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Budget

Budget. Plan for managing and spending money. Governments create budgets to help them make decisions because of limited resources aka SCARCITY!!. Budget continued…. Two parts: Revenue and Expenditures Revenue: Money the gov’t receives Expenditures: Money the gov’t spends

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Budget

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  1. Budget Plan for managing and spending money. Governments create budgets to help them make decisions because of limited resources aka SCARCITY!!

  2. Budget continued… • Two parts: Revenue and Expenditures • Revenue: Money the gov’t receives • Expenditures: Money the gov’t spends • Runs on a fiscal year: October 1-September 30.

  3. Nearly 100% of federal gov’t revenue comes from taxes • Income tax and Social Security • 80% of state gov’t revenue comes from taxation. • Excise tax and sales tax • 60% of local gov’t revenue comes from taxation • Property tax

  4. Non-Tax Revenue The government will charge tolls for the use of roads and canals. The government will charge fees for driving, hunting, fishing, and getting married. Charge fines (ie. traffic) The government will sell and rent land. Government run lotteries provide revenue, but they are controversial. http://prezi.com/v9fb37hv6pek/present/?follow=-lv7ji7xi4ss&auth_key=q246x09#5

  5. Mandatory and Discretionary • Mandatory Expenditures- funding entitlement programs such as: • Medicare/Medicaid, Food Stamps, and Welfare • Discretionary Expenditures- Congress sets the level of spending for departments

  6. Budget Deficits • Deficits occur when expenditures exceed revenue in one fiscal year. • Governments are expected to do more without raising taxes. • This forces them to borrow money.

  7. Gov’t Borrowing Money • The government borrows money to make up for a deficit. • Most borrowing comes from the sale of government bonds. • The government pays off the bonds as they come due (mature).

  8. National Debt • The total amount the government owes on the money it has borrowed. • Goes up with each deficit and accumulated interest. • Interest: Fee paid for the use of money. http://www.brillig.com/debt_clock/

  9. Debt vs. Deficit Deficit = One year of expenditures > revenue Debt = all deficits + interest Bonds are the #1 reason for government debt

  10. Balancing the Budget http://www.printthis.clickability.com/pt/cpt?expire=&title=House+votes+to+require+budget-balancing+plan+-+News+-+ReviewJournal.com&urlID=502075943&action=cpt&partnerID=192612&cid=190578081&fb=Y&url=http%3A%2F%2Fwww.lvrj.com%2Fnews%2Fhouse-votes-to-require-budget-balancing-plan-190578081.html • Balanced Budget: Expenditures do not exceed revenue. • Republicans in the House of Representatives have approved a bill that would require a plan to balance the budget. The Senate is probably not going to pass the bill. • State constitutions require balanced budgets with no borrowing.

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