BudgetBudget- a plan for managing - a plan for managing and spending money.and spending money. A budget has two parts revenues A budget has two parts revenues

and expenditures.and expenditures.

Revenue is the amount the Revenue is the amount the government brings in and government brings in and expenditures is what it spends expenditures is what it spends on each item.on each item.

Because governments have Because governments have limited revenues choices must limited revenues choices must

be made.be made. A billion $$’s A billion $$’s

on space on space exploration will exploration will mean less mean less money for money for programs that programs that feed the feed the Hungry. Hungry.

Budgets are done annually Budgets are done annually which is once each year.which is once each year.The calendar year runs The calendar year runs

January 1January 1stst to December 31 to December 31stst. . Governments have a fiscal Governments have a fiscal year which runs from October year which runs from October 11stst to September 30 each to September 30 each year.year.

The federal government The federal government spends an immense amount of spends an immense amount of money in fact it is over a money in fact it is over a Trillion $$$”s.Trillion $$$”s.

Preparing the budget takes the Preparing the budget takes the work of 100’s of people over work of 100’s of people over several months.several months. The budget work The budget work

is first done by is first done by the (OMB) or the (OMB) or Office of Office of Management Management and Budget is a and Budget is a division of the division of the executive executive branch. branch.

The head of the office of The head of the office of management and Budget management and Budget

Has their workers determine how Has their workers determine how much each branch of the much each branch of the government, agency or government, agency or department will need in the department will need in the coming year.coming year.

They then how much money the They then how much money the government can expect to take government can expect to take in.in.

Director of the Office of Director of the Office of Management and Budget.Management and Budget.

Peter OrszagPeter Orszag

Based on recommendations from Based on recommendations from the President and his advisors a 1the President and his advisors a 1stst draft of the budget is worked out.draft of the budget is worked out. The completed The completed

11stst draft of the draft of the budget is often budget is often more than a more than a 1,000 pages 1,000 pages long.long.

Once the President has approved Once the President has approved the OMB’s budget it is sent to the the OMB’s budget it is sent to the Congress for approval. Congress for approval. The President The President

usually marks usually marks the occasions the occasions with a with a televised televised speech. speech. Explaining and Explaining and defending his defending his budget.budget.

It then goes to Congress and they It then goes to Congress and they almost never accept the budget as almost never accept the budget as it isit is

Many members of Congress have Many members of Congress have different priorities from those of different priorities from those of the President.the President. So after weeks So after weeks

or months of or months of debate, the debate, the budget usually budget usually emerges with emerges with major major changes.changes.

By the time both houses of By the time both houses of Congress pass the budget it Congress pass the budget it contains many compromises.contains many compromises.

Read state budget and Read state budget and Expenditures 477-478Expenditures 477-478

DeficitDeficit-an excess of -an excess of government expenses over government expenses over revenues. revenues.

The government spends more The government spends more money then they take in.money then they take in.

The Federal government has The Federal government has had a deficit every year since had a deficit every year since

1970.1970.

National DebtNational Debt

Is the total Is the total amount the amount the government government owes on owes on money it has money it has borrowed.borrowed.

Total Budget DeficitsTotal Budget Deficits

In 1996 the United States paid In 1996 the United States paid $345 Billion $$$ in interest rates $345 Billion $$$ in interest rates on money it has borrowed.on money it has borrowed.Only a limited amount of Only a limited amount of

money is available to borrow money is available to borrow if the federal government if the federal government borrows most of it that leaves borrows most of it that leaves very little for individual very little for individual citizens.citizens.

Balanced Budget.Balanced Budget.

Is a budget in which Is a budget in which expenditures do not exceed expenditures do not exceed revenues-in other words a revenues-in other words a budget with no deficit.budget with no deficit.

Chart federal deficit 480Chart federal deficit 480Read 480-481Read 480-481