About fifteen percent of all federal expenditures

Info icon This preview shows pages 15–16. Sign up to view the full content.

View Full Document Right Arrow Icon
About fifteen percent of all federal expenditures just go to paying interest on this debt rather than being allocated for current policies. Also the government is often dependent on foreign investors and foreign governments to fund its debt, creating an unwanted dependency. For a fascinating visual look at the national debt see http://www.usdebtclock.org/ . B. Federal Expenditures Two things are apparent about federal expenditures. 1. The policies and programs on which the government spends money change over time and 2. Expenditures keep rising. Two conditions associated with government growth in America are the rise of the national security state and the rise of the social service state. 1. The National Security State World War II greatly expanded the defense budget. Usually defense budgets had gone down after wars, demilitarize. After the war, the cold war resulted in a permanent military establishment and expensive military technology. In the 1950s and early 1960s, spending for past, present, and future wars amounted to more than half the federal budget. Things changed. From mid1960s to early 1980s, defense expenditures crept down and while social service expenditures more than doubled. The defense budget now constitutes of about 19% of all federal expenditures. 2. The Social Service State The biggest slice of the budget pie now belongs to income security expenditures (policies extending direct and indirect aid to the elderly, poor, and needy). The biggest of these is the Social Security system. Along with disability insurance added in the 1950s and Medicare added in 1965, Social Security accounts for almost one-third of the federal expenditures. Other social service expenditures have also been growing: health, education, job training, federal retirement… 15
Image of page 15

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
ISS 225 – Power, Authority, Exchange Economic Order These factors help explain why the budget is the center of attention in American government. Important Terms: Circular flow of expenditures and income Supply Demand Market equilibrium Product markets Factor markets (labor, capital, land) Gross domestic product Consumption Investment spending Government spending Exports Per capita GDP Unemployment rate Frictional unemployment Structural unemployment Cyclical unemployment Seasonal unemployment Full employment Inflation Consumer price index Demand-pull inflation Cost-push inflation Hyperinflation Stagflation Goals of economic policy Regulation Deregulation Monetary policy Federal Reserve Board Fiscal policy Keynesian economic theory Supply-side economics Laffer curve Federal budget Income tax Social insurance tax Borrowing Expenditures For Your Amusement, The Top Ten Reasons to Major in Economics: 10. Real Economists are handsome and gorgeous. 9. You get to say "trickle down" with a straight face. 8. Mick Jagger and Arnold Schwarzenegger both studied economics and look how they turned out. 7. You can say heteroskedasticity and know what it means. 6. When you get drunk you can tell everyone that you are just researching the law of diminishing marginal utility. 5. You can talk about money without ever having to make any. 4. When you are in the unemployment line at least you'll know why you are there. 3. Economists do it with interest. 2. Economists can supply it on demand. 1. Economists do it with models. 16
Image of page 16
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern