The Federal
Government!
By: Connor Grose & Robert Taylor
Period 1
How does the government spend its money?
* National Debt
In 2005 the federal government spent $497 billion on national defense also
about 31 billion on homeland security. This was 21.5 of the government
spending. In other words, out of every dollar the government spent in 2005,
21.5 cents to the national defense.
* Income Security , Retirement , and Disability
This is referring to housing assistance, food and nourishment assistance for
the poor, unemployment, etc. $197 billion was spent on this. Retirement and
disability programs was $147 million. Sum total o both is $344 billion 14%
of government spending.
*Social Security
$516 billion o social security. 21% of federal gov. spending.
*Medicare
$297 billion on Medicare, which is 12.1% of the spending.
Government
Spending
Net Interest on National
Debt
*When the government spends more money
than it receives in tax revenues, it is said to
run a budget deficit.
*For example if the government spends 2,000
billion and the tax revenue is 1,800 billion the
government has to borrow 200 billion in the
same way people have to borrow money.
Although this is true, this borrowed money
accumulates if not taken care of. This is called
national debt.
The Cost/Benefits of Government
Spending Programs
*According to economists, a government
spending program is not worth pursuing
unless the benefits outweigh the cost.
*For example if a program produces $100
billion and cost $40 billion it is thought to be
worth it in $60 billion in net worth.
The Budget Process
*In the federal budget, the federal government
specifies how it will spend the money it has. IT
has several options such as national defense
or health care.
*The process to prepare a budget begins with
the president, including the entire executive
branch of the government.
*The president’s budget recommends to
Congress how much should be spent for
national defense and income security
programs.
Budget Process Continued
*Once the president’s budget is in the hands
of Congress, it is scrutinized by the members
of the many congressional committees and
subcommittees.
*The Congressional Budget Office advises the
members of the committees and
subcommittees on technical details of the
president’s budget.
*Congress is obligated to pass a budget by the
beginning of the fiscal year. Once passed, the
details of the outline are passed as a law.
Key Terms
Budget Deficit: the amount by which
government expenditure exceeds income from
taxation or custom duties in one fiscal year
Surplus: an amount or quantity that is
greater than needed after the requirements
have been met
National Debt: the financial obligations of a
national government resulting from deficit
spending
United Federal Revenues &
Expenditures 2000-2020
Works Cited
"Surplus | Define Surplus at Dictionary.com." Dictionary.com - Free Online
English Dictionary. N.p., n.d. Web. 7 May 2013.
<http://dictionary.reference.com/browse/surplus?s=t>.
" National Debt vs. Budget Deficit · The National Debt Crisis." The National Debt
Crisis. N.p., n.d. Web. 13 May 2013.
<http://thenationaldebtcrisis.com/national-debt-vs-budget-deficit/>. Category.
"Federal Deficit and the National Debt - Difference Between the Federal Deficit
and the National Debt." U.S. Government Info - Resources. N.p., n.d. Web. 13
May 2013. http://usgovinfo.about.com/od/federalbudgetprocess/a/debt-vsdeficit.htm
"Does the federal government spend half its revenue on health care? | The
Incidental Economist." The Incidental Economist. N.p., n.d. Web. 13 May 2013.
<http://theincidentaleconomist.com/wordpress/does-the-federal-governmentspend-half-its-revenue-on-health-care/>.