American Government Unit Chapter 16

III. Spending and the Budget

ObjectivesIdentify the key elements of federal spending.Define controllable and uncontrollable

spendingExplain how the President and Congress

work together to create the federal budget.

What is the Federal Government spending money on?

Federal Budget

Federal SpendingEntitlements – benefits that law says must be paidMedicare, Medicaid, OASDI (SS), food stamps,

unemployment insurance, veterans pensions.People who qualify are entitled to these programs.OASDI – Old Age, Survivors, and Disability

Insurance program – Social Security (FICA)3rd largest program at 727.5 bilDefense – 636 bilPublic debt – 383 billion – must pay it – interest

only

What to do?Do not trust social securitySecond and third form of retirement3% of people retire at there life style403 bRoth IRAStraight stock market

Controllable and Uncontrollable SpendingControllable/Discretionary Spending – part of

the budget that Congress and President can make choices

Uncontrollable/Mandatory spending – budget must have these programs (OASDI, interest,…)

All entitlements are mandatoryTo change, Congress must change law –

political suicide.60% of budget is Uncontrollable and growing

The Federal BudgetCongress has the “power of the purse” – they

approve everything (the people)President proposes budgetBudget is a political statement. How?

How the budget is createdPresident and the agencies with the help of the OMB

(Office of Management and Budget) create the budget and send to Congress

Goes to Budget Committees and Appropriations Committees in both houses

CBO (Congressional Budget Office) helps Congress answer questions

Hearings are held – lobbyists lobby – page 470 quote/bias?13 concurrent resolutions must pass then to get budget

approved.Continuing resolution – presidential order allowing office

to stay open under last years budget until the budget is passed

Review – what is our money spent on?

Federal Budget