Budget Debt Deficit 1 st Assignment Budget 101

Budget / Debt / Deficit • 1 st Assignment: Budget 101 • $3. 8 Trillion for 2015 Federal Budget

IF I HAD A TRILLION DOLLARS

Red Text – do not need to know for test • How high is a trillion in $1000 bills? • 1 trillion dollars = 63 miles high (give or take a foot or two) • If a person’s salary is $40, 000 per year it would take: • $1 Trillion you would have to save $34 Million each day of your life • 1 trillion seconds = 30, 000 B. C. (give or take a decade or two)

Mandatory vs. Discretionary Spending • Mandatory Spending • – spending that already is decided upon by existing laws. Do not have to be approved year to year • Ex’s: Social Security, Medicare, Food Stamps • Discretionary Spending – • spending decided on by Congress each year • Ex’s: Military, Education, Government (jobs/payroll)

Government Programs You Need to Know • Social Security – • A United States federal program of social insurance and benefits developed in 1935. • The Social Security program's benefits include retirement income, disability income, death and survivorship benefits.

• Medicare – • A U. S. federal health program that subsidizes people who meet one of the following criteria: • 1. An individual aged 65 or older who has been a U. S. citizen or permanent legal resident for five years. • 2. An individual who is disabled and has collected Social Security for a minimum of two years. • 3. An individual who is undergoing dialysis for kidney failure or who is in need of a kidney transplant. • 4. An individual who has Amyotrophic Lateral Sclerosis (Lou Gehrig's disease). • Medicare helps out people at a time in their lives when they may have serious health problems but lack the funding for treatment.

• Medicaid • A joint federal and state program that • helps low-income individuals or families pay for the costs associated with long-term medical care, provided they qualify. • Although largely funded by the federal government, Medicaid is run by the state where coverage may vary.

• Welfare • A government program which provides financial aid • to individuals or groups who cannot support themselves. • Welfare programs are funded by taxpayers and • allow people to cope with financial stress during rough periods of their lives. • In most cases, people who use welfare will receive a biweekly or monthly payment. • The goals of welfare vary, as it looks to promote the pursuance of work, education or, in some instances, a better standard of living.

2 nd Assignment: Debt – Who We Owe About ¼ of the debt is owed to the Federal Government HOW? ? ? Example – the tax revenue that is collected for Social Security – the government has used some of that money to use for other spending…. so the government owes the Social Security fund the Federal Reserve buys Govt. bonds – so the government owes the Federal Reserve

• About ¼ of the debt is owed to China, Japan and other countries • China is the country we owe the most to (1. 3 trillion)

3 rd Assignment: YOU FIX THE BUDGET Student Reaction Easiest Hardest

NY Times Readers Selections • Reduce the size of the military rather than reduce pay for noncombat members of the military. • Impose a millionaire’s tax rather than cut deductions for high-income households. • Cap the growth of Medicare spending rather than raise the eligibility age.

• two groups: • those who far prefer spending cuts, • and those who want to mix cuts with tax increases. • The responses also point to a deep divide between those two sides, illustrating why a solution is difficult.

• The single least popular choice was allowing the expiration of the Bush tax cuts on income below $250, 000 a year. • But when it came to tax cuts for incomes above $250, 000, people’s opinions appeared to diverge according to their political views. --conservative groups generally wanted this tax cut to remain in place. --liberal group — the expiration of the tax cut was the single most selected policy.

• The most popular option among all respondents? • 80% of responses included – • Reducing the military to less than its size before the Iraq war — • But cutting pay and benefits for the military was a choice of only 40 percent.

In this world nothing can be said to be certain, except death and taxes. -Benjamin Franklin 3 Types of Taxes You Need to Know

INCOME TAXES • imposed on income earned by individuals or businesses. Federal and State Income Taxes (some states don’t have income tax) • income taxes are typically withheld automatically from paychecks and sent to the government. • actual "take home pay" for a worker often measures substantially less than his stated monthly salary or wage earned. • Income taxes in the U. S. increase as a percentage of income for higher income earners. = called – Progressive (organized in TAX BRACKETS)

Deductions-lowers your taxable income

Income Tax (Social Security and Medicare) • Federal Insurance Contributions Act (FICA) • also known as payroll taxes. • The FICA tax includes two different taxes: • the social security tax and the medicare tax. • ½ paid by employer ; ½ paid by employee • Approx 14%: 7% paid by employer, 7% paid by employee

• Sales taxes • are taxes imposed on the sales of goods and services. • In the U. S. , sales taxes are imposed by state and local governments. • Some states do not have sales taxes.

• Property taxes • charged for owning certain types of property. • If you own a home or land, you may have to pay property tax on the value of the home and/or land. • Property taxes may also be imposed on owners of vehicles and boats.