The Federal Budget, Chapter 25.1 Essential Idea #1: 1. The first Monday of every February, the president proposes a _____________ to Congress that outlines how the government should _________ its money. 2. Congress then passes a budget __________________, which totals the revenues and spending, and sets targets for how much money will be __________ in different categories. 3. There are two types of spending: ________________ and __________________. a. ________________________ i. This type of spending does ______ need annual approval. The government will pay this no matter what. 1. Examples: b. ___________________________ i. This type of government spending must be approved _______________. 1. Examples: 4. Before the government can actually spend this money, the Congress must first pass ______________________________. a. _________________________ approve spending for a particular activity. Essential Idea #2: 1. The federal budget contains two parts: ________________ and _________________. Revenues 2. Nearly _______ of the government’s revenue comes from the ______________, which is paid by _________________. Each year, every worker files a ________________, which calculates how much of their ___________ they must pay in taxes. Tax returns are due by _______________ of each year. 3. The second largest source of revenue is called __________________, which is used to pay for ___________________ and _________________. a. ______________________ pays people who are _____________ or _______________. b. ______________________ pays for the __________________ costs of the elderly. c. ____________________ pays the health costs of people with _____ incomes. 4. A tax on specific goods like gasoline, tobacco, or telephone services is called an ________________. 5. A tax on money inherited is called an _________________. 6. Taxes can be classified according to the effect they have on the people taxed. a. ____________________ i. With a progressive tax, the percentage of tax ______________ as income _____________. ii. Example: b. _______________________ i. With a regressive tax, the percentage of tax _______________ as income _____________. Regressive taxes hurt people with _____ incomes. ii. Example: c. ______________________ i. With a proportional tax, the percentage of tax __________________ no matter the income. Expenditures 7. What does the government spend all of this money on? a. The government spends most of its money on ___________________, which accounts for ___________ of the federal expenditures. b. Will the money spend on social security increase or decrease in the future? Why? c. The second largest category is _____________________, which accounts for ____________ of the federal expenditures. i. Defense spending ____________ during times of __________. d. A portion of the federal budget goes toward paying _____________ on the ______________. How big is the national debt right now? Managing the Economy 8. The government used to only have ___________ expenditures that could be written on _______ page. Today, the budget takes __________ pages to write. 9. When the government spends ________ money than it collects, it has a __________. 10. When the government spends ________ money than it collects, it has a _________. 11. Government want a ________________________, where spending and collecting are _____________. 12. To help stabilize the economy, the government provides ____________________, such as ______________________, and making income tax a ______________________.