The+United+States+Budget

Power Points



Description: In this section we will look at a few aspects of the power of the purse. One is a simple overview of the budgetary process, as well as a look at the history of process - how it developed over time. This gives us an opportunity to look at the nature of revenue collection (taxation) and outlays (spending) nationally. What types of taxes exist and how much is collected? What are the relative arguments for and against various methods of taxation? And what do we actually spend money on - how much is spent where?

The US government also uses its power of the purse to manage the macroeconomy. We will look at the two principle ways this is done. One is through fiscal policy (the power to tax and spend), the other is through monetary policy (the power to regulate the money supply). We will also look at the general relationship between the powers of the national government and the economy overall - this will allow us to look at the economic rationale that exists justify governmental intervention in the economy, and the concept of market failure.

Goals: After reading through the material above, you should be able to address the following questions:

- What parts of the Constitution impact economic policy? How specific is the Constitution about the budgetting process? How did it evolved over time? - Be familar with the principal aspects of the budgetting process. - What is the level of revenue collection and outlays in the US? - What is discretionary and non-discretionary spending? - What are the largest spending items in the US? - What is the level of debt in the US? What is the debt actually composed of? What controversies are associated with the national debt? - Where does US revenue come from? What percentage of the budget is devoted to what spending items? - What do the terms revenue and outlays refer to? What has the level of revenue and outlays been over the past few decades? How has it changed? - What does "GDP" refer to? Why is it an important measure of the state of the economy? Be familiar with the size of GDP in recent history as well as the nature of the growth and reduction in the level of GDP in recent years. - What is fiscal policy and what is monetary policy? How do each attempt to manage the macroeconomy? What are the benefits and drawbacks of each? What institutions are principally involved in each policy? - What does the term "Keynesian Economics" refer to? What controversies exist about it? - What was the American Recovery and Reinvestment Act? What did it do? How? - What do the terms "unemployment" and "inflation" refer to? Be familiar with the levels of each on recent history. - What is the Philip's Curve?