1. $
Money Matters
$
$
INTRO TO TAXING AND SPENDING

2. Pre Class
How much money do you think the government
spends each year?
What do you think it spends the MOST money on??
Why should we care about the government’s
expenses???

3. $
The government spends
roughly…
$3,600,000,000,000
Per year!

4. Where Does Federal Money Come From?
$
TAXES!
Revenue - Money that the government raises
through taxes; all revenue bills MUST begin in the
House of Representatives

5. TAXES – why should we care?
$
Income Tax Social Security
is based on a percentage
is taken to provide retired
of what you make. The
people with income they
more you make, the
need. In 2010 it was 6.2% of
higher percentage you
your total income!
pay!
Corporate Excise Tax
paid on certain goods
Income Tax like alcohol, cigarettes,
jewelry, and gas.
Just like the personal
income tax,
corporations must pay
income taxes! Other Taxes
This includes estate taxes (when someone
dies) and taxes on goods brought from other
countries (tariffs).

6. TAXING Bills
House of Rep. – has power to start revenue bills
 House Ways and Means Committee –
 decides whether or not to go along with President’s request for tax
cuts/increases
 Makes rules for determining who will pay how much
 Closed rule – no changes to the bill can be made from the floor of
the House
Senate Finance Committee
 Proposes amendments to the tax bills passed by the House
 Bills become “Christmas trees” – decorated with riders
(provisions that about subjects other than the subject of the
bill!)

7. SPENDING Bills
Spending requests usually come from the executive
branch (ex. The President’s annual budget)
ONLY Congress has the power to appropriate
money, or approve of government spending
 It must APPROVE spending before other departments and
agencies can actually spend it!
2 Step Process
 Authorization bill - sets up a federal program and specifies
how much $$$ can be appropriated for it
 Appropriations process – appropriations committees study
requests and create bills stating how much $$ they will grant

8. Signs a bill that will build rec
centers in inner cities - $30
million can be spent
HUD’s budget will
Says the Department become part of the
of Housing and Urban annual budget that the
Development (HUD) President submits to
will administer the Congress!
program
HUD doesn’t have the
money!!!! So, it asks
Congress for the $30
million (this is an
appropriations bill!)

9. Appropriations subcommittees – become familiar
with federal agencies (like HUD) because each year
heads of those programs must speak before the
committee, and explain why they need the funds they
are requesting
Special interest groups – try to influence the
members of the subcommittees
 Ex. A private aeronautics firm might try to get more $$ for the
defense Department to build a certain kind of aircraft

10. Where Does the Money Go???
$
FEDERAL BUDGET: A plan for how the government
brings in and spends revenue

11. Where Federal Money Comes From
$

12. In 1933, federal
government spending
was 4.6 billion per year
– today, that amount
would pay for less than
one day of the federal
government’s
expenditures!!!

13. Where do your taxes go?

15. Types of Spending
Mandatory (2/3 of budget)
 Direct benefits – entitlement programs such as Medicare,
Medicaid, Social Security
 Interest on the national debt
 Uncontrollables – earlier legislation that legally commits
the govt to spend $ - spending NOT controlled by current
Congress!
 Make up MOST of our spending!
Discretionary – subject to Congressional
appropriates (Congress must approve it each year)
 Defense, environment, transportation

16. Two Possible Outcomes for the Budget
$
Deficit earned.
More money is spent than
Trillions of Dollars
In fact the government must borrow
money to complete the budget, which
increases the DEBT!

17. Two Possible Outcomes for the Budget
$
Surplus
Less money is spent than earned.
Trillions of Dollars
The government can use the money
that is left over for other projects!

19. Two Possible Outcomes
$
Deficit:
Surplus:
more money
less money
spent than
spent than
earned
earned

20. Budget
Process

22. Conflicting Feelings about Government Benefit
Where do some residents who were interviewed stand
on government spending on social programs?
Where do YOU think about government spending?

23. Special Interest Groups
 any organization that seeks to
influence public policy
 Examples:
 American Civil Liberties Union –
civil liberties/rights
 National Rifle Association – gun
ownership rights
 Sierra Club – protecting the
environment
 Veterans of Foreign Wars –
Veterans’ healthcare and benefits
 These groups lobby Congress
 contact members of Congress or
other government officials directly
to influence their law making

24. Jack Abramoff

25. Federal Budget Game