AG 7.A

Unit VII, Part A: Economic Goals and the Federal Budget

Economic Goals

The way the federal government collects and spends

money reflects many many economic goals.

The nations budget is its plan for how much revenue

(money the government collects through taxes) it takes in and how it plans to spend it.

When spending and revenue are equal we have a

balanced budget.

When there is more revenue it's called a budget

surplus.

When there is more spending it's called a budget

deficit.

National Debt: The total amount of money the United

States has borrowed and not paid back

http://www.usdebtclock.org/index.html

The Budget: Executive Branch

Every year the government creates a budget predicting the total spending

and revenue for the coming year.

In the case of the federal budget the year does not begin on January 1st.

The Fiscal Year runs from October 1st the September 30th the following year.

The budget process begins a year ahead of itself with executive agencies

developing proposals for the president.

Steps in the Budget Process:

Feb-Dec: Executive agencies review prior years data and makes

proposals, Prez reviews and edits.

Dec-Feb: Budget documents are prepared and sent to congress

March-Sept: Congress reviews Prez Budget, develops its own, and

approves spending

Oct 1: Fiscal Year Begins

Oct 1-Sept 30: Budget executed

Oct-Nov: Data for completed year become available

Budget Conflict

The Budget: Legislative Branch

According to Article I, Section 9, of the Constitution,

Congress is required to approve all federal spending. While conflict between congress and the President is inevitable, they still get the final say.

The Steps Congress takes to create their budget is as follows:

1. House and Senate Committees review proposal and

hear from executive branch members.

2. Congress sends budget to its own analysts.

3. After revision and review from committees, budget is

voted on it the House, then Senate

4. Because budgets may vary, House and Senate budget

are combined

5. Final Budget is voted on and sent to President to be

signed

Although the process is established, recently

Congress has failed to agree on a budget.

While the president is required to submit his

budget by February, Congress has no such deadlines. Between '09 and '14 congress never passed a budget and resorted to continuing resolutions: carrying over the previous budget.

When Congress cannot even agree to pass a

resolution the government mush shut down. This happened in '95, '96, and '13. When the government shuts down all nonessential offices, museums, and parks close.

Federal Spending

Uncontrollable: Expenditures required by

law or to pay off interest from national debt.

A major part of uncontrollables are

Entitlements: Benefits congress must pay to individuals. i.e. Social Security and Medicare.

Discretionary Spending: Spending left up

to choice. This spending is split as either Defense or Nondefense. Mostly because the majority of discretionary spending is used for the DOD, department of defense.