money to fund the

di�erence. The federal budget de�cit for March 2021 was $660 billion (Peter G. Peterson Foundation, 2021). Sometimes, the federal government

“prints  ” money, which causes it to lose value.

Reasons for Larger De�cits

Government Spending

There are a number of reasons why de�cits have been larger than typically seen in the last decade.

In recent decades, the government uses the �rst part of Keynesian Economics to stimulate the economy without using the second part.

Keynesian Economics states the government should borrow and spend money to stimulate the economy AND pay back the

loans it took as soon as the economy improves (Maynardkeynes.org, 2021). Politicians tend to like to spend money for programs for their

constituents in order to be re-elected.

When a moderate de�cit in the budget is experienced, it increases economic growth and is not an immediate crisis. It gives businesses and

families the means to spend more money, and in turn help create a stronger economy. Under these circumstances, the United States always pays

back the debt that it incurs, giving its lenders no reason to worry. But when the debt-to-GDP ratio approaches or exceeds 100 percent, lenders

develop cause for concern.

The terrorist attacks that occurred on September 11, 2001, led to wars that increased military spending. •

Mandatory spending, which includes funds spent on programs such as Social Security and Medicare continues to increase. Changing

these expenditures would require an Act of Congress that would involve a majority vote in both houses. Current bene�ciaries of these

programs, who have shown to be a powerful voting demographic, would be the ones to su�er and would also be likely to show their

disapproval at the polling station.

•

The Great Recession: E�orts to curb the Great Recession included several economic stimulus packages, spending billions of dollars each.•

The COVID-19 Recession: Several COVID-19 stimulus packages passed Congress, spending trillions of dollars each.•

Moderate deficits

The Budget Deficit

When government spending exceeds tax collections during a �scal year, there is a budget de�cit. The government must borrow money to fund the

di�erence. The federal budget de�cit for March 2021 was $660 billion (Peter G. Peterson Foundation, 2021). Sometimes, the federal government

“prints  ” money, which causes it to lose value.

Reasons for Larger De�cits

Moderate de�cits

There are a number of reasons why de�cits have been larger than typically seen in the last decade.

In recent decades, the government uses the �rst part of Keynesian Economics to stimulate the economy without using the second part.

Keynesian Economics states the government should borrow and spend money to stimulate the economy AND pay back the

loans it took as soon as the economy improves (Maynardkeynes.org, 2021). Politicians tend to like to spend money for programs for their

constituents in order to be re-elected.

When a moderate de�cit in the budget is experienced, it increases economic growth and is not an immediate crisis. It gives businesses and

families the means to spend more money, and in turn help create a stronger economy. Under these circumstances, the United States always pays

back the debt that it incurs, giving its lenders no reason to worry. But when the debt-to-GDP ratio approaches or exceeds 100 percent, lenders

develop cause for concern.

The terrorist attacks that occurred on September 11, 2001, led to wars that increased military spending. •

Mandatory spending, which includes funds spent on programs such as Social Security and Medicare continues to increase. Changing

these expenditures would require an Act of Congress that would involve a majority vote in both houses. Current bene�ciaries of these

programs, who have shown to be a powerful voting demographic, would be the ones to su�er and would also be likely to show their

disapproval at the polling station.

•

The Great Recession: E�orts to curb the Great Recession included several economic stimulus packages, spending billions of dollars each.•

The COVID-19 Recession: Several COVID-19 stimulus packages passed Congress, spending trillions of dollars each.•

Government Spending

The National Debt

As the annual de�cits accumulate, the national debt grows. The public (treasury bills, notes, and bonds) and other governments  in addition to the

account securities owned by federal agencies hold the U.S. Debit. Since 1972, the national debt has risen each year. The combined public and

government debt is more than $28 trillion, or about 140 percent of the GDP. To see the current national debt, check out the US Debt Clock  .

Paying Off the National Debt

At more than$28 trillion (as of June, 2021)  , paying o� the national debt would require more than $85,000 for every man, woman, and child in the

United States, an amount much greater than the the U.S. per capita income of approximately $60,000. This stands as the largest national debt of any

nation in the world by a large margin, greater even than that of the 28 countries that make up the European Union. The current debt is more than the

country produces in a year. Even if everything the nation produced in an entire year went towards paying it, it would not be paid o�. As of June, 2021,

the federal government pays more than $400 billion a year on interest payments just on the national debt (USDebtClock.org, 2021)

Please take some time to explore the national debt and de�cit  by using the Economic Research capabilities of the Federal Reserve.

Overview

Welcome to Week 5.

The focus of this content will be on two major policy issues that have been in the

forefront of discussion over the past few years, economic and health care policy.

Economic policy governs the largest economy in the world, one with a gross

domestic product (GDP) of over $18 trillion and several of the world’s most

important �nancial markets. Healthcare policy in the United States affects the

health and well-being of hundreds of millions of people. Equity issues are rife in

both policy �elds; the question of who pays for what, and who bene�ts the most

and least, pervade the nation’s economy and health industry alike. 

Course Objectives

01 CO2: Assess the history of various domestic and foreign policies.