Chap 12 Flashcards
(36 cards)
What is a deficit?
When the state spends more than it receives in taxes in 1 year.
What is the deficit equal to in terms of spending?
the amount of spending minus the amount of taxes
What is the federal debt?
The total amount the state owes.
How does the state spend more than it taxes?
by selling bonds to individuals, companies and other governments.
The federal deficit also equals
the bonds outstanding
What is the net public debt?
the portion of the debt that the government owes to others (not to itself)
What do politicians compare the new spending plan to?
The planned spending, not the old spending.
How do long do the spending plans typically plan for?
10 years
What is the CBO?
The Congressional Budget Office
What does the CBO do?
forecasts how new taxes and spending will affect the budget
What is static scoring?
it assumes individuals will not change their behavior with tax/spending changes
What is dynamic scoring?
looks at the past changes of behavior to forecast the effects of the legislation
What are two key words to pay attention to when studying taxes?
Rate and Income
How much does the U.S. currently spend per day?
10 billion
The Net Public Debt in comparison to GDP has increased since 2008 as spending rose due to…
2009 stimulus package, stimulus built into regular spending, 8% increases in ordinary spending and TARP funds spent/not repaid
Historically speaking U.S. spending was __% of GDP.
1-2%
Spending in terms of GDP increased when…
Civil War and WWI
Most of spending was ____ until the New Deal
military costs
Post New Deal spending changed from military costs to…
socializing costs (spreading private costs to society) through taxes.
What are three examples of programs that emerged through socializing costs?
Social Security, Unemployment insurance, Medicare/caid.
Currently we spend __% on Social Security/Medicare/caid/Unemployment insurance/other welfare programs.
60%
We spending ~ __% on national defense.
20%
The interest component of spending is at 5%? Why is it so low?
Because the Fed has expanded the money supply
What will happen when the Fed lowers the money supply?
the spending on interest will rise and cause a crisis
