Federal expenditures

1. By Risha Parikh, KavinSomu, and AkashHegde Period 4 Federal expenditures

2. Big governments, Big budgets. • A small government has been extremely difficult because citizens like government services. • 20% of the GDP is just government expenditures.

3. National Security State After WWII: defense spending increased because of Cold War Mid-1960s: defense spending started decreasing while social welfare spending increased due to Great Society Program (LBJ) Military Industrial Complex: Eisenhower coined this term to warn against t he close relationship between the military hierarchy and the defense industry that supplies its hardware needs Defense spending has only increased after 9/11. In the chart, notice entitlement spending increased as the Democrats came into power. Budget still consists of only 1/6 of federal expenditures

4. Social Service State • Biggest amount of budget belongs to income security expenditures-for the elderly, poor, and the needy • Social Security Act: 1935-originally intended to provide a minimal income to sustain elder people and prevent them from poverty • Mid-1960s: social security was greatly expanded. Disability insurance was added, and so was Medicare. • Medicare: (1965) provides both hospital and physician coverage to the elderly. • Most SS checks go to retired workers, and also disabled, Medicare patients, and to widows. • By the year 2025, there will be only 2 workers supporting each SS beneficiary as opposed to 50 per person in 1945 • 1999: President Clinton tried unsuccessfully to allocate budget surplus money to Social Security and invest it in the stock market to save Social Security, but people were opposed. George Bush also faced the same opposition to his attempts to save SS. • The rise of social service state has contributed to budget growth in other areas, such as health and job training. • Liberals favor Social Security and other welfare programs, while conservatives think they are too costly.

5. Uncontrollable Spending Entitlements are what make up our uncontrollable spending.

6. Uncontrollable Spending • Usually a budget works as an “allowance”. The government agencies are appropriated money and they need to make that money last for the entire fiscal year. • However, it doesn’t actually work that way. Two-Thirds of our budget does not function that way. The 2/3s of spending are called “Uncontrolled expenditures” • This happens because of obligations the government that entitle certain people to benefits. These benefits are called entitlements. • The biggest uncontrolled expenditure is Social Security which eats up over $800 Billion

7. Incrementalism • Incrementalism means simply that the best predictor of this year’s budget is last year’s budget plus a little bit more (an increment). • Incrementalism may be a general tendency of the budget, but it does not fully describe the budgetary process. • Because the budgetary process looks incremental, there is a never ending call for budgetary reform.

8. Incremental Budgeting Features • Very little attention is focused on the budgetary • Agencies can assume they will get the budgets they had the previous year. • Most of the debate and attention of the budgetary process is focused on the proposed increment • The budget for any agency tends to grow a little every year.

9. Political Cartoons “We Don’t Care How, Just Keep Supporting It!” Incrementalism Throughout History

10. More Political Cartoons “Cut the Fat!” “This pretty much guarantees we’ll be left behind.”