The Role of Government: The Federal Government and Fiscal Policy
This lesson printed from:
Posted January 8, 2001
Author: Marty Yopp
Posted: January 8, 2001
Updated: December 28, 2012
Students will visit “A Citizen’s Guide to the Federal Budget,” and use the federal government web site to obtain information which will help them understand basic information about the budget of the United States Government for the current fiscal year.
- Define and describe the Federal Budget.
- Learn what percentage of GDP is used for government spending in the United States and other industrialized countries.
- Know which branch of the federal government is responsible for preparation of the Federal Budget.
- Identify the major categories of government revenue and the major categories of government expenditures.
- List "non-defense discretionary expenditures."
- Know the difference between Medicare and Medicaid.
Students will visit "A Citizen's Guide to the Federal Budget" and use the federal government web site to obtain information which will help them understand basic information about the budget of the United States Government for the current fiscal year.
In your own words write a brief paragraph which summarizes the United States Budget. [The Federal Budget is a plan for how the US government spends taxpayer money. It raises money through different kinds of taxes: income taxes, excise taxes, and social insurance payroll taxes. It spends money for national defense, national parks, the FBI, Medicare, meat and fish inspection and much more. If revenues are greater than spending the government runs a surplus. When the economy is doing well people earn more and unemployment is low. Revenues increase and the deficit shrinks.]
Use Chart 1-2 to respond to the following: In 1998, or the last year charted, which of the industrialized nations allocated the smallest share of its GDP to government spending (federal, state, and local combined)?
[The United States allocated the smallest share of its GDP to government spending.]
Which industrialized nation allocated the highest percentage of GDP to government spending? [France allocated the highest percentage of GDP to government spending.]
Which branch of the federal government, Executive, Legislative, or Judicial, is responsible for the preparation of the Federal Budget? [The Executive branch is responsible for the preparation of the Federal Budget.]
- What government official is ultimately responsible for the preparation and submission of the Federal Budget? [The President of the United States is ultimately responsible for the preparation and submission of the Federal Budget.]
Move forward and Select: 2. Where the Money Comes From - and Where it Goes.
In your own words, write a paragraph about how the federal government plans its budget. [The President and Congress determine how much money they expect to collect in the next few years and where it will come from. They then allocate how much they need to spend to reach their goals. They decide how much spending they will finance through taxes and how much through borrowing (if any). The government must spend for such things as national defense, foreign affairs, social security, health benefits, law enforcement, education, transportation, research, environmental cleanup, and other economic goals.]
List government revenues by category beginning with the largest percentages. [Individual Income Taxes 48%, Social Insurance Receipts 34%, Corporate Income Taxes 10%, Excise Taxes 4%, Other 4%]
What is the estimated about of money that the federal government takes in each year? [The estimated amount of money that the federal government takes in each year is $2,000 billion.]
List government expenditures by category beginning with the largest percentages. [Social Security 23%, Non-Defense Discretionary 19%, Defense 16%, Medicare 12%, Interest 12%, Medicaid 7%, Other Mandatory 6%.]
What expenditures are classified as "Non-Defense Discretionary"? [The expenditures that are classified as "Non-Defense Discretionary" are: Education, training, science, technology, housing, transportation, and foreign aid.]
Who are the beneficiaries of Medicare and who are the beneficiaries of Medicaid? [Medicare provides health care coverage for 40 million elderly; Medicaid provides health care for 34 million poor people, people with disabilities, and seniors in nursing homes.]
What is the difference between Medicare and Medicaid? [The difference between Medicare and Medicaid is that Medicare is an entitlement, and Medicaid is a social service.]
What is the estimated amount that the federal government spends during the fiscal year when it received $2,000 billion? [The estimated amount that the federal government spends during the fiscal year what it received $2,000 billion is $1,800 billion.]
What priorities is the President dealing with through on and off budget items? [The president is dealing with Social Security solvency, Medicare solvency, and catastrophic prescription drug coverage through on and off budget items.]
- Have these issues been important in the 2000 elections? Describe. [Yes, both presidential candidates and many of the other candidates have pledged their support to maintaining social security coverage and medicare plus providing some prescription drug coverage for seniors.]