Federal Spending

Definitions:

Mandatory Spending - required by Congress to spend on certain programs or debt (ex interest payments)

Discretionary Spending - lawmakers choose what to spend it on (defense, education)

Biggest Parts of Spending - Medicare (for the elderly), Medicaid (for the poor), SS (for the elderly)

Entitlements - social welfare programs people are guaranteed (SS, Medicare, Medicaid, pensions)-bc they pay into it-and get if they meet certain eligibility requirements (ex income level)

Third Rail of Economics - SS, Medicare, Medicaid; if it changes it will cause problems

Notes:

• SS - 60 mil (of 330 mil) Americans getting benefits; baby boomers are retiring so SS #’s increased (fewer workers are paying into the system, creating a shortage of funds)

• Defense Spending - 20%+ of the federal budget (troops, weapons, tanks, jets)

• Other Discretionary Expenses - education, sci research, student loans, law enforcement, pollution cleanup, disaster aid, gov’t employee salaries