warmup how do you keep track of where you spend your money?

Warmup

How do you keep track of where you spend your money?

EXPLORING THE MONEY MATTERS OF THE

FEDERAL GOVERNMENT

Money Matters$ $$

Where Does Federal Money Come From?

$

Where Does Federal Money Come From?

$When the government needs more money,

it can’t simply start printing it.

It has to come from somewhere!

Where Does Federal Money Come From?

$

TAXES!

You might have heard people complain about paying taxes from time to time, but

without taxes our government couldn’t run some very important programs that help

people!

Where Federal Money Comes From$

The money that the government runs on is raised through taxes.

This money is called

REVENUE!

That’s right! The money raised by the

government through taxes is called revenue!

There are several types of taxes…

$Where Federal Money Comes From

Income

Tax

Social Security

Corporate Income Tax

Excise Tax

Other Taxes

This tax is

based on a

percentage of what

you make. The more

you make, the higher

percentage you pay!

This tax is taken to provide retired people

with income they need. In 2010 it was 6.2% of your

total income!

Just like the personal income tax,

corporations must pay income taxes!

These are taxes paid

on certain goods like

alcohol, cigarettes,

jewelry, and gas. This includes estate taxes (when

someone dies) and taxes on goods brought from other countries (tariffs).

Where Federal Money Comes From$

TOTAL: $2,381,000,000,000

Quick Review! $

Revenue is…

A. New “reve”

B. Money that the government raises through taxes

C. Money that the government spends on taxes

D. Money that the government spends over their budget

Where Federal Money Goes

The Federal Budget

With all that money (all $2,381,000,000,000 of it) and all the projects in the country to think about, there is only

one thing that can help keep it all straight…

$

Where Federal Money Goes$

What’s a BUDGET?

Where Federal Money Goes$

FoodHousingClothesOther NeedsInsuranceCar

BUDGET: A plan for how money is earned and spent

Where Federal Money Goes$

DefenseSocial SecurityMedicare & Med-icaidOther MandatoryOther Dis-cretionaryInterest

FEDERAL BUDGET: A plan for how the government brings in and spends revenue

Where Federal Money Goes$

A budget is…

A. a type of plan for printing money.

B. something the government uses to measure things.

C. a plan for receiving and spending money.

D. a pet bird.

I see! A budget is a plan for receiving and

spending money.

Federal Spending

There are several ways the federal government

spends money…

$

Federal Spending$

National Defense

Social Security

Income Security

Medicare

Health

Net Interest

Veterans Benefits

Education & Employment

Transportation

International Affairs

Administration of Justice

Resources & Environment

Science & Technology

Government

Agriculture

Community & Regional Development

Energy

These are just broad categories!! Let’s

break them down…

FY 2010: National Defense$

Defending our nation is a high priority.

In 2010, more than $650 billion dollars went to

funding military operations, personnel,

supplies, and research!

Total Defense Spending:

$722,000,000,000

FY 2010: Social Security$

When people are retired or disabled, Social

Security helps them get the financial assistance

they need.

Total Social Security Spending:

$724,000,000,000

FY 2010: Income Security$

Other types of financial assistance help people

who are disabled, unemployed, or needy.

These programs provide necessities like housing

and food.

Total Income Security Spending:

$629,000,000,000

FY 2010: Medicare$

When people retire, they often lose their health

insurance.

The U.S. government has established Medicare to help them pay for health

care! Total Medicare Spending:

$462,000,000,000

FY 2010: Health$

Doctors’ visits, medicines, emergency care… these

are necessities for everyone!

Insurance for the needy, disease research and

control, and children’s health insurance all fall

into this category.

Total Health Spending:

$386,000,000,000

FY 2010: Other Spending$

There are many other categories of government spending. These include:

• Education• Science

• Environment• Development• Transportation

Other Government Spending:

$677,000,000,000

FY 2010 Spending$

The total estimated budget for 2010 was

$3,600,000,000,000

Hundred

sThousand

sMillions

Billions

Trillions!

Quick Review! $

The federal budget is…

A. The plan for managing and spending state money.

B. The plan for raising government funds.

C. The plan for figuring out who will feed the dog.

D. The plan for managing and spending federal money.

$Two Possible Outcomes

After all the revenue is counted and all the spending is tallied,

there are two possible outcomes for the

budget…

$

Deficit Surplus

OR

Two Possible Outcomes

The government spends LESS

than it raises in taxes so that

there is money left over!

The government spends MORE

than it raises in taxes so that it must borrow

money!

$Two Possible Outcomes

Deficit In a deficit there is no money left over after the budget is laid out.

In fact the government must borrow money to complete the

budget!

Trillions of Dollars

SurplusIn a surplus there is money left

over after the budget is laid out.

$Two Possible Outcomes

The government can use the money that is left over for other

projects!

Trillions of Dollars

1980 1985 1990 1995 2000 2005-300

-100

100

300

500

Revenue Short of Budget in Bil-lions

$This chart shows that there has been a deficit almost every year since 1980.

Two Possible Outcomes

Deficit: more money spent than earned

Surplus: less money spent than earned

$Fill in the blank:

Most of the revenue raised by the government

comes from _________tax.

income

$

Match the definition to the term:

budget

federal budgetsurplus

deficit

money left over after the budget is spent

spending more than is raised in taxes

a plan for how money is earned and spent

the plan for bringing in and spending revenue

$

budget

federal budgetsurplus

deficit

money left over after the budget is spent

spending more than is raised in taxes

Match the definition to the term:

a plan for how money is earned and spent

the plan for bringing in and spending revenue

$

Match the definition to the term:

budget

federal budgetsurplus

deficit

money left over after the budget is spent

spending more than is raised in taxes

a plan for how money is earned and spent

the plan for bringing in and spending revenue

$

Match the definition to the term:

budget

federal budgetsurplus

deficit

money left over after the budget is spent

spending more than is raised in taxes

a plan for how money is earned and spent

the plan for bringing in and spending revenue

$REVIEW

budget

federal budgetsurplus

deficit

money left over after the budget is spent

spending more than is raised in taxes

Way to

go!

a plan for how money is earned and spent

the plan for bringing in and spending revenue

$

When the country spends more than it earns that is called

a…

A)

Surplus OR

B) Deficit

Choose the right answer:

When the country spends less than the amount of money it earns it is called a…

A)

Surplus OR

B) Deficit

$Choose the right answer:

According to the chart shown earlier, our country usually

has a…

A)

Surplus OR

B) Deficit

$Choose the right answer:

That’s right!Our country usually spends more than it earns, so we have a

deficit!

$REVIEW