The 2011 Federal Budget

Mr. Way, Economics, 3/8

12.3.3 Describe the aims of government fiscal policies

(taxation, borrowing, spending) and their influence on production,

employment, and price levels.

Federal Deficit

• Revenue 1.9, Expenditure 3.3 • As stated earlier in the semester, our

federal deficit is approximately $1.3 Trillion

• That’s $1,300,000,000,000

• It also means that our federal government is currently spending 173% of its income.

• That’s the same as if you worked for $10 an hour and spent $17 an hour!

Federal vs. State & Local Spending

• Federal spending = $3.3 trillion

• State spending = $1.4 trillion

• Local spending = $1.7 trillion

• Total U.S. government spending:

$6,400,000,000,000

• U.S. GDP: $14.59 Trillion

Total State Spending

Mandatory Spending

• Mandatory spending is stuff that the government is required to pay.

• This is generally considered to include social security, medicare, interest payments on loans, & welfare.

• These are mandatory because everyone had money taken from their pay specifically to cover these programs, or because of a loan agreement.

Discretionary Spending

• Discretionary spending is what lawmakers have the freedom to change year after year without violating a contract.

• When Congress debates a budget, they only consider discretionary spending, which is currently only about 1/3 of the total federal budget.

What would your budget look like?• On a separate sheet of paper, decide what percent of its

budget you think the government should spend on each.• Explain reasoning behind top and bottom 3

• FBI, DHS, CIA• Housing• Veteran’s Benefits• Food programs• Research &

Development• International affairs• Taking care of the

environment

• Defense• Pensions• Health care/insurance• Welfare• Education• Transportation

infrastructure• Paying off the debt

Find classmates with similar priorities• Compare your list of government priorities

with your classmates.• Form a group of 3 to 9 with the most

similar priorities.• For instance, look for others who share 3/5

or more of your top priorities• Or, supposing you feel very strongly about

them, look for others who share your bottom priorities, or some combination thereof.

Congratulations!• You and your peers have formed a political

party.• On one paper, write down each member’s name

and their top 5 priorities + what % of the budget they think each should be

• As a group, decide your party’s top 3 priorities, and what % of the budget it wants each to be.

• Come up with a name for your political party.• You will get extra credit points equal to• (# in party)(# of priorities matched by party)• If your party is not reflecting your priorities at all,

you may leave to look for a new party.

• Observe your political party’s goals.

• How close are they to your own? How about all the others in your group?

Writing prompt (1 paragraph min):

On the paper with your spending priorities list, answer the following:

“Do political parties help their members achieve their individual goals?”