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Chapter 14: The Budget. …or why we’re screwed. Focus: Does Your Family Have a Budget?. What happens when you go over?. What if there were no consequences?. What does a trillion dollars look like?.
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Chapter 14: The Budget …or why we’re screwed
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.
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.
While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a standard pallet...
And $1 BILLION dollars... now we're really getting somewhere...
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.
Four Major Concepts • The national deficit is $ we don’t have and the national debt is $ we owe. • Entitlement spending takes up most of the federal budget*. • The budget-making process is a political process that often prevents Congress from making tough choices. • 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.
Specific expenditures Environmental protection, Defense and security Education, etc. Congress and the Pres. decide how much will be spent Controllable Spending TYPES OF FED SPENDING PART OF THE FED BUDGET Uncontrollable Spending Congress and Pres. have no direct power To change Interest on the national debt Social Security & other Entitlement programs
WHAT THE GOV. BRINGS IN EXPENDITURES FEDERAL DEFICIT
The future? YOU
What we CAN’T cut • Entitlement programs: • Social Security • Medicare • Medicaid What we CAN cut
ENTITLEMENT PROGRAMS GUARANTEED BY LAW BABY BOOMERS START RETIRING
1940 • Workers • Retirees
1950 • Workers • Retirees
2006 • Workers • Retirees
??? • Workers • Retirees
Proposed Reforms • Increase retirement age • Raising the payroll tax • Invest some of Social Security trust fund into the stock market • Privatized accounts “THE THIRD RAIL”
Budget Agents Tax Committees GAO Agencies OMB CBO • Incrementalism- • The idea that last year’s budget is the best predictor of this year’s budget, plus some.
