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16 How The Government Spends Your Money


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16 How The Government Spends Your Money

  1. 1. How the Government Spends your Money Objective: Analyze how the government manages the money of the U.S. Taxpayer
  2. 2. Government Growth <ul><li>Government has grown considerably in the last 70 years </li></ul><ul><li>In 1929 government at all levels employed 3 million people </li></ul><ul><li>Today, the government at all levels employ 20 million people a six fold increase!!! </li></ul>
  3. 3. Why has the Government Grown <ul><li>Some say need, because of national urgency during the Great Depression and WWII </li></ul><ul><li>Some say because we became richer and demanded more government services </li></ul>
  4. 4. Is Government Growth Good or Bad? <ul><li>That depends, government taxing and spending as opportunity costs </li></ul><ul><li>Government activity displaces private economic decisions </li></ul><ul><li>Private decision making is at the heart of wealth creation and a rising standard of living for all citizens </li></ul>
  5. 5. Functions of Government <ul><li>1. To provide public goods (Police, Fire, and Military protection </li></ul><ul><li>2. Redistribute income (Tax the rich and give it to the poor) </li></ul><ul><li>3. Regulate economic activity (Ensure a fair playing field) </li></ul><ul><li>4. Ensure economic stability ( minimize the ups and downs) </li></ul>
  6. 6. How the Government Spends your Money <ul><li>The national government spends almost half 48% of your taxes on entitlement programs </li></ul><ul><li>Next runner up is the military at 18% </li></ul><ul><li>Finally 14% is spent on interest on the national debt </li></ul>
  7. 7. Government Spending <ul><li>When the government spends more money then it takes in this is called </li></ul><ul><li>Deficit Spending </li></ul><ul><li>When we deficit spend the national debt grows!!! </li></ul>
  8. 8. National Debt
  9. 9. Taxes <ul><li>Proportional Taxes- is a tax that takes the same percentage of all incomes </li></ul><ul><li>Progressive Tax- Takes a larger percentage of higher incomes than lower incomes </li></ul><ul><li>Regressive Tax- Takes a larger percentage of lower incomes than higher incomes </li></ul>
  10. 10. Review <ul><li>What are the functions of government? </li></ul><ul><li>Ans. Provide public goods, redistribute income, regulating economic activity, and ensure economic stability </li></ul><ul><li>Name the three different types of Taxes </li></ul><ul><li>Ans. Proportional, Progressive, and Regressive </li></ul><ul><li>What is deficit spending? </li></ul><ul><li>Ans. When the government spends more then it takes in </li></ul>