Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at...
-
Upload
jocelyn-veronica-peters -
Category
Documents
-
view
216 -
download
0
Transcript of Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at...
![Page 1: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/1.jpg)
Chapter 16 Government Spending
![Page 2: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/2.jpg)
Growth of Government
![Page 3: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/3.jpg)
Public Works projects
Definition - publicly used facilities such as schools and highways that are built and paid for with tax dollars
![Page 4: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/4.jpg)
Why has Government Grown
Today, total government purchases represent 19% of GDP.
This figure does not include interest payments on debt or transfer payments like welfare
If those things are included spending exceeds 1/3 of the GDP
Not included in this amount is government mandated private sector spending (like providing health care to your employees)
![Page 5: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/5.jpg)
Functions of Government
Providing Public Goods
Promoting General Welfare
Regulation & Economic Stability
![Page 6: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/6.jpg)
Providing Public Goods Public Goods- goods or services that can be used by many individuals
at the same time without reducing the benefit each person receives, like streetlights.
Different levels of government share responsibility for public goods like the legal system including courts, correctional institutions and law enforcement agencies
Some public goods are called merit goods (ones that is socially desirable) like ballets, museums and classical music concerts
There are also demerit goods (ones that are socially undesirable) like tobacco, alcohol and gambling. The government exercise control over these goods by taxing, regulating or prohibiting the manufacture, sale and use of them
![Page 7: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/7.jpg)
Promoting the General Welfare
Americans have chosen to see that almost everyone in the nation is provided with a certain minimum level of support
Usually accomplished through income redistribution, or using tax receipts to assist citizens in need 2 General categories of assistance
Social Insurance programs Public Assistance programs
![Page 8: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/8.jpg)
Social Insurance Programs Definition – government programs that pay benefits to retired and
disabled workers, their families and the unemployed
Social Security – federal program that provides monthly payments to people who are retired or unable to work
Medicare – federal program that provides low-cost health care for the elderly
Both are meant to be supplemental income supports not primary source
Workers’ Compensation – programs that extends payments for medical care to workers injured on the job
Unemployment – program to provide income temporarily to people who are unemployed through no fault of their own, must be actively seeking new employment
![Page 9: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/9.jpg)
Public-Assistance Programs
Definition – programs that make payments to citizens based on need; also called Welfare
Supplemental Security Income – federal programs that include food stamps and payments to the disabled or aged.
Temporary Assistance for Needy Families – state run program that provides assistance and work opportunities to needy families
Medicaid – state and federal program that pays health care costs for low income and disabled persons
![Page 10: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/10.jpg)
Regulation and Economic Stability
Stable growth, low unemployment, and low inflation are the primary economic goals of the government
Externalities – economic side effects or by-products that affect an uninvolved third party; can be negative or positive For example – a steel mill produces pollution that causes health
problems in the surrounding area, if there are no legal rules that limit pollution the steel mill does not have to correct the negative externalities
![Page 11: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/11.jpg)
Government Regulation
![Page 12: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/12.jpg)
Ensuring Economic Stability
Smoothing the ups and downs of the economy
Attempt to shield citizens from harmful effects like unemployment, high inflation, recessions and depressions
![Page 13: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/13.jpg)
Critics of Government Involvement
Some critics believe that merit goods (like museums, parks and arts) should be provided by private organizations instead of the government
Critics of redistribution think that government assistance discourages personal initiative, affects incentives, and harms self-development
Critics of government regulations argue that most regulations raise prices and instead we should encourage market solutions to problems such as pollution
![Page 14: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/14.jpg)
The Federal Budget and National Debt
The Budget Process – The goal of the budget process is to balance what the government takes in with what it spends
Budget Surplus – when the government takes in more than it spends
Budget Deficit - - when the government spends more than it takes in
![Page 15: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/15.jpg)
Federal Taxation and Spending
![Page 16: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/16.jpg)
The Federal Budget Process
Budget is done on a fiscal year not a calendar year
Begins October 1 and ends September 30
It takes 18 months to prepare the budget prior to its start
Begins with President and Office of Management and Budget making a plan
Plan is then submitted to Congress by January where it is examined
Proposal is submitted by April 15 for debate
![Page 17: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/17.jpg)
Budget Process
![Page 18: Chapter 16 Government Spending. Growth of Government In 1929 only 3 million governme nt workers at all levels Depression causes greater demand for government.](https://reader034.fdocuments.in/reader034/viewer/2022051401/5697bf8b1a28abf838c8b56d/html5/thumbnails/18.jpg)
National Debt
When a budget deficit occurs the government must raise funds by borrowing money
Deficit financing – government policy of spending more money than it is able to being in through revenues
Deficit financing is financed by selling government securities to individuals, businesses and foreign governments