chapter 14: the budget …or why we’re screwed. focus: does your family have a budget?
TRANSCRIPT
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Chapter 14: The Budget
…or why we’re screwed
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Focus: Does Your Family Have a Budget?
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What happens when you go over?
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What if there were no consequences?
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What does a trillion dollars look like?
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• A packet of one hundred $100 bills is less than 1/2" thick and contains $10,000. Fits in your pocket easily and is more than enough for week or two of shamefully decadent fun.
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• Believe it or not, this next little pile is $1 million dollars (100 packets of $10,000). You could stuff that into a grocery bag and walk around with it.
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• While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a standard pallet...
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• And $1 BILLION dollars... now we're really getting somewhere...
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• Next we'll look at ONE TRILLION dollars. This is that number we've been hearing so much about. What is a trillion dollars? Well, it's a million million. It's a thousand billion. It's a one followed by 12 zeros.
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Let’s look at a trillion dollars another way…
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Four Major Concepts
1. The national deficit is $ we don’t have and the national debt is $ we owe.
2. Entitlement spending takes up most of the federal budget*.
3. The budget-making process is a political process that often prevents Congress from making tough choices.
4. Since World War II, Americans expect more and more from the federal government but show a reluctance for increases in taxes to pay for it.
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Concept #1
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Types of Taxes
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18
TYPES OFFED SPENDING
PART OF THEFED BUDGET
Congress and Pres.have no direct power To change
Interest on the nationaldebt
Social Security & otherEntitlement programs
Congress and thePres. decide howmuch will be spent
Specific expenditures
Environmental protection,Defense and securityEducation, etc.
ControllableSpending
UncontrollableSpending
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Clip
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The National Debt
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Concept #2
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Where are YOUYOU in this cartoon?
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Entitlement programs:Social SecurityMedicareMedicaid
What we What we CAN’T cutCAN’T cut
What we What we CAN cutCAN cut
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ENTITLEMENT PROGRAMS
GUARANTEED BY LAW
BABY BOOMERS START RETIRING
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How Social Security Works
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1940
• Workers • Retirees
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1950
• Workers • Retirees
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2006
• Workers • Retirees
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???
• Workers • Retirees
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Proposed Reforms
• Increase retirement age
• Raising the payroll tax• Invest some of Social
Security trust fund into the stock market
• Privatized accounts
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Concept #3
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GAO Budget Agents
Tax Committees
AgenciesOMB
CBO
Incrementalism-The idea that last year’s budget is the best predictor of this year’s budget, plus some.
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The Budget Process (in theory)
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Concept #4
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or...
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or...
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or…
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or...
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or...
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or…
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Ch. 14- The BudgetFour Major Concepts1.
2.
3.
4.
Types of Taxes:1. Progressive-2. Social Insurance-3. Excise tax-4. Estate tax-5. Custom duties-
Controllable Spending-1.
2.
3.
4.
Uncontrollable Spending-1.
2.
3.
Debt vs. deficit: The Public Debt-1.2.3.4.5.
Social Security Reforms:1.2.3.4.
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Budget Agents:
Government Accounting Office (GAO): Congressional Budget Office (CBO):
Office of Management and Budget (OMB): President:
Congress: Tax Committees:
Interest Groups: Agencies:
The Budget Process (In theory):
1.
2.
3.
4.
5.