Taxes & Government SpendingChapter 14 Section 3

Federal Spending

Taxes & Government Spending Objectives:

Distinguish between mandatory and discretionary spending.

Describe major entitlement programs. Identify categories of discretionary spending. Explain the impact of federal aid to state and

local governments.

Taxes & Government Spending Most of the $2 trillion + of the money the

government receives each year is already accounted for .

After they fulfill their legal obligations, only about 40% of the money is left.

Taxes & Government Spending Mandatory and Discretionary Spending

Mandatory Spending – is money that lawmakers are required by existing laws to

spend on certain programs or to use for interest payments.

Discretionary Spending – is spending about which the government planners can

make choices.

Taxes & Government Spending Money that is for mandatory spending has grown

over the years. The percentage of discretionary spending has

decreased over that same period of time.

Taxes & Government Spending What term describes the money that

lawmakers are required by existing laws to spend on certain programs or to use for interest payments?

Taxes & Government Spending Mandatory Spending

Taxes & Government Spending What term describes the spending in which

the government planners can make choices.

Taxes & Government Spending Discretionary Spending

Taxes & Government Spending Entitlement Programs:

Entitlements – social welfare programs that people are “entitled to” if they meet certain eligibility requirements. i.e. age or income

Mandatory spending increases as more and more people qualify for the money.

Some of the entitlement programs are “means-tested”, that means people with higher incomes may receive lower benefits or no benefit at all.

Taxes & Government Spending What are Entitlements?

Taxes & Government Spending social welfare programs that people are

“entitled to” if they meet certain

eligibility requirements. i.e. age or income

Taxes & Government Spending Entitlements are a largely unchanging part of

government spending. Once Congress has set the requirements, it cannot

control how many people become eligible for each king of benefit.

Congress can change the eligibility requirements or reduce the amount of the benefits.

Taxes & Government Spending Social Security

This is the largest category of federal spending. More than 50 million retired or disabled people

and their families and survivors receive monthly payments.

Taxes & Government Spending Medicare

Medicare serves about 40 million people, most of them over the age of 65.

This program pays for hospital care and for the costs of the physicians and medical

services. Also pays for disabled people and those suffering

from certain diseases. It is funded by taxes withheld from your paycheck

Taxes & Government Spending What is the largest category of federal

spending?

Taxes & Government Spending Social Security

Taxes & Government Spending Medicaid

It benefits low-income families, some people with disabilities, and elderly people in

nursing homes. It is the largest source of funds for medical and

health-related services for America’s poorest people.

Taxes & Government Spending What term describes the benefits low-income

families, some people with disabilities, and elderly people in nursing homes?

Taxes & Government Spending Medicaid

Taxes & Government Spending Other Mandatory Spending Programs

These include Food Stamps Supplemental Security Income (SSI) Child Nutrition

Taxes & Government Spending Future of Entitlement Spending

Spending for both Social Security and Medicare have increased enormously.

It is expected to increase even more in the future as the “baby-boomers” began to

collect.

Taxes & Government Spending What are the other three types of mandatory

spending programs that we talked about?

Taxes & Government Spending Food Stamps Supplemental Security Income (SSI) Child Nutrition

Taxes & Government Spending Discretionary Spending

Spending on Defense is almost ½ of the budget’s discretionary spending.

In 2006 the Defense’s budget was 499.6 Billion,. Total Budget was $ 934.7 Billion

Taxes & Government Spending

Taxes & Government Spending Other Discretionary Spending

Other federal spending categories include* Education * Training

* Scientific Research * Student Loans

* Technology * Law Enforcement

* National Parks & Monuments

* Environmental Clean-up * Housing

*Land Management * Transportation

* Disaster Aid * Foreign Aid

* Farm Subsidies

Taxes & Government Spending Federal Aid to State and Local Governments

This figure is around $ 300 Billion + per year. Federal Money goes to States for Education,

Unemployment, Aid to Children and Families, Highways, Mass-

Transit, Low-income Housing, and etc.

Taxes & Government Spending What category gets the most money from the

budget’s discretionary spending programs?

Taxes & Government Spending Defense

Taxes & Government Spending Name one program that Federal government

spends money at either the state or local levels?

Taxes & Government Spending Education, Unemployment, Aid to Children and

Families, Highways, Mass-Transit, Low-income Housing, and etc.