economic policy a brief overview honors government
TRANSCRIPT
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ECONOMIC POLICYA BRIEF OVERVIEW
HONORS GOVERNMENT
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TWO TYPES OF POLICY
FISCAL POLICY
• TAXING AND SPENDING CONSIDERATIONS. FISCAL POLICY IS CONDUCTED BY CONGRESS AND THE PRESIDENT.
MONETARY POLICY
• REGULATION OF MONEY SUPPLY BY THE FEDERAL RESERVE BOARD (“THE FED”) ADJUSTING INTEREST RATES TO INCREASE OR DECREASE INFLATION.
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TAXING• TWO TYPES:
• PROGRESSIVE TAXES
• A TAX THAT RISES IN PERCENTAGE TERMS AS INCOME RISES
• CAN ANYONE GIVE AN EXAMPLE?
• INCOME TAX
• REGRESSIVE
• A TAX THAT FALLS IN PERCENTAGE TERMS AS INCOME RISES
• CAN ANYONE GIVE AN EXAMPLE?
• SALES TAX
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SPENDING
• WHERE IS THE MONEY SPENT?
• DIRECT BENEFIT PAYMENTS TO INDIVIDUALS (SOC. SECURITY, MEDICARE, MEDICADE, ETC.) APPROX. THIS IS MANDATORY OR NON-DISCRETIONARY SPENDING
• NATIONAL DEFENSE – APPROX. 18% (DESCRESIONARY)
• NET INTEREST: APPROX. 6% IS NON-DESCRESTIONARY
• NON-DEFENSE DISCRETIONARY SPENDING
• GRANTS TO STATES, FEDERAL OPERATIONS, ETC.) APPROX. 17%
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ENTITLEMENTS
• ALSO KNOWN AS “UNTOUCHABLES”
• FEDERAL MONEY THAT IS:
• PROVIDED TO THOSE WHO MEET ELIGIBILITY REQUIREMENTS
• AUTOMATICALLY SPENT EACH YEAR WITHOUT CONGRESSIONAL REVIEW
• SOME HAVE A BUILT IN “COLA” WITHOUT AN ANNUAL REVIEW
• EXAMPLES WOULD BE MEDICARE, SOCIAL SECURITY, FEDERAL PENSIONS
• THESE ACCOUNT FOR MORE THAN TWO-THIRDS OF THE FEDERAL BUDGET
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DEFICIT SPENDING
• BUDGET DEFICIT: INCURRED WHEN GOVERNMENT EXPENDITURES (SPENDING) EXCEEDS REVENUE (INCOME) DURING A ONE YEAR PERIOD
• WHAT SOLUTION CAN YOU PROPOSE TO STOP THAT PROBLEM?
• NATIONAL DEBT: THE AMOUNT OWED BY THE FEDERAL GOVERNMENT (THE ACCUMULATION OF PAST BUDGET DEFICITS)
• SO WHAT IS OUR DEBT?